The Ultimate Partner Incentives and MDF Program Policy Checklist

Program Policy Checklist

Last Updated on October 5, 2021

Well-planned partner incentives or Market Development Funds programs are the key to boost your channel sales. Structuring your program policy is a crucial part of planning your partner incentives. Putting the right policies in place will set you on the right course for you, your ecosystem partners, and your business ecosystem. In this blog, we will take you through the ultimate checklist to design your partner incentives or market development funds program policy.

Definition of Partner Incentive Program Policy

A partner incentive or MDF program policy is a list of guidelines for your ecosystem partners that explain their expected standards and behaviors when executing your partner incentive or MDF program. Your partners’ compliance with this policy is considered a precondition for participating in your partner incentive or MDF program.

Partnership means being on the same page – being aligned with each others’ objectives. When it comes to your Market Development Funds and partner incentives program, your program policy is what keeps you and your partners on the same wavelength. This policy is how you’ll communicate your goals, how your partners can help and how they’ll be rewarded. 

Recently we published an article on the 4 Steps To Design Your Partner Incentives and MDF Program — framing your program policy was the second step. In this blog, we’re going to run you through a checklist of 11 factors that you need to consider when building an MDF and partner incentive program policy. So, let’s get started!

1. Qualifying Partners

Make sure your program policy explains the eligibility criteria for your partner incentives and funds. Clearly explaining which partners qualify for which incentives will help your company attract the right partners for your program. Your eligibility criteria can include partners requiring specific partner membership status, certifications, or geographic locations. In addition, having a clear partner criterion will help your teams more rapidly approve or reject fund requests. 

For example, some important questions that you might consider while framing your partners’ qualifying criteria are: 

  • Do you want to offer the same funds for each partner?
  • Do you want to offer different funds for each type of partner? 

2. Partner Segmentation

If you want to know how a partner can drive value, start by looking at their own goals. Sort your partner by their capabilities, industries, and their past sales history. This segmentation will help you put your partners in the right MDF or partner incentive program and the best position to succeed. 

For example, if you have a partner who has a lot of experience selling a subscription-based offering, you might want to put them in the program that offers lifecycle funds. On the other hand, if you have a goal to enter a new vertical, you could put a partner with expertise in that industry into an MDF program.

3. Partner Funds Qualifying Initiatives

Just as your program policy defines qualifying criteria for partners to apply for funding, it should also clearly define the activities that will qualify to be carried out as a part of your partner funds or MDF program. Be clear about the exact way you want your partners to drive value and perform their activities. While you of course want to focus on outcomes, making sure that partners are rewarded for actions and not just the final transaction is key in building trust. You can set milestones for each activity to track your partners’ performances.

Additionally, your policy should explain which activity expenses are eligible for reimbursement (qualifying expenses). For example, you could make course fees eligible for reimbursement for an educational training program, but cancellation fees and end-user training courses ineligible. Your program policy should also explain the method of this compensation. Will it be a deduction from your partner’s gross revenue (contra-revenue) or a monetary payment (in cash or credit)? Ironing out these details will go a long way to avoid confusion when your partners fill in their expense requests.

4. Creative Control

When your partners work on your partner incentive or MDF programs, they represent not just your joint offering but your company and your brand too. So, your program policy should be clear about how your partners portray your offerings and your company. t’s important to have brand guidelines (logo usage, style guides, colors, partner-specific usage, and corporate trademark) 

5. Funding Mechanism

Something you need to clarify right off the bat is how your MDF and partner incentive programs will be funded. Will your company completely fund the program? Or will you fund part and your partner contribute a percentage? Having a clear policy on the funding is important to avoid confusion and allows you and your partner to plan future investments more effectively.

6. Documentation

As part of your MDF and partner fund program, your partner will submit different types of requests, such as when they propose an activity or request a payout. When these proposed activities are completed, they will need to be submitted with documentation for proof of performance. Your program policy should be clear about the exact required documentation for all proof of funded activities. You can also create critical milestones for phased funds release for larger investments. 

For example, some typically required documentation include: 

  • Expected ROI document to measure against actual performance
  • Proof of performance (POP) to assess initiatives’ success rates
  • Return-on-Investment proof of performance (ROI POP) 
  • Third-party invoices, etc.

 7. Contingency Management

Including contingencies in your policy is extremely important. Not only does this preparation help you and your partner align quickly for unexpected events, but it also builds confidence within your ecosystem. Your program policy should cover program exception guidelines with the standard operating procedure (SOP) – explaining the workflow and expected vendor-partner behavior for exceptional events. 

For example, your policy might include cases when :

  • Partner fund requests do not meet qualifying criteria (Refusal guidelines)
  • Partners want to report or escalate a complaint
  • Partners are unable to deliver the projected ROI

 8. Funding Sign Offs

The rules you’d want your team and partners to adhere to while approving fund claim requests are called funding sign-off policies. These policies can differ based on MDF programs, partner levels, geographies, and industries. Your program policy should state the sign-off rules and workflow that your partners can expect. 

A common example of a sign-off policy is that no field representative can approve a partner’s fund claim request if they have a relationship with the partner. Similarly, you can mention rules that are specific to your partner incentives or MDF program.

 9. Payout Mechanism

Your partners are understandably going to be the most interested in how you’ll pay out the partner funds. Ensuring that your partner program policy is clear about this is, therefore, key to ensuring a healthy pipeline of partners in your program.

Payout mechanisms can vary from one incentive program to another. Based on your program type, goals, and partners’ membership status, the process to offer funds can differ. Primarily, there are two payout models: one is accrual-based, and the other is reimbursement-based. In an accrual payout model, your partners receive funds accumulated as a percentage of their sales. While in a reimbursement payout model, funds are planned up-front and assigned to the partners once their request is approved. You can choose to use either of these models or a combination of these two. 

 10. Partner Funds/ MDF Timeline and Cadence

Make sure that each motion in your MDF or partner incentive program has designated cadences to ensure your program is time-bound. This guarantees a practical execution of your program strategy so that you and your partner have a mutual understanding of when to expect certain motions. 

Your program policy should give a clear timeframe for your channel partners to :

  • Raise funds requests
  • Spend money on program activities
  • Submit MDF/incentive claims, etc.

An example of a guideline around cadence is defining a turnaround time on fund requests. Such a policy ensures the timely movement of your program and also creates a better partner experience.

 11. Support

Finally, your program policy should depict your supportiveness to your partners. Additionally, encouraging communication and collaboration is always considered a good practice while managing your partnership programs. So, your policy should include support/service details and resources that your partners can use to clarify their doubts while executing program initiatives. You may also want to include contact details to give partners an added sense of assurance. Ensure your partners feel comfortable contacting you to share their concerns as well as any feedback or learnings.

The Bottom Line

We hope this article has helped you understand what you might include in your own Market Development Funds or partner incentives program policy. Remember that your policy is how you keep your partners on the same page.

Need more help with MDF and Partner funds? Make sure you check out our 35-page guide explaining the what, why, and how around partner funds and MDF – everything you need to know here:

Nitika Rawat
Nitika manages content marketing at Workspan. As a content marketer, she loves ideating, innovating, and creating all sorts of valuable content to help partner leaders grow in their business ecosystems. When not at her work desk, she can be found either enjoying a good non-fiction read or training her two adorable pups. She lives in Pauri, a hill station at the foothills of the Himalayas in India.

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