Know-How Exchange : Strategy

I think you need five key legs to your MDF strategy:

1. Teach them first. A thorough briefing, explanation and training program which explains the various types of eligible spend and the types of campaign you want VARs to conduct. Provide comprehensive phone and web-based support, including FAQs that get updated (step 5 below) with new examples of claims that won't be allowed.

2. The Rule Book. The legal document which contains the rules. Spell out all the terms and conditions under which claims can be made and identify broad types of claims that won't be made.

3. Fact Checks. A fast (that part is important) assessment process which accepts claims, processes them and rejects problematic ones for a more senior resource to go through in detail.

4. Post-claim checks. Auditors - who visit VARs in the field to check they are doing what they said they are doing.

5. Close the loop. Identify problem claims, go through a disciplinary process with the VAR if required, and UPDATE the training, FAQ and legals documents to clarify (if required) the things the VAR did wrong and try to ensure the same mistake isn't repeated by another VAR in the future.

You may also have some strategic issues: If you are finding customers are accruing large amounts in the MDF, perhaps you are setting aside too large a percentage for MDF. Maybe you should divert some of those funds into your marketing in order to throw more leads their way, rather than expecting them to do so much local-area marketing. Just a thought.

Hope that helps

ChrisB

If the partners see the money as "their right" I am assuming you have a system where you are basing the amount they have available to them based on their revenues. If that's the case, I would put together written guidelines on what is and is not acceptable. Most software companies I work with only allow those things that are specifically tied to opportunity generation and require some proof of performance.

Actually, that last part is important as it can impact how your MDF/co-op program needs to be treated from an accounting perspective. I see you are in Asia and I don't know the rules there, but be sure to work with your legal department if you make any changes.

If you are basing their available pool off of their sales revenues then technically the money is "their right." That's why the guidelines are so critical. You can get yourself in some legal hot water (at least in the US) by denying money that your programs say they've earned.

If, on the other hand, your MDF is simply a pool of money that you have available and partners can apply to have funds allocated toward specific programs, you also need guidelines. In this case you won't be able to guarantee that anything will be covered as once your pool of funds is gone it's gone. However, you should lay out what you will cover and what you won't. e.g. will you cover training events as some MDF programs do?

The problem usually occurs when a partner wants to do something such as a trade show that has no history of delivering results. Here's where you need someone managing channel marketing who is as much marketing coach as they are MDF administrator. You need someone who can help them turn the show around or find other more effective ways to use the funds.

If you don't have someone who can coach them in marketing, at least have someone who knows how to diplomatically but unequivocably say "no" when that needs to be said. Be careful not to play favorites. This needs to be a business decision.

All the best!

Melissa