Reseller's top tricks for co-op funding success

You know the scenario. The phone rings and you are offered money from a vendor.  Pick a vendor, any vendor – the MDF or co-op programs are mostly the same. 

You are offered money. You are offered collateral. Industry experts. Corporate boxes. Breakfast breakouts and so on. Fantastic, right? Great for business development. More fuel in the tank of your marketing engine. Smiles all round.

Wrong. Well, mostly anyway. What follows can be anything from writing a 50-page business plan or taking a sizeable hit on the cash flow until you receive the money months later. Hey, I’m the last to attack vendors: we love them and need them, it’s just that most of the time the programs don’t get past go.

The vendors are operating under a sound theory. Pick a bunch of medium or well-performing companies and co-invest in them, building more business in the marketing. Work with the distributor to choose the bright bunch and away we go. The vendor builds business, the distie drops more units and the reseller pumps away in the market developing sales, hopefully growing ongoing services as well.

In my opinion and from my experience, these programs mostly don’t work for the average reseller in practice. The paperwork is heavy. And when I say heavy, I mean they can be another version of War and Peace. I remember spending the weekend filling out a case study for a particular funding amount (less than $10,000 by the way). Some of the criteria included market analysis, justification for a multiple return of 10x, prior case studies – the list goes on. Frankly, I could have continued for another week and developed a three-year business plan.

What else? Well, the availability of funds when required is limited. The marketing programs are generic or weak. It’s not easy, and resellers turn away from the opportunities out of lack of time, lack of resources and sheer frustration.

A recent great example was a phone call I received from a well-meaning gentlemen asking me how I wanted to spend co-op funds. He excitedly suggested a number of dinners, events and so on for existing and potential customers. I almost groaned out loud. My poor customers are mostly flat strap themselves. The thought of spending time, money and effort on these events was starting to become a headache – especially when a lot of CEOs, MDs and CIOs were already inundated with these types of events, forums and other affairs.

So are co-op and marketing development funds a waste of time? They can be but they shouldn’t be. There are some key components required to make them a roaring success for the reseller’s organisation. Through industry advice and my own personal experience, I have come up with a set list of key points in making sure MDF generates success (see box).

A case in point

I recently caught up with Jamie Romanin, managing director of ShoreTel Australia and New Zealand, to discuss the frustrations of these programs and how he thought ShoreTel was making headway. “At the start of this year, ShoreTel introduced several changes to its Champion Partner Program designed to make its partners even more successful,” said Romanin. 

“One of the key changes within the program was to improve MDF spend, making it more lucrative for partners successfully selling ShoreTel UC systems,” he told me. “The changes were carefully considered – we conducted more than 50 partner interviews and worked with consultants – to ensure the program is simple and objective so all partners can prosper.

“In line with your observations, the best way for partners to maximise MDF spend is to plan, plan, plan. In fact, our new MDF structure has been flipped around so that partners must submit a pre-approval and strategic justification before ShoreTel will commit to co-funding the activity. We work with partners to create marketing campaigns that are focused on building their technical capabilities and sales pipeline to bring new deals to the table,” said Romanin. I have to agree with him that vendors need justification for investment and I like that they have focused on simplicity and objectivity.

Look at the list in the box – sounds like a lot of work right? Sounds like you don’t have time? Absolutely right but the old adage applies: a business that isn’t growing is a business that is dying. Vendors and distributors quite rightly make funds available particularly to performing and consistent partners. If you can work this in to your business plan – or more specifically, your marketing plan – for the coming fiscal year, MDF and co-op can be a big winner.

There are also IT-centric marketing companies that know this space well. They have all the assets and resources to make use of the funds and are set up really well to report on activity, results and the ultimate success. Quite often a basic brief,
a few short meetings and a budget discussion can kick these useful partners into action and to start driving revenue for you, your distributor and the vendor.

Mark Sze, director of Inform Group, which specialises in marketing in the tech sector and digital strategies, says: “Successful campaigns can be delivered without the need for large budgets or, indeed, long timeframes. 

“What’s critical to turn campaign activity into sales pipeline is a clear understanding of how a client’s technology solution provides value for customers and drives revenues.” 

Sze agrees that outsourcing can be useful for busy resellers. “We add value through marrying up our existing industry knowledge with other assets, skills and unique marketplace activity in  order to efficiently drive return on investment to the channel.” 

I think fundamentally we all have to bite the bullet and make a decision to follow the process internally or externally and maximise the opportunities staring at us through the vendors and distributors. After all, if we can
get a system in place that works, then it should be a case of rinse
and repeat.

Geoff Olds is the founder and  managing director of Australian solutions provider TechFlare Solutions

Next: Five steps to MDF success

Five steps to MDF success

1 Planning 

Often co-op funds and MDF campaigns are done on the run. This is due to vendor and distribution deadlines and because the reseller (guilty as charged) has left it to the last moment. A consistent planned approach on a quarterly basis is crucial to get bang for buck. Plan the type of campaign, the assets and the resellers’ investment of time.

 2 Investment 

The obvious factor is most funding is dollar for dollar. In other words, it is hard-earned cash from the reseller’s pocket. The less obvious investment is patience to allow the activities to work and the time investment in meetings, quoting, selling, etc. Fear and avoidance of these is key to why campaigns never start or if they do, they never get up and deliver.

 3 Education 

Clients mostly buy on being educated on the product or service, especially on how it fits the overall IT solution and strategy. Clearly defining the return on investment for them is a key education piece.

 4 Customisation

Most successful resellers are unique in their geographic location, industry vertical, offerings and approach. So while the skeleton or framework of a campaign will likely be common, the approach and strategy has to be customised to each reseller.

 5 Success measurement 

Is it the number of clicks? Is it the number of leads? Is it the type of opportunities? Often resellers get burnt by focusing on the key success measurement, the bottom line. One particular campaign didn’t generate the numbers I was hoping for. However, a year later the gross profit turned out to be 10x the result. So eyeing the end goal with the right timeframe is essential.