I often hear vendors complaining that they have allocated Marketing Development Funds (MDF or Co-Op) to resellers, but it’s not being used. Then I speak to resellers who will say that they would like to find ways to grow their business but don’t have the money to do it.
So where’s the disconnect? There seems to be two issues:
• Resellers don’t know how to ask for the money
• Resellers don’t always have the skill/resources to use the money effectively
Ask the right way
Vendors and resellers think differently about money. Vendors think in terms of revenue; resellers think in terms of profi t and cash fl ow. And it’s easy to see why. If you’re a reseller operating on 10 per cent margin, and $0.90 of every dollar is going to your supplier, then revenue alone is not enough.
The problem is that resellers become so focused on profit they don’t talk to the vendor in their language (ie. revenue) and don’t get the support they could otherwise get.
Vendors are motivated by two things:
• Sales to new customers
• Additional sales to existing customers
In other words, anything that increases revenue and market share. Which means that any request for marketing funds must demonstrate a clear outcome in terms of additional sales or new customers. If instead the outcome is more sales to the reseller but not necessarily to the vendor (ie. it’s a program that grows the reseller’s slice of the pie rather than growing the actual pie) it will be rejected.
The problem is most requests for MDF come across as “a good idea with no clear sales outcomes”. And the reason for this is that most resellers are too busy or don’t have the marketing experience to put together an effective marketing program.