4 Steps to Design Your Market Development Funds Program
Now that you know the considerations to keep in mind before designing your partner funds program, you are all set to create one. Building a successful program is a 4-step process – each complementing the others. These steps are:
1. Structuring Program Strategy
2. Framing Program Policy
3. Picking the Right Management Platform
4. Program Implementation
Figure 4: Steps to Design Your Market Development Funds Program – Building a successful program is a 4-step process, starting with MDF Program Strategy, MDF Program Policy, MDF Management Platform to MDF Program Implementation.
Step 1: Structuring Program Strategy
The first step to designing your MDF program is to decide on the right strategy. The strategy you choose will directly impact you, your ecosystem partners, and your business ecosystem. Recent market trends have had a dramatic impact on the way companies partner today. The old ways of partner reselling have given way to companies working together to co-build and co-sell solutions. With that in mind, you need to consider what kind of partner fund investments will have the highest return for each of your partnership models. Accordingly, you will need to decide the portion of your total budget allocated to programs optimized for reselling versus programs for co-building and co-selling with your partners.
For example, you can have multiple partner fund strategies depending on different partners, their geographies, and what value they bring to the table. MDF strategies that work for one partner’s business model may not work for another.
Step 2: Framing Program Policy
Once you’ve structured your program strategy, the next step is to build your MDF policy. The policy offers guidelines for your partners, explaining their expected standards and behaviors when they execute the program. Your partners’ compliance with the policy should be considered a precondition for participating in your MDF Program.
Step 3: Picking the Right Management Platform
The final step of creating a solid partner funds program involves selecting a platform to operate and manage your program. An automated tool to manage these programs helps you and your partners connect seamlessly and have transparent visibility on the expectations, progress status, real-time metrics, and deeper ROI data.
Program owners, participants, and stakeholders can use these tools to interact on a single interface for funds and claims management, with clear visibility of funds availability and requests/claims statuses. Hence, choosing the right platform to drive your partner funds program is a crucial move for promoting an enhanced partner mind-share and greater participation. Tools like WorkSpan can help you dramatically boost efficiency and return on your partner incentive funds spending.
Step 4: Program Implementation
After designing your program strategy and policy and choosing your platform, the final step is to plan your program implementation. Your implementation process should reflect the strategy and policy you’ve developed by now. This process can be divided into six phases:
1. Accept Partner Funds / MDF Program Applications
2. Approve/Reject Applications
3. Launch Partner Funds / MDF Program Initiatives
4. Measure Program Outcomes
5. Accept Claim Requests
6. Pay Out Claimed FundsTo learn more, here is a blog we recommend: 4 Steps To Design Your Partner Incentives and MDF Program
Figure 5: Market Development Funds Program Implementation – This is a seven step process from accepting applications, reviewing applications, launching programs, measuring outcomes, accepting claim requests to finally paying out the claimed finds.
Step 1: Accepting Partner Funds / MDF Program Requests
Once you have your program strategy, policies, and process ready, you’re ready to start communicating the program offering to your partners. Based on the technology you use, you can accept program applications in three ways:
2. Application Forms
3. Request through a platform
Collect the following details from your channel partners who are requesting partner funding:
- Initiatives to be funded (Webinars, events, email campaigns, sales promotions, POCs, etc.)
- Expected results from activities (Number of qualified leads, trial downloads, closed revenue, etc.)
Required details to be eligible for the program (Specific Range of Revenue, certification, etc.)
Step 2: Approving Requests
Once you receive fund requests from your partners, review them and respond. You can accept or reject their requests based on your qualifying criteria and partner profiles. Your team should react to partner applications within a stipulated turnaround time, abiding by your program policy. After your partners’ applications get approved, they are all set to officially launch their funded sales and marketing activities.
Step 3: Launching Funded Program Activities
In this step, your preparation comes into execution as your ecosystem partners launch several funded activities as a part of your program. Ensure that these activities are aligned with your program policy and goals. Further, they should also be measurable to evaluate your partners’ performance and your programs’ success rate. To effectively implement your funded activities, you can support your partners with sales and marketing resources, training, and more.
Step 4: Measuring Funded Program Activity Outcomes
Keep track of your partner’s funded activities to measure your program’s performance. Leveraging this data will enable you to prioritize your partners, allowing you to make better decisions for your company’s future. Your program’s success can depend on performance metrics like the number of potential customers acquired, qualified leads, joint opportunities created, customer PoCs completed, etc. Instead of analyzing your program’s performance right after the project is completed, you can set intermediate milestones for measuring results to make your program more targeted, yielding increased ROI.
Step 5: Accepting Claim Requests
Your channel partners can propose one or more claims against their approved program requests by creating a claim request of total or partial reimbursement. Depending on the agreement, partners may also need to submit proof of performance (POP) and/or proof of execution (POE). Some vendors mandatorily collect a return on investment proof of performance (ROI POP) when the partners make a claim.
Step 6: Approving Claim Requests
After accepting the claim requests, the next step is to evaluate them for their qualification to process funds payout. This approval process needs to be clearly defined and could include multiple levels of approval, depending on the reimbursement amount. Approvers should include members who understand the claims process (including SOP, guidelines, acceptable POE/POP/ ROI POP submissions for any MDF program activities). Based on the evaluation, timely communicate the approval or rejection of fund claim requests to your ecosystem partners.
Step 7: Paying Out Claimed Funds
There are two modes to payout funds to your channel partners: cash and credit. The selection of either is typically dependent on your industry and/or ecosystem practices. After the payout, ensure that you communicate the payment release to your partners, mentioning the claim ID, amount, and reference ID.
11 Considerations to Frame Program Policy
Consideration #1: Qualifying Partners
Based on your program goals, you can offer the funds to all your partners or a selected few. Your program policy should clearly explain the standards (eligibility criteria) for your partners to qualify for the offered funds. Based on the eligibility criteria, you can offer your funds to partners having the potential to drive your program goals. For example, you can define specific partner membership status, required certifications, or a geographic location as a qualifying criterion. Later while approving partner fund requests, you can accept or reject them based on the qualification criteria defined in your MDF program policy.
Consideration #2: Partner Segmentation
If you want to make your Partner funds / MDF program a success, your partners’ goals need to be aligned with your program goals. To ensure this, categorize your partners based on specific standards like their sales region, past sales performances, projected channel sales, type of partnering activity (services, software, cloud, etc). This categorization will help you define the right partner segment to drive your program better. For example, suppose you want to penetrate into a new geography. Then, you should offer incentives to those partners who have a firm foothold in that area rather than those who are outsiders.
Consideration #3: Partner Funds Qualifying Initiatives
Your funding policy should clearly define the activities that would qualify to be carried out as a part of your partner funds program. Additionally, specify how the activity expenses would be reimbursed – as a deduction from your partners’ gross revenue (contra-revenue) or monetary payment (in cash or credit). Many times, partners claim compensation for initiatives that vendors consider non-eligible for expense requests. So, to avoid any confusion, define the program expenses that are eligible for claim requests (qualifying expenses) and that are not (non-qualifying expenses). For example, for an educational training program, course and exam fees of your partners’ employees may be qualifying expenses. While cancellation fees and end-user training courses could be non-qualifying expenses.
Consideration #4: Creative Control
Allowing your channel partners the freedom to represent your brand without strict guidelines is risky for your brand reputation. But, being too controlling might hinder their performance and impact your partnerships negatively. Look for a middle ground – set clear boundaries between you and your partners. Your policy should define branding specifications with essential details like logo usage, colors, and corporate trademark representation.
Consideration #5: Funding Mechanism
You can choose to completely fund your MDF program or offer funding of a certain percentage (with your partner contributing the rest). Ensure your policy states the funding process and percentage contribution of both parties (you and your partners). This would help your partners plan their investments better and contribute to the program efficiently.
Consideration #6: Documentation
Give clarity to your ecosystem partners on the documentation required in both the submission and the payout phases. You can also create critical milestones for phased funds release for larger investments. Examples of typically required documentation could 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.
Consideration #7: Contingency Management
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.
Some funds program exceptions 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
Consideration #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 different MDF programs, partner levels, geographies, and industries. Your policy messaging should mention the sign-off rules and workflow that your partners can expect. One of the most common sign-off rules 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 such rules that are specific to your funds program.
Consideration #9: Payout Mechanism
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 payout using either of these models or even as a combination of these two. Specifying how you’d pay the funds is crucial information that your partners need to know. Therefore, make sure you define the funds’ payout mechanism in your policy.
Consideration #10: Partner Funds/ MDF Timeline and Cadence
Ensure your program is time-bound to guarantee a practical execution of your strategy. The policy should give a clear timeframe for your channel partners to :
- Raise funds requests
- Spend money on program activities
- Submit MDF/incentive claims, etc.
The policy should also state the turnaround time of your team on fund requests from your partners. Defining a turnaround time will help your team to respond to partner requests on time. This will also reinforce accountability and responsibility in your team and partners.
Consideration #11: Support
Your program policy should provide support service details that your partners can take advantage of to clarify any doubts they might have. Mention your team’s contact details so that your partners can reach out to you if they need any help. The best practice is to encourage your partners to contact you to share their concerns and share any feedback or learnings.