How Channel Partners Monetize Vendor RelationshipsBy Howard M. Cohen | Print
Marketing effectively to find new sources of income is challenging, but channel partners can leverage their vendor relationships to create new revenue streams.
Going to Market Together
Marketing Development Funds (MDFs) and Co-operative Marketing Funds have been part of the vendor-partner relationship for decades. There are several ways in which vendors provide funding and other support for marketing activities. Some are calculated as a percentage of sales accomplished. Others are apportioned based on a periodic business review.
A number of vendors, however, take a much more informed approach. Some make it part of their program, while others don't tell you about it; They just wait for those who take the initiative to ask. In these cases, the vendor will consider a well-written, well-thought-out proposal for a specific, innovative new marketing campaign or activity, and will offer a specific dollar contribution to the execution of it. In some cases, vendors may require a percentage match of funds from the proposing channel partner.
Can I Tell You How to Market?
Welcome to the Danger Zone.
Many vendors have been frustrated by the failure of co-operative marketing ventures with partners to produce sufficient new revenue for them. Many thought raising ROI demands for their marketing investments to 50x, 300x, or more would motivate greater sales production. They were wrong.
Most recently, many larger vendors have developed well-defined marketing programs that they offer to channel partners. There have been several challenges with this approach, and three are described below.
- The marketing resources the vendors engage to produce these programs often have no familiarity with the partner channel or how it operates. As a result, channel partners find themselves educating these companies, sometimes extensively, and often with no ROI for their time, effort and matching funds.
Before you invest any matching funds, interview the program provider to determine if they understand your business and can give you qualified leads. Stay focused on the cost-per-lead and make sure it justifies the anticipated ROI.
- A number of channel partners have been frustrated by the fact that many of these prepackaged programs promote the vendor's products, but not the partner's service superiority. Some allow only the embossing of the partner's logo and location information on the collateral. Look for vendors that will incorporate your service messaging into the program and highlight it.
- Some overzealous vendors, especially those with multiple business units, have inundated partners with too many programs that run simultaneously. Most partners lack the extensive marketing and business development departments required to work with the program providers, some of whom require extensive support.
Let's Be Realistic Together
In the earliest days of vendor-channel relationships, there were many abusers who simply planned ways to drain marketing funds from vendors. This ultimately damaged the relationships, the programs and the ways they served the channel. While abuses certainly still exist, closer relationships between vendors and their chosen channel partners have created an environment in which both can enjoy significantly increased income.
If you're currently measuring the success of your business development and marketing effort by how many marketing fund dollars you're extracting from vendors, stop! Then think about it. The element that will perpetuate and grow your cooperative marketing efforts is the revenue that you generate, which benefits both the vendor and channel partners.
Don't wait for vendors to demand and then measure ROI. Track ROI yourself and focus on vendors with which you generate the most revenue. That's the real measure of how well you monetize your vendors.