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the death of mdf: reviving a broken system

Lois Dixon
by Lois Dixon - April 13, 2018

 

MDF-schematic

Change is a good thing…right?

As tech consumers, we are constantly fed the newest products from our trusted brands, who are working tirelessly to keep up with their nearest competitor and stay at the leading edge of whatever corner of the market they are trying to dominate.

We are continually being informed that our current phone, tablet, gaming console, fill in the blank, is simply not good enough and no longer relevant. We are so terrified of being left behind in this rapidly evolving world that we embrace the constant updates and as such, are adapting behaviourally in what can only be described as a technological and societal evolution. This change in consumer behaviour then in turn is forcing businesses to adapt and evolve in response, but are they keeping up? 

Brian Solis, principal analyst of the Altimeter Group says “this is a time of digital Darwinism — an era where technology and society are evolving faster than businesses can naturally adapt. This sets the stage for a new era of leadership, a new generation of business models, charging behind a mantra of ‘adapt or die’.”

As a B2B marketing agency, specialising in the tech world, we see companies throughout the channel looking to expand their business, increase ROI and facilitate growth to ensure they remain competitive, but quite often using the same business models that have been used for the past 20 years. Something has to change.

One of the most flawed of business models we see at Sherpa is that of ‘Market Development Funds’ (MDF).

MDF is a commonly used programme throughout the channel, with Vendors providing funds to resellers in order to facilitate their products’ path to market. Sounds like a simple concept…especially since it is so widely used. However, the majority of MDF programmes are still operating on systems and practices from the 90s. Not ideal in this digital age.

So, what are the main issues? 

From a Vendor’s perspective MDF is viewed as a source of frustration. They provide resellers with funding (which incidentally must be spent in full) and obviously expect results. However, it is extremely hard to provide proof of execution and reporting when the systems being used are outdated and the platforms complex to navigate. It becomes a manual, laborious and sometimes impossible process when what they are really lacking is industry specific marketing expertise. Resellers also complain that the turnaround with which they are provided and the length of each campaign is insufficient for planning and execution. This is miles away from the ‘end-to-end marketing’ by which we swear and guarantee ROI.

Sherpa CEO, Tom Perry, sees a lot of MDF models and saysAll too often marketing activities executed under an MDF programme are not properly planned, executed or measured to any meaningful level. Subsequently they are often ineffective and ultimately ROI is impossible to gauge. By changing the dynamics of an MDF programme and campaigns run through the channel, there are significant gains for all parties.

The entire system and MDF dynamic is fundamentally broken and needs a full overhaul to bring it in line with the current climate. In the words of Brian Solis, it will need to ‘adapt or die’. 

We have put together a blueprint for optimising MDF and hopefully we work together to revive this broken system. 

Download your MDF blueprint here:

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#GoHigher #Rebrand #Sherpa #MDF #b2b

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