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016 - The DO's and DON'TS of MDF · Partnerships Unraveled

• 0:07
  Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries of partnerships and channel on a weekly basis.
• 0:15
  My name is Rick van den Bosch, and I'm the CEO and founder at Channext.
• 0:18
  And I'm here together with Alex Withford VP partners at Channext.
• 0:21
  Alex, how are you doing today?
• 0:23
  Yeah, really good, excited to be back.
• 0:25
  We've got a great topic today discussing all things MDF.
• 0:29
  So excited to get your opinion on it and probably argue the points through the podcast.
• 0:34
  Likewise.
• 0:34
  Yeah.
• 0:35
  MDF market development funds, probably one of the most spoken topics about in channel.
• 0:41
  Does it work well?
• 0:42
  Isn't it working well?
• 0:43
  Do we continue with it?
• 0:45
  Are we not continuing with it?
• 0:46
  There are so many different opinions about it.
• 0:49
  So that's why I thought today very interesting.
• 0:51
  Maybe together we dive into that topic a little bit and maybe ask first question, what is MDF exactly and how did it found its origin within the channel?
• 1:01
  Sure.
• 1:01
  So MDF is a budget within the vendor that flows through to distributors and to partners to help generate more business.
• 1:11
  And the idea, operationally speaking, is that there's a pool of money that you know is capped that you write off every month or every quarter or every year to help the partners and the distributors generate more business for you.
• 1:24
  And then there's loads of ways in which you can spend that.
• 1:27
  And some businesses separate MDF based on spend, so you get a portion of the revenue that you spend as a partner, or they might do it as part of tiering.
• 1:35
  So Gold partnerships get more than silver partners or some vendors might segment based on activity.
• 1:41
  So they basically go, everyone sending the activities you want to do, and we'll decide based on what we think will get the most ROI, what to spend it on.
• 1:50
  Yeah.
• 1:50
  And I think eventually, indeed, the initiative is oftentimes with the Parkinson's or the distributors and the vendors have to approve it, right?
• 1:58
  Yeah, exactly.
• 1:59
  So typically there's two flows, either director partner or via Disney, but they will put together a list of like, here's what we want to do for the next quarter, and they try and get that signed off ahead of the quarter so that they can coordinate and execute on those activities.
• 2:17
  And then it's paid on execution.
• 2:18
  So once the activity is actually done, then MDF is approved and the money flows down.
• 2:25
  And then what I often hear in the market is that oftentimes it's a little bit between 0.5% to 2% of the revenue generated by that partner, oftentimes of the last quarter or the last year.
• 2:35
  And it depends a little bit on how aggressive you want to go to market.
• 2:39
  Right, yeah.
• 2:40
  And also there's a maturity model in there.
• 2:42
  So if you're a long standing channel, you've probably got that level of coordination.
• 2:49
  Newer channels are much more likely to say, okay, tell us what you want to do, and we will decide which ones we approve within that plan.
• 3:00
  That typically when you're still growing and you're still not quite sure what your revenue is, or you're going through double or triple digit growth within your channel, that's a way that you're able to be more flexible, and you can flex the budget up and down depending on what the vendors growth looks like at any point.
• 3:17
  So then with those growing channels, then there's not really a thing where they look at the past revenue or something like that, where it's always the same, but much more.
• 3:25
  Who has the best initiatives?
• 3:26
  And based on that, they allocate the budget.
• 3:28
  Yeah, exactly.
• 3:30
  I've been part of those discussions, and what you see a lot is marketing might be told what their h one budget is, and so then they split that over two quarters, but they're not yet sure on what their h two budget looks like.
• 3:43
  And so they're not able to just say, oh, it's 2% of spend, because they can't make that commitment yet.
• 3:49
  And actually it might flex up depending on growth, or flex down or stay neutral.
• 3:53
  So instead, what they'll do is they'll work with distribution, with partner marketing managers, with channel account managers to say, hey guys, go and find out what your marketing initiatives look like.
• 4:04
  Bring those back.
• 4:06
  Bring back the expected ROI that you want to see, bring back the importance factor on each one of those, and then we'll make a decision accordingly, usually based on what the expected ROI looks like.
• 4:19
  Do you have some examples of what usually MDF spend on?
• 4:23
  Yeah, well, some of my favorite channel experiences have been MDF funded, which is they can be done on end user events, partner events, rewards.
• 4:33
  There's ski trips, holidays, all sorts of stuff based on partner activity.
• 4:38
  Or you might have digital marketing, you might have telemarketing, you might have launch days.
• 4:43
  There's all sorts of ways that you can spend that activity.
• 4:46
  Funded heads.
• 4:47
  I've been a funded head that was pulled out of MDF, and so I much more think maybe MDF is a slightly looser description of the operational mechanism that allows us to drive sales from a marketing perspective.
• 5:01
  And so there's lots of ways you can cut that up.
• 5:04
  And some vendors do it very well, some vendors don't do it very well, and the same is true for partners.
• 5:09
  Some partners I know are exceptional at spending MDF, and they really coordinate their activities and drive ROI very effectively.
• 5:16
  And some say, give us £1000 and we'll email our base with a white space analysis of what you send us.
• 5:24
  That's really at the low edge of what you want to see, but it's sort of team and individual dependent.
• 5:30
  If you've got an exceptional marketing leader in your partner, then they're most likely to be delivering real marketing excellence.
• 5:38
  Could you elaborate a little bit more on what the funded head is?
• 5:41
  It's mostly in the enterprise channels where they're very mature already, like why is it used and how does it work exactly?
• 5:47
  Yeah, so a funded head, I'm actually a really big fan of them.
• 5:50
  I think when well executed, they're a phenomenal model for everyone involved.
• 5:55
  What a funded head is, is either the vendor will pay for someone within the distributor or within the partner to exclusively work on that product.
• 6:05
  And so they almost have 1ft in each camp.
• 6:08
  They're a bit vendor and a bit partner, and they're specialized in driving that go to market motion.
• 6:14
  So they might be a product specialist, there might be a sales specialist, and they help drive the closure of that sales.
• 6:20
  But you're effectively buying a resource, it's low risk for the partner because they don't have to hire anyone new.
• 6:28
  Typically there's an internal promotion to it and it's low risk for the vendor because you effectively commit for twelve months and if it doesn't work out okay, you just cancel it so you've not had to hire more resource.
• 6:40
  And so especially when you're landing in new markets or you might be attacking a new vertical, this is a great way for both parties to sort of try it without committing to it.
• 6:52
  Yeah, I agree there, because I think we've been talking a lot about how hard it is to get the attention of partners.
• 6:57
  And with such a thing, by giving budget for a funded hat, you know that there will be someone within that organization of your partner that is fully dedicated to your product and to your proposition, and you can cooperate very closely to also build more relationships into that partner.
• 7:12
  So I agree, if your channel is already a bit more mature, it's a very interesting model to get it going.
• 7:18
  Yeah.
• 7:19
  And typically you would align a sales target.
• 7:21
  What I've seen a lot is about a six to one ratio.
• 7:23
  So if the funded head costs $100,000, the expectation is that funded head drives$600,000 worth of growth over and above the projected growth.
• 7:33
  And I say over and above because you've got to stress setting up the funded head is critical.
• 7:38
  What you want to make sure is they're not now just facilitating pipeline that was going to happen anyway.
• 7:44
  It's additive.
• 7:45
  And I think the way all of this MDF discussion has put in inverted quotes, well executed, because MDF is either a fantastic tool or a complete waste of time.
• 7:57
  Because MDF is just the device.
• 7:59
  How you execute on it is whether the success was worth it or not.
• 8:05
  I think if you look at the channel, they've always had a little bit of a love hate relationships with MDF.
• 8:12
  And I think where do you think that's coming from?
• 8:14
  Well, the love I think is certainly coming from I know lots of people's best experiences have been MDF, so I've distribution, ski trips and partner, I be the holiday and all sorts of reward elements.
• 8:28
  So that's great.
• 8:29
  And it was great for building that relationship factor.
• 8:33
  And as we know, the channel is typically driven on relationships.
• 8:38
  As long as your go to market and product are pretty close, partners are going to sell based on relationship.
• 8:44
  At that point.
• 8:45
  However, where I think there is a love hate relationship is where the misalignment comes in.
• 8:51
  And I think one of the key things that's so important when you set up an MDF program is how are we going to track ROI?
• 8:58
  Because if you don't track ROI effectively, you don't know who's spending your money wisely and who's wasting your money.
• 9:04
  And that's a two way flow.
• 9:06
  So a partner might think, Well, I've done a brilliant job and you've cut my MDF.
• 9:10
  And the vendor might think, well, you've done a terrible job because I can't see what's happened.
• 9:15
  And so what's really critical is that we're all very aligned.
• 9:19
  What the activity is, what the ROI is expected to be, and what the ROI was, and how did we prove that.
• 9:26
  And if you've got those four things, MDF is pretty well executed, but it's zero, three and four.
• 9:31
  What was the ROI and how did you track it?
• 9:34
  That is where that love hate relationship starts to come into play.
• 9:37
  Yeah, and I think that's where it oftentimes also heads towards that hate relationship, where because it's so difficult, actually, if you really simplify MDF, it's to generate demand that leads to revenue eventually, no matter what type of activity it is.
• 9:52
  But what you see there is that it really became a thing within the channel to make margin on it for the partners as well.
• 9:59
  So, all of a sudden, I recall my father always saying it where he said, for every dollar you put into MDF into the channel, only $0.20 end up at the end user.
• 10:09
  Well, the only goal is to create end user demand generation.
• 10:13
  And that's where it gets a bit tricky.
• 10:14
  Like, how do you balance that part as well?
• 10:16
  Like, how do you make sure that you can actually measure what is being done with the dollars that you invest into it?
• 10:22
  But then also, indeed, what is the ROI of it?
• 10:24
  And those two things, because they are oftentimes going into the wrong direction.
• 10:29
  It's a very hard thing to get right in the channel.
• 10:32
  Yeah, it's an age old battle in marketing, right?
• 10:35
  Is marketing responsible for MQLs or is marketing responsible for revenue?
• 10:39
  And I think that the same is doubly true, actually, as part of MDF.
• 10:43
  It's not responsible for just events or engagement or how do we tie that very, very accurately to revenue?
• 10:52
  And the partners who are focused on delivering revenue would be the partners that I back.
• 10:58
  Because personally, and I've seen it time and time again, it's one of my biggest bug bears.
• 11:02
  They go, oh, yeah, we'll send out an email campaign.
• 11:05
  We'll charge you 1500 for that.
• 11:06
  And it's like you're sending emails.
• 11:09
  There's no effort.
• 11:10
  What you were in fact doing is just paying for your internal marketing team.
• 11:14
  That's not a wise investment.
• 11:17
  And instead what we should be doing is focusing on activities which we know are going to drive revenue.
• 11:23
  However, the partner is not blameless because here's my theory on how this has happened, is if you're not able to calculate ROI, then here's what I would do if I was a very cynical partner.
• 11:36
  First, I'd try and deliver a load of ROI, I'd put in lots of effort and I'd get the money.
• 11:41
  And then the next quarter I'd try a little bit less hard and I'd still get the money.
• 11:46
  Four quarters later.
• 11:46
  I would be putting in minimal effort because I know the money is coming in anyway.
• 11:50
  And if you're not backing the horse that generates ROI, then you're just in some way encouraging the partners to do the least effort.
• 11:58
  At the end of the day, we all want to do the least effort to get the maximum return.
• 12:02
  And if I know I'm getting the MDF one way or another, I'm just going to come up with crap plans to get the MDF that I don't have to put any effort into.
• 12:09
  Whereas instead, what you can do is drive an MDF culture which is put plans together that are really accurate, really precise, not pay out if they're failed on.
• 12:20
  And guess what you do?
• 12:21
  You ensure that you work with partners that are really proactive on driving revenue performance.
• 12:28
  And once you get those partners aligned to your MDF strategy, you raise the bar and suddenly people are like, well, if we want this MDF, we have to work hard for it.
• 12:37
  And if we work hard for it, we get returns, which ultimately helps the revenue number.
• 12:41
  And at the end of the day, it just comes down to revenue attribution within the partner and the vendor.
• 12:45
  If the marketing team and the partner can prove this, this and this lead converted and it all came from marketing.
• 12:51
  And if the same is true at the vendor, both marketing teams are rewarded.
• 12:55
  They both get bigger budgets, they both get pats on the backs, they both get promotions.
• 12:59
  That's what everyone wants to know, that they are contributing.
• 13:02
  Yeah.
• 13:02
  And I think if you look at the MDF spend, I think in a lot of, like the physical things, so to say.
• 13:07
  So events or maybe merch and stuff like that.
• 13:10
  They are so crucial that you have very good blend with it.
• 13:13
  Because where it oftentimes goes wrong is when it's, for example, just a generic customer event they have and then they like looking for sponsors.
• 13:20
  They put your logo somewhere.
• 13:21
  But what's the actual content behind it?
• 13:23
  The actual plan towards the end users that will be there?
• 13:27
  So if you do events with your partners, you can better choose to do less of them, but then with a very strong plan with it.
• 13:33
  So you make sure that there's a right plan, the right agenda for the day, that you know, what type of end users are coming to the event, how are we going to engage them, et cetera.
• 13:43
  And then you go into a wildly different zone than how it's now oftentimes executed, where the event is hosted.
• 13:49
  And then afterwards, it's very hard to say, hey, what did it actually contribute to?
• 13:53
  Yeah, and I think the important thing here, some partnerships are not going to have the resource, not going to have the time, not going to have the desire to really put in that level of effort.
• 14:04
  And that's absolutely fine.
• 14:04
  But then don't work with those partners from an MDF perspective or not put them high on your priority list.
• 14:10
  Other partners see marketing as a revenue generation mechanism, which is what it should be.
• 14:16
  Right.
• 14:16
  That is the game is create opportunities that ultimately convert and drive revenue performance.
• 14:23
  Those are the ones that you want to then have a much more strategic conversation, which is not to say, hey, you can stick our you can stick your logo on our golf day, and we're just going to take everyone out for golf and dinner and potentially you can talk to them.
• 14:38
  Maybe.
• 14:38
  But I have seen events be incredibly well executed, like sea level executives come to six of them come to a dinner.
• 14:47
  It's a very expensive night.
• 14:49
  However, you've got six sea level executives, key end users around the table, and you can present them properly.
• 14:57
  Well, yeah, that's a really good way to spend, but what you've just said is critical.
• 15:01
  It's not about quantity, it's about quality.
• 15:04
  I would rather spend 20% of my budget getting six key stakeholders at Enterprise Endusers and get 2 hours with them to present, and then we go out for a really great dinner.
• 15:14
  That's much more interesting than, let's just have a big golf day where 200 gen users comes.
• 15:20
  But I don't really get much contact time.
• 15:23
  Maybe I get a ten minute presentation, but guess what?
• 15:26
  There's 20 other presentations.
• 15:27
  So everyone's bored, probably a little bit drunk, not really interested, and that's not productive.
• 15:33
  So I would be far, far more precise with my expectations to the partner and my selection of who I want to work with at the partner.
• 15:41
  Because some partners are amazing.
• 15:44
  They see marketing as the backbone of how they're going to drive engagement at the end user level.
• 15:49
  Find those partners and ask them, how can we work more closely together?
• 15:54
  Let's build a marketing strategy.
• 15:54
  Yeah, that's correct.
• 15:57
  I think you really want to do, like a selection.
• 15:59
  You want to look, you can test it with multiple partners, but how are they actually executing it?
• 16:03
  And then also just don't be shy to make decisions where it's poor execution two quarters in a row.
• 16:09
  We don't do it anymore because then you can better spend it somewhere else.
• 16:13
  And if I would, like, have to put two buckets there with like love and hate.
• 16:17
  I would say that well executed events, funded hats, the right incentives and stuff like that, that, that works really well in terms of MDF.
• 16:25
  But where I see a lot of the hate or where it's very difficult is within the digital marketing.
• 16:30
  And I think that's been a shift of the last ten years.
• 16:32
  Of course, that more and more of MDF is actually transferring to that digital marketing.
• 16:38
  But if you think of it conceptually, it's such a wildly bizarre way of spending it because let's say you have 1000 partnerships and you're going to do a new product launch.
• 16:48
  If all 1000 partners would get MDF, they would say, okay, then I build a landing page for you and I'll do an email to my database, et cetera.
• 16:55
  So you're going to spend 1000 times for every partner to create that landing page themselves.
• 17:02
  To create that email themselves.
• 17:03
  It cost a lot of time from all the channel and the partner marketing managers because it has to be checked, it has to be approved, et cetera.
• 17:10
  Well, if you would centralize such a thing and actually bring it from a centralized place that everybody gets the right templates, et cetera, that they can easily customize towards their end users and you bring that together, I think that will be a much more efficient way than what we're doing it right now.
• 17:26
  Because let's say with those 1000 partnerships that everyone would get €2000 for it, then you already have a massive amount of MDF spent just on content creation and then you haven't reached an end user yet.
• 17:39
  Yeah, you're, you're paying for people to do the design of the activity and then the execution of the activity.
• 17:47
  And actually there's a much better leverage model than that, which is build the design first and then just pay people on execution.
• 17:54
  And I think that's where you want that scaling vector of the channel, I think digital marketing my theory, but please chuck me at DM if you think I'm wildly wrong.
• 18:05
  My theory on why digital marketing is becoming the predominant spend of MDF is because it's low effort, right?
• 18:12
  Partners go, yeah, we'll create an email campaign and blah, blah.
• 18:15
  Well, that's almost cost them no effort and then they get the MDF, right?
• 18:20
  So instead what you want to do is pivot away from that.
• 18:23
  Digital marketing is absolutely something you should be doing with partners.
• 18:27
  But rather than, in your example, going to all 1000 partners and going, hey, can we do this instead?
• 18:33
  Go, right, who actually has a good digital marketing campaign?
• 18:37
  How are we going to do this together?
• 18:39
  What can I do on your behalf that therefore you're not going to charge me for?
• 18:43
  And then how can we run paid advertising or social campaigns, whatever the funneling mechanism you want to deliver?
• 18:51
  Is that's what you're then paying them for, not to create a landing page?
• 18:56
  That's insane.
• 18:57
  Yeah, 100%.
• 18:59
  I think what you really want to go towards is that you don't really pay your partners for content creation anymore.
• 19:05
  Because if you centralize that and enable your partners with the right content, you'll make that way easier for them and then you can actually shift those budgets to paid advertising.
• 19:15
  And that's where it becomes really interesting because what do all partners want?
• 19:18
  And you as a vendor yourself as well, net new business and through emailing to the current end user base or through landing page on the website, usually you are mostly activating the existing end user base of such partner.
• 19:32
  And if you shift it towards paid advertising, you can completely target specific account based marketing where you focus on specific accounts on a vertical that you're going after with a partner.
• 19:43
  And there it becomes really interesting because everything is measurable.
• 19:46
  You can attribute it from the first touch until revenue and you actually know that it's being spent on the right thing, that you actually expand that end user base.
• 19:56
  So that's where I really think from an MDF perspective, you really get to the right level there.
• 20:01
  Yeah.
• 20:02
  And the key bit for me, right, I'm always looking for that competitive edge.
• 20:06
  What I would be doing if I'm a marketing leader is understanding, right, how much today am I contributing to revenue?
• 20:14
  Right?
• 20:14
  Okay, let's say it's 5%.
• 20:16
  Pick a random number and go, right, my job is to get that to 10% this year.
• 20:20
  How do I do that?
• 20:21
  Well, I might need more budget.
• 20:23
  I'm not going to just get more budget.
• 20:25
  I need to prove that the budget I'm using is having an increased effect.
• 20:31
  And the way you do that is you get better ROI per dollar.
• 20:34
  So pivot your mentality from macro activities to micro impact and instead you do things like B to C marketing, but driven through B to B channels.
• 20:46
  Increase the leverage, do paid advertising, but stop paying people for content creation because guess what?
• 20:51
  They're not as good at content creation as you are.
• 20:55
  You have the brand, you live and breathe the sales messaging.
• 20:58
  And by the way, you're probably doing Direct to end user marketing already.
• 21:01
  So you have the insights of what's working.
• 21:04
  So you create the content, distribute it ideally automatically through to your partners so that they can leverage that content far more dynamically and increase revenue.
• 21:15
  Find the partners who really see marketing as the value creation tool to generate real revenue impact, not to pay for their marketing managers.
• 21:27
  I think if you look at it from that perspective at the beginning of such MDF, sorry, I don't know where I was going with that one break.
• 21:35
  I know what I was going to say with the oh yeah, centralization.
• 21:43
  I think if you look at it from a marketing perspective with that MDF, I think within the digital marketing we should really aim within the channel for centralization.
• 21:52
  Because just as with content where we just spoke about, where everything is completely done by the partners themselves and then you have to pay for every partner to reinvent the wheel.
• 22:02
  The same thing goes for paid advertising as well.
• 22:05
  Let's say you're doing a paid advertising with ten partners and every partner would get five K in budget for their MDF.
• 22:13
  If they would all do it on their own, with their own agency, then everyone is going to pay the learning money that you pay when you launch a new campaign because you have to test, you have to experiment, et cetera.
• 22:24
  Well, if you combine those budget, you all of a sudden have a 50K budget in total.
• 22:29
  The first five K is being used to experiment, to learn and the other 45k you get the highest reward for every dollar you spend.
• 22:37
  And that's really the crucial thing.
• 22:38
  If you in the digital marketing centralize more and more you make that super scalable so you can decentralize in the offline world.
• 22:46
  So with events and with Thundered heads, et cetera, so you can go very specific there and there you can put in all the effort and time because you are centralizing and automating a lot of the stuff in the digital marketing.
• 22:58
  And I think if you look at MDF from that perspective, that's when you really get to the best of both worlds.
• 23:04
  Yeah, and the other bit, especially if I'm trying to drive marketing impact, really I'm trying to show that hey, my team and my budget and everything is delivering more and more value.
• 23:15
  Stop single betting every partner and instead double and triple down.
• 23:19
  Right, so you touched on that at that point.
• 23:21
  Exactly.
• 23:21
  So if I hire an MD, if I hire a funded head and put him in a partner well, I should also spend within that partner to do a launch event, to run continuous face to face campaigns, to drive engagement.
• 23:34
  And then I should run a digital campaign over the top.
• 23:37
  Because rather than spreading all my spend out, what I actually want to do is create huge engagement within a few partnerships that are going to deliver maximum value.
• 23:48
  And I think that's where we need to focus much more as channels are really working out.
• 23:54
  Does this partner have the capability to deliver what I need?
• 23:58
  Does this partner have the focus to deliver what I need?
• 24:01
  And does this partner actually have the desire to figure out what I need?
• 24:04
  If they don't have yes, yes and yes.
• 24:06
  Do not spend your money.
• 24:07
  That is a waste of time.
• 24:10
  And I think you need also what you touched upon tying together all the marketing activities.
• 24:14
  That's where you will create true success with your comarketing with a partner.
• 24:17
  Because you can leverage your online channels to get people to the event and the other way around again, like to start following to get them into the email database and then you really start building traction with a partner together and that's where the magic happens.
• 24:29
  Yeah, but the irony is, and I completely understand how it's happened, is because MDF has grown organically and we're dealing with a bit of a legacy structure that I think is going through a revolution.
• 24:41
  I see some vendors doing it exceptionally well where they're redesigning the entire MDF format and I think they're getting outsized advantage against their competitors.
• 24:52
  But we know this from a marketing perspective, you don't just spend on brand awareness, you don't just spend on end user targeting.
• 24:59
  Like you have to build a macro marketing strategy that hits top of funnel, middle of funnel and bottom of funnel.
• 25:06
  You have to do that effectively.
• 25:07
  And it's crazy that you're just then going to let the partners decide from their own learnings when by the way, they're doing marketing activities for your direct competitors and for lots of different vendors.
• 25:18
  They don't have the level of detail that you have because you're just focused on you.
• 25:24
  Instead, provide the information to the partner, provide the collateral to the partner, provide the strategy to the partner and if the partner doesn't want to work with you in those confines, that's absolutely fine.
• 25:34
  There will be plenty that will but build the holistic strategy that you know is going to drive the outsized impact and ultimately if your competitor isn't delivering that same level of strategy, that's where you will win.
• 25:47
  Yeah, and I think also offering personalization in there because if you centralize everything and you enable your partners in such a way, some will say, yeah, but I want to give it my own tone of voice.
• 25:56
  I want to give it my own look and feel because it's my end user base.
• 25:59
  And they say that's perfectly fine, here are all the assets.
• 26:02
  You can customize them easily and push them through your end user base.
• 26:06
  But the funny thing is what we see that from all the partners we are working with, less than 5% is actually configuring them and editing them.
• 26:15
  So actually what the partners want is ease of use together with control over their own marketing and then you get into the best situation there.
• 26:24
  The irony is I think you've positioned correctly into partners.
• 26:27
  You go, no, that's great.
• 26:28
  You want to add your own tone of voice, your own unique spin.
• 26:31
  Absolutely.
• 26:31
  We'll do that around your services.
• 26:34
  Don't do that around our brand.
• 26:35
  We know how to sell our brand effectively.
• 26:37
  We've done the due diligence.
• 26:39
  Here's all the data that backs it up.
• 26:40
  Here's how we know that this messaging is most likely to work.
• 26:44
  But then your new unique voice is what you add around that.
• 26:48
  So allow the marketeers of the partner to market what they market best, which is the partner.
• 26:53
  Right.
• 26:53
  So they can do their services, they can do their management contracts, they can do their installation, they can do their support, whatever it is that is their unique value.
• 27:02
  Around the brand that they're selling.
• 27:04
  That's what they should be marketing, and actually that's what they're best positioned to market.
• 27:08
  And I think that's where if you're having a better coordination of marketing strategy, that's when you can have a conversation with a partner to say you don't actually want to customize it, you want to customize your message, which is great, tie the two together.
• 27:21
  That's why it's a partnerships unraveled.
• 27:23
  And I think therefore, the partnerships indeed, when they can tie it together, that's the only thing they want as well because they want to position the product, they want to position the solution, but then on top of it, their services then they think now it's the joint value proposition that they're positioning online, which.
• 27:38
  Is the whole point of the partner.
• 27:38
  Right.
• 27:40
  If we're being really honest, if the vendor has all the value and the partner just has the relationship, well, they probably don't need marketing that much.
• 27:49
  But the reason partners are so valuable is because it's almost never that way.
• 27:53
  The partner is providing a load of value add, which, by the way, they're probably charging for, as they should.
• 28:00
  And it's crazy that we're not marketing around that.
• 28:02
  And that's where that joint proposition or multi vendor bundling is so critical, is that, yeah, the partner might be going, well, it's great that you've created this content, and actually I want to build it into a campaign that targets the meeting room or targets security or whatever it is.
• 28:18
  And so that we can build this campaign that leverages all of that together.
• 28:22
  That's where the marketing sort of powerhouse from the partner perspective needs to come into place.
• 28:27
  They can define that strategy of how to glue it together, not waste time building content that isn't going to be as good or shouldn't be as good as the vendor content, because that's the vendor's day job.
• 28:38
  Yeah, I fully agreed.
• 28:40
  Era I think if we look at what we just discussed so you've got a plan with your partners.
• 28:46
  It's like a Holistic approach with two marketing events, digital marketing.
• 28:50
  Then the final thing is, of course, how are we going to tie all this together and tie that to revenue growth.
• 28:56
  What do you think from an MDF perspective?
• 28:58
  Where should we focus on?
• 28:58
  Sure.
• 29:00
  So if I was running channel marketing for an enterprise vendor, my absolute top priority in 2023 would be to build better revenue attribution tools.
• 29:13
  Either build them internally, go out and buy them.
• 29:15
  Because there's two key reasons why.
• 29:18
  If you are just spending MDF and you're not aware of how the budget is being used and what the exact ROI is off the back of it, two things are guaranteed.
• 29:28
  Your budget is not going up, especially in a recession, and you can't back the right horse.
• 29:33
  You don't know which partner is well executing, or they just know how to submit a good MDF, or a partner that's badly executing and so what you need to be able to do is very effectively differentiate between those two, so you can start to bet on the partners that are going to give you the outsized return.
• 29:51
  In turn, what will happen is you're able to go and speak to your senior leadership team, say, look what a great job the revenue Attribution model is doing.
• 29:59
  Look what great job our partners are doing.
• 30:01
  Look how the revenue is going up and your budget will grow.
• 30:05
  It becomes a mathematical conversation.
• 30:08
  Well, should we hire more salespeople?
• 30:10
  Well, the salespeople give us this ratio of return or we put more money into MDF and we get this ratio of return.
• 30:18
  If you can make it a mathematical conversation and you're winning, then you're going to win over the long term.
• 30:24
  And that's what CFOs want to see in this market.
• 30:26
  Right?
• 30:26
  Let's be really clear.
• 30:27
  Budgets are being squeezed globally, but if you're able to mathematically prove through better revenue Attribution tools that you're the way to bet in this market, you will win.
• 30:40
  I think eventually it's all about Attribution there because that's what proves the pudding, like whatever activity you do.
• 30:46
  So you need to think about how can we attribute things to specific partners?
• 30:49
  And there it comes towards partner engagement, but also in terms of end user impact that they are making.
• 30:54
  So with all the campaigns, all the activities you are launching to really see which partners are most active, which partners are reaching the most end users, converting the most end user engagement, but also really your full end user journey.
• 31:08
  What you really want to get to is the point where, you know, once a contact is coming in, through which partner, through which campaign, which social post or advertisement, et cetera, and you have them very early on and then all the way until the dual registration of your partner so you can get insights into the full journey there of the end user.
• 31:27
  And there you can really start attributing, because you know when attribution is right, where the end user came in, through which event true, which advertisement, through which social, and that will make your life so much easier as a partner marketer at the end of the quarter, at the end of the year, because you have proof of the activities that were added.
• 31:46
  Here what it actually resulted in the end in terms of revenue.
• 31:51
  Yeah, exactly.
• 31:52
  I think partner marketing has a very difficult job without data, right?
• 31:57
  It becomes impossible.
• 31:58
  It's your best guess.
• 32:00
  And how do you run best guesses across language, across territory, across region?
• 32:04
  It becomes impossible.
• 32:06
  And so what you need is much, much better data.
• 32:09
  And once you have that data, the game becomes all about test and iterate and improve.
• 32:14
  And that's what you want to do.
• 32:14
  That's the fun bit.
• 32:16
  If you're a partner marketing, you get to go, okay, well, this was my baseline.
• 32:20
  Now we're going to try this okay, that didn't work, but we're also trying this.
• 32:23
  Oh, that works great.
• 32:24
  And over time, you sharpen the tools, you get very, very good.
• 32:28
  Marketing is a development process where quarter one, okay, we didn't know much.
• 32:33
  Quarter two, we knew a bit more by the time you were in quarter 4567.
• 32:38
  Suddenly you're like, oh, we have a really, really compelling marketing growth strategy, and that is going to provide the outsized return against your competition.
• 32:46
  I think it's so important that channels understand that you are in a consistent competition and those leaps ahead of them, that's what's going to allow you to capture their market share, and then you.
• 33:00
  Get into continuous learning and continuous optimization, and that's really where you want to go with your MDF, I think.
• 33:05
  Final comment for me in terms of that data is also, like, how important it is to have real time data.
• 33:11
  If there's one thing that's hard with MDF as well, that oftentimes the plans are submitted at the start of the quarter and the reporting is done at the end of the quarter.
• 33:21
  In fact, it's actually sometimes worse than that.
• 33:23
  The plan is submitting for the upcoming quarter.
• 33:26
  The new plan is submitted for the following quarter before the results of this quarter were worked out.
• 33:31
  So you might be running in a six month lag going, oh, we've now double bet on this activity, and actually, we've got nothing to prove for it.
• 33:40
  Yeah, I agree there.
• 33:40
  And I think especially where you want to go is that, you know, it way earlier already, because if you only get your reporting at the end of the quarter, maybe the budget was spent very poorly.
• 33:49
  And let's say a partner gets a significant MDF budget, you want to know way earlier if you do a paid advertising campaign together, you want to know where it's heading once you've spent €1000 and not once you've spent €10,000, because then it's too late.
• 34:03
  And that's the crucial part of getting to real time data, connecting with your partners, with their social media channels, with their paid advertising channel.
• 34:10
  So you have everything in a single place.
• 34:13
  That's where it gets so crucial, because then, you know on a daily basis, and you can help the partner way better because you can actually say after a week, hey, I see that it's not going in the direction we both want.
• 34:23
  Let's sit down together, create a new plan, new hooks, et cetera, and then you will get much more ROI out of your MDF.
• 34:31
  Yeah, the whole idea, right?
• 34:33
  It's my favorite thing, right?
• 34:34
  Fail fast, fail cheap.
• 34:35
  What you want to do is go and try ten different things all at once that you can perfectly prove ROI and do it very, very cheaply.
• 34:42
  Just get those leading indicators, then take out the five worst, performing slightly bigger bets on the five remaining, and you'll suddenly work, oh, these two are clearly way above everything else.
• 34:54
  Don't forget Pareto's principle, the 80 20.
• 34:57
  We know that 80% of those marketing activities or 20% of those marketing activities will lead to 80% of the impact.
• 35:04
  So you just need to find where that 20% is.
• 35:07
  What are those two activities that are giving you all the outsized return and once you've proved it, you just want to double, triple and quadruple down on those bets.
• 35:16
  And so that's the way you need to think about your marketing strategy through the channel is how do we track that far more effectively?
• 35:23
  Because if every all your competition is evenly betting across those ten initiatives and you've gone well sod the other eight wick going all in on these two, you are going to drive the incredible outsized returns and ultimately take large parts.
• 35:37
  In the market and then really get most of that budget of that 80% that's going to 20% to 20% of activities.
• 35:45
  And I think then you are in a winning mode which are NDF and your channel.
• 35:48
  Yeah, and the math is quite simple, that's a ten X return, right?
• 35:51
  So that's what you want to see is how do I ten X ROI?
• 35:55
  Well, that sounds like a really big statement, sounds like the start of a LinkedIn post.
• 35:58
  But really that is the response which is how do we take away 80% of the budget and redefine it into the 20% that's giving us the outsized return.
• 36:06
  And if your competitors are not doing that effectively, your partners are going to work far more closely with you because you're delivering significant inbound demand.
• 36:15
  And as we know, partnerships almost never switch sell.
• 36:19
  If they ask for a brand, they typically get a brand.
• 36:23
  And so it's your job as marketing to deliver as much inbound demand as possible.
• 36:28
  Makes sales life easier.
• 36:29
  And the best thing, if you've got real ROI attribution you're able to mathematically prove that it was you that made that change happen.
• 36:39
  And that's how you shift from channel push to end user pool.
• 36:42
  And that's the dream for every partner, marketer and channel person there.
• 36:47
  I think that was it for today.
• 36:49
  So I think shortly to summarize, for our listeners who want to start with MDF or are already working with MDF, we've spoken today about where MDF found its origin, but also a little bit of that love hate relationship within the channel with MDF.
• 37:03
  We spoke a lot about how to best utilize MDF for digital marketing and then bringing it to paid advertising as well.
• 37:10
  And of course, crucial, how do you tie your MDF to revenue because that's where you prove what your activities actually delivered and how you can get more and more budget for both you and your partnerships.
• 37:22
  I really hope you enjoyed listening today.
• 37:25
  We enjoyed this conversation a lot.
• 37:27
  If you enjoyed it, please share it with your colleague or with your friends.
• 37:32
  Wait, I was just thinking I'm going to record a separate outro or do I still do that.
• 37:40
  I would just do both and then.
• 37:40
  You just to be sure.
• 37:42
  Just to be sure.
• 37:44
  Then I'll only do the last.
• 37:47
  Thank you for listening today.
• 37:49
  I hope you enjoyed this podcast.
• 37:51
  If you did, please let us know via the fucking hell.
• 38:02
  Do I need to add this one?
• 38:04
  No, I just summarized, so I would.
• 38:06
  Just say thanks for listening.
• 38:09
  Thanks for listening today.
• 38:11
  I hope you enjoyed the podcast.
• 38:12
  If you liked it, please share it with a colleague or a peer or send Alex or me a DM on LinkedIn.
• 38:18
  We're very active there and always happy to chat about channel.
• 38:21
  Hope to see you next week.