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Lloyd Wolf, president and CEO of Wolf Consulting Inc., used to fund marketing programs entirely from his company's coffers
That was, until he attended an HTG Peer Group meeting and began to learn about market development funds (MDF) -- dollars vendors provide channel partners to support their marketing campaigns. Wolf educated himself on MDF funds and began participating in the MDF programs of Dell, Dell's SonicWall unit, eFolder and Microsoft. Over the past four years, vendors have covered up to half the cost of a given marketing initiative, allowing Wolf Consulting, a managed service provider (MSP) based in the Pittsburgh area, to fund more events and purchase more radio spots.
"I was just funding our marketing and business development by myself," Wolf recalled. "It never occurred to me that a vendor would help pay a portion."
As it happens, lack of MDF awareness among MSPs isn't unusual. Marketing, in general, may not be top of mind for the engineers who often launch managed services companies.
"They come from a technical background and not a marketing and sales background," said Stuart Crawford president and chief marketing officer of Ulistic, a company based in Buffalo, N.Y., that provides marketing and consulting services to IT service providers. As a consequence, MSPs may not realize MDF money is available in the first place, he noted. But even company leaders familiar with MDF may balk at participating.
"They don't feel comfortable pursuing it," Crawford said. "It is not a natural fit for them."
MSPs seeking a marketing boost need not leave money on the table, however. Industry executives said, with some upfront planning and follow-through, MDF can help fund a significant part of a service provider's marketing activities. Thoroughness is the key, however: An MSP must document the leads, closed deals and vendor sales attributable to an MDF-funded campaign to build a case for the next round of vendor assistance.
Steps to MDF
The MDF endgame is lead generation, so MSPs need employees who can make the follow-up calls and turn leads into prospects. Accordingly, the key prerequisite for MDF is to have sales people on staff. Ted Hulsy, vice president of marketing at eFolder, said an MSP should have at least one or two quota-carrying sales people -- other than the MSP's partners or owners -- before ramping up marketing activities. A data protection and cloud file sync technology vendor, eFolder markets to MSPs and value-added resellers (VARs).
Channel partners, Hulsy said, "have to crack the code on sales before they crack the code on marketing."
Ted Hulsyvice president of marketing, eFolder
For the next step, an MSP should evaluate its vendors and whittle down the list to a handful of critical suppliers. Hulsy said MSPs and VARs maintain relationships with dozens of vendors, but recommended zeroing in on the top vendors with respect to revenue contribution. Those are the ones to ask about MDF.
"Pick your lead horses," Hulsy advised, "and really go deep with those vendors."
Next, comes the task of actually applying for MDF dollars. Hulsy noted program requirements and processes may vary from vendor to vendor.
"You need to spend the time to understand the program requirements," he said. "If you can master the process, you can tap into those dollars. If done right, it could be 50% of your marketing budget."
The process can prove a tough obstacle course, according to MSP executives.
Ron Culler, co-founder and CTO at Secure Designs Inc., a managed network security provider based in Greensboro, N.C., said MSPs need to ask their vendors about their MDF programs' structure -- how to submit application forms properly and other vendor expectations. He recommended contacting a vendor-partner's inside or outside sales rep and asking her to identify the person within the company who can discuss the best way to navigate the MDF program.
"Once you know that path, the ability to write something and get it approved is so much easier," Culler said.
Showing commitment to the vendor also helps in the quest for marketing money.
Crawford said he suggests the following two-part strategy for MSPs asking for MDF: One, service providers need to demonstrate proficiency in the vendor's product or service and possess the relevant technical certifications, and, two, MSPs must demonstrate they can sell the vendor's offering.
The marketing consultant said he was very engaged with his most strategic vendors when he was running a $5.5 million MSP business prior to his consulting career. To demonstrate sales capability, he sent his top vendors a weekly spreadsheet documenting his company's sales pipeline, including the vendors' contribution.
Crawford said he employed other ways of maintaining close vendor relations, including weekly status updates via phone, quarterly conference calls and annual in-person planning sessions. He also recommends attending strategic vendors' annual conferences.
"That is the time to … meet with the executives," Crawford said, noting that executive contacts help provide additional leverage when it's time to fund marketing campaigns.
Steps to MDF
- Maintain a sales organization to manage leads;
- Evaluate vendors; narrow focus to strategic partners;
- Work with vendors to understand details of MDF process;
- Apply for MDF;
- Execute marketing program;
- Document results of marketing effort; keep vendors appraised; and
- Use track record to apply for next round of MDF funds.
Spending MDF funds
Jennifer Bodell, channel marketing manager at StorageCraft Technology Corp., a backup and disaster recovery vendor that works with MSPs and VARs, said channel partners use MDF funds in a variety of different ways. Marketing initiatives can range from webinars to booths at conferences. She said MSPs and hybrid VAR/MSPs are heavily engaged with the company's MDF program
StorageCraft and its partners have seen particular success with client-facing educational programs such as lunch-and-learn events, according to Bodell. She said a StorageCraft sales account manager and sales engineer participate in the partner events to help answer attendee questions.
"It's definitely more successful if representatives from StorageCraft are there, rather than just giving the money to partners and saying, 'good luck,'" Bodell said.
Wolf Consulting uses MDF to host informational briefings, the company's take on lunch-and-learns. Wolf said the sessions are geared toward business owners and management executives at client companies and prospective customers. One example, "Six critical backup and disaster recovery questions -- that every owner and manager should know the answer to for their business," was executed with eFolder's MDF support.
Wolf said he also used MDF to fund radio advertising campaigns. Before MDF, Wolf Consulting was able to back a one-month to six-week radio initiative. But with vendor assistance, the company can now take on two- or three-month campaigns, Wolf noted.
In addition to informational briefings and radio spots, Wolf Consulting has also used MDF funds to defray the cost of sales lead list rentals from such companies as InfoUSA and Salesgenie.
Secure Designs, meanwhile, has used MDF money to help fund telemarketing campaigns, Culler said. In one case, the company teamed with an ISP partner, using the ISP's client list to sell managed security services and a vendor's firewall appliance. The vendor supported the effort, which involved covering half of the telemarketer's salary over the 3-month campaign, , seeing an opportunity to boost its sales.
Culler said his company may also use MDF to help fund the development of a sales tool or an incentive program.
"As long as you can show results -- and show what you are using the money for -- companies, a lot of times, are willing to invest,"' he said. "We will use every dime of MDF that we can creatively come up with a way to incorporate. When you talk to the vendors, at the end of the year there is all this MDF money just sitting there waiting. It is there because no one else uses it."
"Go out there and ask for it," Wolf advised. "All you have to do is ask and make your case."
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