Give away the first one, and once they’re hooked, they’ll keep coming back. Seems like something I’d hear a drug dealer say in a movie. Well, it’s not far from the reality of market development funds (MDF) in the IT and telecom industries. At first, it’s just free money from your manufacturing and service partners to help you grow your market and business. But soon, it becomes just too good to give up. The more money that’s made available, the more you take, and pretty soon your P&L has an MDF line item. Why not? It’s free money to grow your business, right? Well…sort of.
The trouble with MDF is the paradox it creates. Sure, MDF is money you’re getting from an outside source and the requirements for performance are typically modest, but that’s intentional. While your revenue is dependent on only what your firm sells, the manufacturers only need a few VARs or resellers to be successful for them to succeed. It’s numbers game that’s largely stacked against you and one they know to the penny. But wait…there’s more.
Most manufacturers and service providers also make execution of MDF campaigns seemingly easier for your marketing team; providing marketing messaging, digital assets, content and more. But while it’s hard to get off the MDF money wagon, smart marketers should easily see the paradox in using these items. Every one of your competitors is getting the exact same support. Taking advantage of the manufacturer material is like planning to stand on a hilltop shouting precisely the same thing as every other marketer on every other hilltop. It’s undifferentiated noise.
The next part of the MDF paradox is spelled out right there in our business category…value added reseller (VAR). Okay, I’ll grant that we call ourselves Solution Providers, Trusted Advisors, Consultants, etc, but those are just marketing monikers for our value adds. Regardless, the things that make our businesses special: customer experience, expertise, engineering, long term partnership commitment, quality of relationships and more, are what makes us different than each of our competitors. MDF by its nature demands you promote the manufacturer and explicitly ignore most of what makes you attractive to your target customers. It forces you into an exclusively opportunistic mode (throw MDF marketing against the wall and see what sticks) that benefits the manufacturer partners far more than it benefits you.
So, the MDF money isn’t really free. The cost is your drastically reduced focus on your brand reputation and core value propositions. We keep doing it though, because like with a drug, giving up the euphoric feeling of “free money” is too hard. Or is it?
Alternatives to MDF-focused marketing are not as easy. They take more insight, more work, and more marketing talent, but the payoff is dramatically more effective marketing that builds strong market presence for YOUR organization and a more solid long-term pipeline. There are even ways to fund this kind of marketing with MDF funds without fleecing partners. If you focus on your core value message and build a marketing machine internally, you can run MDF target prospects through it. Account-based marketing (ABM), for example, is a fantastic mechanism for this kind of cross over. Campaigns become account focused instead of product or solution focused, so your main MDF task shifts from campaign design to identifying the ideal client profile for the partner solution for which you have MDF. Now you can run those prospects through the ABM machine and serve two masters.
This is a bit of the secret sauce our firm uses to help IT and telecom solution providers to better build their own business with the MDF support from partners. I was somewhat “hand wavy” about the work it takes to build that marketing machine, but our ABM practice has got a robust offering in this regard. We love diving into greenfield or maturing ABM opportunities with our customers. If you’ve got your own budding ABM program, this might be an approach for which you’ve already got the team. Either way, the ugly truth about MDF will stay ugly unless we talented marketers wean our organizations off the MDF drug and fund more organic and effective approaches to differentiate ourselves.