Like torture victims being dismembered by horses pulling in different directions, distributors and resellers frequently find themselves caught in a tug-of-war between vendors and customers. Such is the fate of the middle man or woman. On the other hand, the middle can also be a useful place to be – particularly for a trusted conduit between one party and another. Still, it’s hardly surprising if the people in the middle occasionally complain.
One issue stirring a murmur of discontent is marketing development funds, otherwise known as MDF. While it’s true these have been part of the channel landscape for many years, the potential for conflict between resellers and vendors over how MDF are used has recently increased as vendors have reduced the amounts available and have sought tighter control over how they are spent.
A white paper * published recently in Britain suggested this trend has caused several difficulties there. The paper claims that, by imposing tighter constraints on access to MDF, vendors have complicated the process of claiming funding. Also, the claims process varies among vendors, leaving resellers floundering in a bureaucratic morass. Worse, the amount available at the end of this now more complex process is less than in the past.
And, by tightening their grip on how MDF is used, vendors can make it harder for resellers to use funds in the way that best suits their business, rather than the vendor’s. Almost no reseller can afford to devote loyalties to a single supplier. The reality of IT dictates that they need to demonstrate the capability to sell ‘solutions’ – and solutions frequently comprise elements from multiple vendors.
The white paper points out that resellers have found it difficult to wrest MDF from vendors to support marketing activities that revolve around their solution selling capabilities because most suppliers do not want to provide funding that could be used, however indirectly, to promote products from another vendor. As vendors apply ever narrower rules on using MDF, the tension between the manufacturer’s view of the best use of such funding and the reseller’s desire to apply funding in a way that suits the business will exacerbate.
Ironically, vendors have for years urged resellers to focus on solution selling to overcome ever shrinking margins on product sales. But, when it comes to the crunch, they seem unwilling to walk the walk. In a weird reversal, while resellers seek to widen their business by focusing more on solutions, vendors are restricting the focus of their MDF to their own products and brand.
Neil Evans, UK channel director at Hitachi Data Systems, concedes in the white paper that resellers have sometimes been “at odds with what vendors’ want” in their move to become vendor-agnostic. But he warns that vendors “need to understand that helping drive solutions sales is as good for business as investing in product ads”.
There’s the rub. Right now, the poor middleman is trying to turn those tethers into reins that will help him steer both teams of horses in the same direction. But unless MFD use is simplified, vendors will continue trying to make resellers operate with one hand tied behind their backs. The solution might be to scrap MDF altogether – leaving vendors to do their own marketing and passing the margin back to all of the channel. Alternatively, they could develop a simpler way for resellers to claim, access and use MDF which takes account of the multi-vendor world they now inhabit. * Making Technology Vendor Marketing Funds Deliver is at: www.second2.com/vendorfunds/
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