Partner investment funds (i.e., MDF, BDF) are transforming in response to the evolution of the indirect channel, including the adoption of partner ecosystems, alignment with customer buying journey, focus on long-term partner success, and increased competition for partner mindshare. This evolution is impacting everything from funds focus to the measurement of success. Channel leaders are either redesigning or at least re-thinking their partner investment funds strategy. The following 6-part blog series will provide insights into what makes partner investment funds successful today and what it takes to maximize their value in the future.
Some of the key trends you will see highlighted include:
- Evolution from market development to partner development
- Investing in long-term partner success through deeper engagements
- Investing in the development of the entire ecosystem
- Aligning investments with the customer buying lifecycle
- Simplified program structure, streamlined processes, automation – less is more
- Renewed emphasis on joint business planning / co-execution
- Standard, pre-packed activities
- Funds budgeting, allocation, and spending guidance
- Measuring success (ROI)
Development Funds Objectives
The business objectives for development funds are evolving. The traditional MDF objectives, such as Strengthening the Partner Business Proposition, Gaining Partner Mindshare, and developing markets, are still important. The focus is evolving to include long-term partner success objectives, including solution and practice development and operational efficiencies.
Partner Ecosystem
Routes to market are becoming more focused on the entire partner ecosystem, and development funds strategies must be aligned accordingly. This includes identifying the different roles, their value, and associated enablement funds. The different roles in the partner ecosystem can provide value in each stage of the customer buying lifecycle (Influence, Transact, Retain).
The customer buying life cycle is defined by TSIA as Land, Adopt, Expand, Renew (LAER). AchieveUnite includes ‘Build’ partners in this lifecycle (B-LAER). Many vendors are dividing their business models into Build, Sell, and Service. Regardless of how you define your partner ecosystem, you must recognize that their enablement needs will vary. Traditional Market Development Funds (MDF) will continue to work well for ‘Sell’ partners engaged in ‘Landing’ new sales. ‘Build’ partners will benefit from Solution Development Funds (SDF), and all partners will grow when their long-term success is enabled via Partner Development Funds (PDF).
Aligning investment funds to the partner ecosystem requires an understanding of each ecosystem member’s value, capabilities, needs, and enablement options. ‘How can they contribute optimally to ecosystem collaboration, customer buying cycle, and customer success.’ Below are examples of the members of a partner ecosystem and how development funds can be aligned with each.
- Distributors are seeking ways to provide more value in their roles. They can help facilitate joint partner business planning, funds management, activity execution, and performance reporting.
- Marketplaces can facilitate solution development and streamline the buying process. They can act as influencers and sellers. Marketplace partners can benefit from Solutions Development and Market Development funds.
- Influence partners will not benefit from traditional MDF activities, so provide PDF that enables industry and technology expertise and the development of use cases.
- Delivery and Service partners value competencies and specializations that help differentiate their business. Business Development Funds aid partners in developing these differentiators.
- Global System Integrators also can play the role of Influencer and/or seller. MDF is effective for GSIs as well as PDF that enable the development of case studies and demos.
- Alliances should include a joint strategy for partner investment funds, including MDF and SDF.
Keep in mind that most solutions sales require multiple partners and/or vendors. Leading MDF programs provide the ability for partners to coordinate campaigns and activities funded by multiple MDF programs.
Development Fund Variations
Development funds take many forms across the technology industry. Most vendors have multiple development funds programs, or they provide different fund types within one consolidated program. Each fund may have unique objectives, requirements, eligible activities, and proof of performance criteria. For this research, co-op funds were not analyzed.
Examples of different funds and their focus are included below.
Market Development Funds
Execute training, marketing, or sales activities that drive more sales
Business Development / Partner Development Funds
Focus on long-term partner success including business skills, operational efficiencies, and partner value proposition
Partner Enablement Funds
Fund partners’ training and certifications, enabling them to optimize their ability to sell and reach new customers in the best way possible
Partner Infrastructure Funds
Sponsor partners’ infrastructure investments to support shared go-to-market activities for the customers to have a complete experience in context with the solutions offered
Opportunity Acceleration Funds
Proof of concepts & migrations
Partner Services Funds
Partner-delivered workshops, pilots, POCs,
Lifecycle Funds
Activities that drive expansion, utilization, and/or renewals
Sales Campaign Funds
Reimburse partners to drive a quarterly increase in revenue by participating in sales campaigns that are defined by vendors & executed by partners
As you can see, many of these programs are focused on enabling long-term partner success. These investments provide a sales fly-wheel benefit as opposed to sales pipeline benefits provided by traditional MDF.
Keys to success may vary based on the funds type. For example, MDF programs should be run by a marketing person who understands how to combine vendor funds to sell one solution. While BDF programs should be run by alliance managers who understand the synergies between the companies, solutions, and sales models.
To transform partner investment funds, companies must reevaluate and realign the strategy, structure, funding, segmentation, allocation, enablement, and measurement of these funds. Stay tuned for future blogs that will provide insights into each of these topics.
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