Guide to Making and Managing Your Market Development Funds (MDF)

For B2B businesses looking to scale, word of mouth remains one of the most effective ways to expand your reach and generate more sales. And the impact of word of mouth can multiply when the recommendations come from a trusted partner, someone who understands the value of your offerings.

That is exactly what Market Development Funds (MDF) are all about. Market Development Funds are partner marketing funds that vendors offer to their channel partners to help drive demand generation, awareness, and revenue growth.

While the end goal is clear, generating measurable ROI, how to effectively manage MDF programs can be a bit more complex. This guide breaks down what you need to know to optimize your partnerships and see a boost in your bottom line.

How Marketing Development Funds Impact Revenue

An effective MDF program goes beyond ad spend. If executed properly, it will help align sales and marketing, empower your partners, and expand your reach to new markets. And there are two avenues you can take to make that happen. 

Types of Marketing Development Funds:

• Accrual-Based MDF: Partners earn funds based on past sales performance. These are predictable and often used long-term partner engagements.
• Proposal-Based MDF: Funds are awarded based on a partner’s campaign plan and proposal. This allows for more flexibility and strategic targeting. 

This isn’t to be mistaken for co-op funds. While both co-op and MDF funds support partner marketing goals, they have different purposes. MDF funds offer the flexibility businesses need to invest in digital ads, webinars, or cobranded content. While Co-op funds are primarily reimbursement-based, they are used for long-term and traditional marketing goals that can range from print ads, in-store product displays, or vendor-specific campaigns. 

This is where sales and marketing alignment becomes essential. Understanding when and how to use each type of fund ensures you fund the right initiatives, partners are properly equipped, and your efforts deliver results.

How to Design an MDF Program That Aligns Marketing and Sales Goals

Without a strategic approach to managing market development funds, you can easily fall into the traps of low fund utilization, slow approval processes, and partner readiness gaps, among other challenges that hinder growth. Here’s how you can get the most out of your MDF program:

• Use funds for events, digital advertising, paid search, content creation, webinars, account-based marketing, and lead generation campaigns.
• Follow best practices, which include:
  • Offering campaign templates and pre-approved vendors
  • Making the submission and reimbursement process simple
  • Providing performance guidelines and expectations
• Require partners to submit proof of performance and metrics.

To ensure this process benefits both channel sales and marketing, your MDF program needs a foundation built on the following:

• Goals that tie funding to specific KPIs like pipeline growth, brand visibility, and the market.
• A structure that clearly defines who qualifies for funding and amounts based on tiers or performance
• An approval process using a centralized platform and a clear timeline for approvals and reimbursement.

The Importance of Staying Ahead of MDF Program Challenges

As mentioned above, there are several challenges you can face when building out your MDF program that clog your funnel. Here are three common problems MDF program leaders run into and how they can be solved:

Problem: Lack of partner resources

Solution: For partners that may struggle with executing campaigns, templates, concierge support, or pre-approved vendors are beneficial. 

Problem: Timeline

Solution: Delays in approval or reimbursements can easily lead to disengagement. A solution can be setting SLA benchmarks.

Problem: Proper fund allocation

Solution: To prevent funds from going unused or beyond spent on initiatives that don’t make an impact, set clear criteria and don’t skip post-campaign reporting.

Measuring the ROI of Market Development Funds

Once you’ve done the hard work of creating an MDF program and implementing it, measuring your efforts is the next step to testing the program's effectiveness. That starts with defining what success looks like through:

• Metrics: leads generated, pipeline created, campaign reach or engagement
• Tools: channel management platforms, partner portal with built-in analytics
• Collaboration: align sales, marketing, and partner teams to define shared goals and success

Market development funds can transform your business by getting your offerings in front of the right people. The MDF programs that work the best give partners the right tools, structure, and support to advocate for your business.

Spur Rely helps companies design and optimize partner marketing fund strategies that align channel, marketing, and sales goals to generate sustainable pipeline growth. Discover how to enhance your partnerships and develop a more effective MDF program.