Navigating the Byzantine World of MDF and Co-op Dollars
Like most great machines, the channel requires a certain amount of grease to help it spring to life every day. In the parlance of the channel, that grease comes in the form of market-development funds (a pool of dollars to drive leads) and co-op dollars (money allocated based on sales volume).
Unfortunately, a lot of vendors make a lot more of these funds available than are ever actually claimed by their channel partners.
The reasons that money stays in the pocket of the vendors are generally twofold. First, a lot of the products that money gets attached to are often offerings that for one reason or another are difficult to actually sell. The MDF dollars attached to those products are often there to help channel partners overcome a fundamental lack of demand for that product.
But a much bigger problem stems from the fact that keeping track of what deals are eligible for MDF and co-op dollars in the first place is tricky. While a vendor may make it plain what kind of funding is available, it becomes difficult to keep track of what was sold across solutions that consist of multiple products. Most solution providers depend on a dizzying array of spreadsheets, CRM and accounting applications that make correlating what deals are eligible for additional funding from a particular vendor exceedingly difficult.
To address that specific challenge, Computer Market Research, a provider of channel management applications that are delivered as a service, has added a co-op/MDF module to its offerings that is designed to help solution providers navigate the complex MDF/co-op opportunity.
The simple fact is that most solution providers leave money on the table that could drop directly to their bottom line every quarter, CMR President Del Heles said.
Because it's so difficult to track what individual products are being sold within the context of a given solution, many solution providers conclude that participating in such programs is more trouble than it's worth. Making things worse, of course, is the fact that the Byzantine nature of many of these vendor programs requires solution providers to hire dedicated administrative staff just to figure out whether there may even be an opportunity to avail themselves of a vendor program.
New software won't fix everything that is fundamentally flawed with MDF and co-op marketing in the channel. But it is a real good place to get started—especially in a recovering economy when more vendors than ever are willing to reward solution providers a whole lot more for making the effort to push just that much more business in their direction.
Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.