Throwing the kitchen sink at MDF is not a solution
For most normal people, MDF is something they associate with choosing a kitchen. There was a certain snobbishness about it in the early days because medium-density fibreboard was a man-made wood rather than a natural product, “an engineered wood product made by breaking down hardwood or softwood residuals into wood fibres”. But beggars can’t be choosers, so a lot of kitchens ended up in MDF.
For people in the channel, however, MDF stands for something completely different, although you could argue it’s just as artificial. Yes, we’re talking about market development funds, also known as co-op funds.
It’s fair to say that MDF is ubiquitous in the IT channel. It’s easy to see why MDF was enthusiastically adopted and endorsed by vendors. The notion that partners are being given access to funding to help create awareness of a vendor’s brand and to sell its products is bound to be attractive.
A cynic might argue there’s also an assumption of superiority attached to the popularity of MDF among vendors. It’s as if they’re saying “we’re rewarding you for selling our products but it isn’t that hard because of the great job we’ve done making them and promoting them and because our brand is so well-known”. The existence of co-op funds is like a challenge to partners to do more to justify their place in the supply chain.
It’s a bit weird when you think about it. Because if the vendors have done a proper job of marketing their products and brands, there really shouldn’t be that much call for partners to do a whole lot more on top. Conversely, if vendors haven’t done it well, they should probably look to themselves to fix it rather than rely on partners to do it for them.
It’s probably worth noting that co-op funds/MDF were presented as a source of new additional funds for partners but many of them displaced some or part of the rebates and rewards partners used to achieve in the earlier days of hitting quarterly sales targets.
Let’s be honest, these types of inducement are more complex than just hitting a simple sales target. No wonder then that, quite often, they go unclaimed or unused. I have no idea just how much is left untapped but I’m guessing it’s a decent percentage.
In an interview with MicroScope recently Helen Curtis, founding director of channel marketing company Coterie, said of MDF: “Sometimes it could be more hassle than it’s worth to the partners if it doesn’t do what they need it to do for their customer. It can feel really last-minute and not very planned and is very reactive.”
So there’s clearly an issue with the complexity associated with gaining access to co-op funds but it also raises two other points. Could vendors be quietly happy with the fact a significant amount of funds go unused every quarter? And if a lot of partners aren’t prepared to take the time and effort to claim MDF, does that suggest they don’t need it in the first place? If the money was vital, partners would surely be doing more to claim it.
Maybe they’ve just decided to do all they need to do to sell a particular vendor’s products and services and opted not to devote more time to jumping through additional hoops to get some extra funding. Maybe it’s just not worth the effort.
Or maybe they just don’t need to make the effort for where they are with a particular vendor. If that is the reason, however, it means vendors may have to look again at how they encourage partners to spread the message around their products and services into other markets or niches.
And it does raise the question: If people aren’t claiming your market development funds, does that mean they aren’t developing markets?