Don’t Waste Free Cash: Maximizing Market Development Funds (MDF) for Growth

Effectively leveraging Market Development Funds (MDF) can be a game-changer for MSPs and IT services firms aiming to scale their growth and enhance their marketing strategies. With the right approach, these funds can significantly boost your IT and MSP marketing efforts, strengthen vendor relationships, and, most importantly, drive business growth.

Whether you’re exploring the possibilities MDF offers for the first time, realizing you aren’t fully capitalizing on funds, or looking to optimize existing efforts, understanding how to effectively use these funds is crucial. Don’t miss out—read on to learn how to best utilize MDF.

Understanding Market Development Funds (MDF)

MDF programs vary among vendors, but typically, the vendor provides a certain percentage of funds based on the channel partner’s sales volume or other predefined criteria. The channel partner then utilizes these funds to execute marketing campaigns, events, training programs, and other activities that promote the vendor’s offerings.

It’s also crucial to note that MDFs aren’t always ‘free’—in some cases, they function on a co-op basis where both the MSP or IT firm and the vendor contribute equally. The complexity and constraints of MDF programs differ among vendors: some offer flexibility and encourage creative use of funds, while others may restrict partners to select pre-defined options. For IT services firms, understanding and adhering to a vendor’s specific MDF guidelines is key to accessing these funds and using them effectively.

Your channel representative should be able to talk you through the details of their MDF program—and the resources they have available to help you—to be sure you can take full advantage of the funds available and understand the rules associated with its use.

Benefits of Leveraging MDF for Business Growth

Here’s the headline: Free money!

If that wasn’t enough to convince you, you’re not alone: For a wide variety of reasons, we see a lot of IT services firms, MSPs, and MSSPs not taking full advantage of MDF. One frequent situation we see is that the IT services firm doesn’t have the marketing and sales resources in-house to effectively use the funds. But MDF can provide a valuable opportunity and competitive advantage to the businesses who get it right.

Before we discuss how to leverage these funds, let’s touch on the key benefits:

• Enhance Marketing Efforts: With additional funds, you can invest in new or expanded marketing strategies for the given product such as advertising, content creation, social media promotion, and event sponsorships. This allows you to reach a larger audience, increase your market awareness, and generate more leads, ultimately driving business growth—even beyond the single vendor’s offering.
• Get Expert Support: In addition to pure marketing execution costs like advertising and events, many MDF programs will even cover or support agency fees to implement and manage marketing campaigns. Partnering with an agency offers a host of benefits, and MDF can help cover some of the cost, meaning that you can bring on expert support to supplement your own marketing efforts.
• Strengthen Vendor Relationships: MDF often comes with other resources from vendors such as training, content, key relationships, co-marketing opportunities, and access to their network and social media channels. You’ll often get the chance to work with other contacts besides your channel rep and can expand your reach within their organization.

The benefits of leveraging MDF are substantial, and can transform the way your business operates and interacts in the market. With this foundation, let’s cover the strategies for optimizing MDF utilization to maximize its impact on your growth.

Strategies for Optimizing MDF Utilization

To maximize the impact of MDF on your marketing efforts, it is important to develop effective strategies for utilization. Here are some strategies to consider:

1. Know your company-wide marketing strategy and plan—and then consider how your vendors’ offering and MDF program fits. Your MDF marketing efforts should not be siloed. Before beginning MDF conversations with a vendor, align internally on your marketing strategy and develop a clear marketing plan that outlines your growth objectives, target audience, messaging, and desired outcomes. Then, think of your MDF initiatives as campaign components that support your overall marketing strategy to ensure that your efforts ladder up to your overall objectives.
2. Align with vendor objectives: Have an open conversation with your vendor about both of your goals and objectives to find the ideal win-win scenario for both of your firms. By demonstrating how your marketing goals align and how your efforts can support their growth, you increase the likelihood of receiving MDF and other support.
3. Focus on ROI: When MDF is involved, it’s usually best to prioritize activities that have a high potential return on investment so both you and the vendor can feel the impact and see results. Rather than broad or brand awareness campaigns (which are still important, but should be planned and paid for by your own company), consider strategies such as targeted advertising campaigns, lead generation programs, and cross-sell/up-sell opportunities with your customers when using MDF.
4. Get creative: ROI-driven doesn’t need to mean boring. Don’t be afraid to think outside the box for an attention-grabbing and impactful campaign. Can you leverage emerging technologies like AI or augmented reality? Do you have a creative idea for a guerilla marketing campaign at an upcoming event? Try a brainstorming session with the vendor and a few key people from your organization—including your marketing team or agency—to come up with new ideas that are a fit for both brands. You can also consider whether there is any alignment between more than one of your (non-competitive) vendors and leverage both MDF programs and vendor support resources to create something even bigger.
5. Track and measure results: Keep tabs on key metrics aligned with your desired outcomes to evaluate the success of your MDF initiatives. This will enable you to identify what works (and what doesn’t) and make data-driven decisions for future MDF investments. Examples of key metrics to track include:
   • Customer Acquisition and Sales Revenue: Number of closed deals, deal size, and ultimately, revenue
   • Lead Generation: The number of leads, MQLs, and SQLs generated through the campaign
   • Brand Awareness: Website traffic, social media engagement and following, and media mentions
   • Vendor Satisfaction and Relationship: Less metrics-driven, but still important—note feedback from vendors and additional opportunities

Note: Be sure to configure your tracking systems (Google Analytics, HubSpot, dashboards, etc.) properly ahead of time—and if possible, get baselines—so you can have a full and accurate picture of results.

Fostering Strong Vendor Relationships for Long-Term MDF Support

The MDF relationship is a two-way street: While your vendors will support you with financial and business resources, your organization will also need to build and maintain the vendor relationship on your side. Remember that your vendor wants you to succeed. Keep open and transparent communication channels with your vendor to align marketing efforts with vendor strategies, share updates and performance results, explore joint MDF opportunities, and learn about any changes to the MDF program and resources available.

Keep in mind that while maintaining the vendor relationship often falls with sales, partner, or technical team members, your marketing team should also have a strong vendor relationship, especially when MDF and other marketing efforts are involved. Your marketing team should be actively engaging with your vendors’ marketing teams, ensuring commitments are met, feedback is shared, and the value of marketing efforts is clearly demonstrated. Before beginning a marketing or MDF conversation, take some time to think about who from your firm should be involved in the discussion—and in what capacity—to be sure everyone has the information and contacts they need to be successful.

How an IT and MSP Marketing Agency can Help You Leverage MDF Effectively

The ultimate tip to get the most bang for your buck? Work with a marketing agency that specializes in technology, IT, and cybersecurity to significantly streamline your use of MDF. An outsourced marketing agency is managed services—just for marketing rather than IT. With experience throughout the technology landscape, these agencies are well-versed in not only marketing strategy and execution, but also in vendor operations and the specifics of MDF programs.

The right IT or MSP marketing agency will be adept at navigating the vendor landscape, ensuring that your marketing efforts are aligned not just with vendor expectations, but also with the actual needs of your end customers. They have a minimal learning curve and will be able to jump right into supporting the entire marketing process, from planning to execution and performance tracking. If you’d like to learn more about how to find a marketing agency that is the best fit for your business, download our eBook: A Step-by-Step Guide to Finding the Right Marketing Firm for Managed Service Providers (MSPs).

If you’d like to learn more about how Magnetude can support your IT services and MSP marketing needs, please contact us.