Making the most of your market development funds

Marketing can be a risky undertaking -- one that value-added resellers (VARs) and systems integrators may be hesitant to put much effort into. However, with market development funds at your disposal, you'd be remiss if you didn't put these five marketing tips to work for you.

By Mike Rothman

Marketing is expensive and fraught with peril. You know the old John Wanamaker quote: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." That generally applies to marketing as well. Given the fact that value-added resellers (VARs) and systems integrators don't look too favorably upon squandering half of an investment in anything, you need to think seriously about how to get the most out of your marketing investment.

But what if you were just wasting half of your manufacturer's money? That makes it go down easier, no?

Most manufacturers provide their reseller partners with funds, typically called market development funds (MDFs), to invest in building a pipeline for their business. These are resources that you likely have at your disposal. It's just a matter of using them in the most effective manner. This can be a challenge since, unless you are one of the mega-VARs, you may not have dedicated marketing staff.

First let's examine the goal of any marketing effort. You are trying to build a permission-based relationship with your prospects. You want to build your marketing list, using as much MDF as practical to do so.

So the first tip is always be collecting names. Whatever marketing campaign you start, you

More marketing tips
Learn five more tips for developing an effective IT consulting marketing campaign.
need to have some kind of direct-response mechanism (Web landing page, email responder, fax-back or self-mailer) to get the prospect to share their contact information. You also want them to explicitly agree to receive email from you. Then you can gain credibility over time via email and earn the opportunity to sell products or services to the prospect.

The next three tips come from Marketing 101. This stuff is certainly not sexy, but it's critical to increase your presence in your target market and build up that list.

  • Look for leverage: I love the idea of vendor "conferences" where you put on a one-day show with a number of your manufacturers who all "sponsor" the event by paying to be there and providing speakers. You can make a little bit of money (I know VARs that make a LOT of money on these conferences) and you get an entire day of face time with prospects who want to do business with you.

  • Attend ALL the local events: Marketing is mostly about consistent activity and repetition. You'll need five to 10 exposures to a prospect before they even remember who you are. So use your market development funds to buy a table at the local ISSA conferences or InfraGard. You can talk about whatever product you're pitching, but more importantly you get additional visibility with prospects.

  • Do focused sporting events: One of the most successful programs I ran as VP of marketing was sporting events. You buy 10 tickets to a cool sporting event (maybe even rent out a box) and get the vendors to pay, since they tag along and get face time with your prospects to help you seal the deal. Given how hard it is to get a cold call returned, the idea of spending four hours in an informal setting with legitimate prospects is very attractive to vendors. On the other hand, prospects will also jump at the chance to see their local teams play, especially with good seats. These events aren't cost-effective for huge numbers, but with five to 10 serious prospects it's a home run, every time. No pun intended.

    Finally, the last tip I'll leave is the power of the loss leader. There are some vendors who provide low-margin products that do not yield a tremendous amount of either product or services revenue. If you net out the cost of your time, you very well lose money on each deal. So why would you even think about dealing with a loss leader?

    It's all about pull. Most of the time you are pushing "solutions" on your customers to solve problems they may not have. In high-volume, low-margin businesses, there is considerable pull on the part of the customer base. Antispam is a great example of this. A few years ago, every customer was clamoring for an antispam device. One of the leading companies did mass-market marketing campaigns that resulted in a flood of inbound leads to their resellers. These leads even had a decent chance of closing because the prospect wasn't looking at other solutions.

    The inbound deal flow is worth its weight in gold. You sell the customer the first product, even though you don't make a lot of margin. Then you have a business relationship with the customer (notice they are no longer a prospect) and you then start working on lots of other projects (basically your entire line card). That one low-margin sale could be the start of a long-term, very profitable relationship with the customer.

    Marketing is all about repetition and leverage. The vendors are desperate for activity, so they are willing to sponsor your events and other marketing initiatives. Use those "free" market development funds to build relationships with your prospects and sell them multiple products and services over and over again. That's how VARs get rich.

    About the author
    Mike Rothman is president and principal analyst of Security Incite, an industry analyst firm in Atlanta, and the author of The Pragmatic CSO: 12 Steps to Being a Security Master. Get more information about the Pragmatic CSO at http://www.pragmaticcso.com, read his blog at http://blog.securityincite.com, or reach him via e-mail at mike.rothman (at) securityincite (dot) com.

  • This was first published in January 2008

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