How to Drive Partner Incentives and Market Development Funds for Your Business

As customers move more solutions into the cloud with subscription-based pricing and the ability to switch to your competitor at renewal time, it’s critical that your ecosystem partners are in lock-step with you throughout the entire customer lifecycle (including renewal time). In order to be a competitor in today’s market, you need to design your partner incentive programs with the right incentives to reward your partners throughout the full customer lifecycle.
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An evolved partner incentive program rewards your partners for their behavior – supporting customers throughout their journey, strengthening your brand’s customer loyalty, retention, engagement, and advocacy. The idea behind these programs is to deliver a better customer and partner experience, bring more profitability, and ultimately help you thrive in the marketplace.
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As the partner ecosystem grows with emerging tech trends, there are some notable shifts in the marketplace. Today, Ecosystem Business Management is essential for modern partnering. New approval hierarchies are being introduced with better compliance and performance-based fund disbursement. Businesses are offering a hybrid of co-op (earned incentives) and market development funds to their partners. These incentive programs offer a mixture of earned and discretionary funds depending on your partner program goals. You can offer multiple such programs to your ecosystem partners based on the program activity or milestone you want to achieve.
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A hybrid partner incentive program can ensure your programs are driven by both funded initiatives and partner performances. Hence, these programs are better aligned with your business goals to encourage more customer acquisition and growth opportunities for you and your ecosystem partners. You can design such programs to collaborate and orchestrate a holistic customer experience across the entire lifecycle to drive customer retention and growth. Check out this video of how VMware has created new partner incentive programs to drive value across the full customer lifecycle.

If you are looking for ways to boost your channel sales and expand your market presence, a well-planned and managed market development fund program can be a great choice. Market development funds or partner funds are long-term investments for your business that can help you cut costs and raise profit. Think of these programs as enablement tools to help you drive value for your partners and grow revenue for your company with the side benefit of strengthening your partnerships. Read on to learn about the benefits of driving these programs for your business and how they can impact your market position in the long term.

With MDF and partner incentive programs, you can leverage your partner’s trusted brand value to deepen your market penetration and spur revenue growth. Suppose you want to expand your business in a new geography. There are two ways you can achieve this. First – you do it all on your own. Second – you work with a partner (who has a solid market position in that location). The first option comes with high costs and risks. Your success in a new geography demands considerable time, investment, and effort for you to create a solid foothold in the marketplace.
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However, with the right partner and the right incentives in place, the latter option offers a higher success rate as a win-win for you and your partner. When you grow your business into geographies where your partners are well-established, you’re able to take advantage of their expertise, local knowledge, and brand value in the market. With partner funds and market development funds programs, you can efficiently optimize your partners’ strengths – accelerating your channel sales and rewarding them for their performance.

Recommended Read: 3 Steps to Boost Market Expansion with Business Ecosystems

Surviving in the modern business ecosystem is all about creating lasting and profitable partnerships. Creating strong trust relationships with your partners is a must for your business’s sustainable growth. With partner funds and market development funds programs, you get an opportunity to build strong and trusted partnerships, gaining a better understanding of your partners’ strengths and how they can be leveraged.
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Further, you gain insight into the success rates of your partners’ initiatives you are funding – the actual value of your market development funds program. Sounds great, right? There’s more to it! When you’ve built strong reporting into your market development funds programs, you can analyze what partner behavior patterns and initiatives have been most effective at growing your revenue. Meanwhile, you’re building stronger relationships with your ecosystem partners and enjoying mutually beneficial partnerships.

Your partners are often also partnering with your competitors who are working hard to have them grow their business. So, how do you convince your partners to sell your products instead of your competitors’? How do you ensure your partners’ loyalty? Here’s the solution – partner funds and market development funds programs! These investment programs can help motivate your partners and set you apart from others in the market. With partner incentives, you are making an investment in your partners’ success. In return, your motivated channel partners execute funded program initiatives with dedication, driving higher ROI and helping you attain your partner sales goals.

Partner funds management is a massive opportunity.

Well-managed partner funds or market development funds programs with strong measurement and reporting can provide insights on your program outcomes, empowering you with a better growth strategy to determine what’s selling and where the market is headed. With access to data like program participation rates, solution growth trends, actual vs. projected ROI, and others, you can see trends and predict potential business opportunities. You can classify partners based on their growth trends by region, industry, segment, and solution. This way, you can identify high-performing partners you want to double down on and lower-performing partners you may choose to weed out. An example of this is the collaboration of Intel and VMWare when they worked together to digitize their joint MDF partner programs on WorkSpan “as one” on their shared channel.

MDF or Market Development Funds are incentives that a vendor provides to its ecosystem partners (ISVs, IHVs, GSIs, resellers, VARs, MSPs, Tech partners, OEMs and distributors) for driving sales and marketing programs to sell vendors’ products or services.
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There’s no question that to systematically allocate, manage and track market development funds, well-structured programs are much needed. As the name suggests, these programs are called MDF programs. Today, many successful tech businesses employ these and other partner incentive programs to grow their revenue, strengthen partnerships, increase market penetration, and build brand awareness.
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Finally, it all boils down to empowering your channel partners with resources that enable them to grow your business – and in turn, grow their business as well. You benefit when your partners sell your products, so it’s in your best interest to support them by granting MDF. As you dive deeper in our upcoming sections, you’ll get a detailed understanding of what, why, and how of MDF and partner incentive programs.

Well begun is half done! If you start your program journey with a well-conceived project plan, half of your work is already done. But how do you build a plan with the best chance for success? Don’t worry – we’ve got you covered. There are seven key considerations to building a strong MDF plan. Let’s go over these ones by one.

The first step to designing your MDF program is to decide on the right strategy. The strategy you choose will directly impact you, your ecosystem partners, and your business ecosystem. Recent market trends have had a dramatic impact on the way companies partner today. The old ways of partner reselling have given way to companies working together to co-build and co-sell solutions. With that in mind, you need to consider what kind of partner fund investments will have the highest return for each of your partnership models. Accordingly, you will need to decide the portion of your total budget allocated to programs optimized for reselling versus programs for co-building and co-selling with your partners.
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For example, you can have multiple partner fund strategies depending on different partners, their geographies, and what value they bring to the table. MDF strategies that work for one partner’s business model may not work for another.

Once you’ve structured your program strategy, the next step is to build your MDF policy. The policy offers guidelines for your partners, explaining their expected standards and behaviors when they execute the program. Your partners’ compliance with the policy should be considered a precondition for participating in your MDF Program.

The final step of creating a solid partner funds program involves selecting a platform to operate and manage your program. An automated tool to manage these programs helps you and your partners connect seamlessly and have transparent visibility on the expectations, progress status, real-time metrics, and deeper ROI data.

Program owners, participants, and stakeholders can use these tools to interact on a single interface for funds and claims management, with clear visibility of funds availability and requests/claims statuses. Hence, choosing the right platform to drive your partner funds program is a crucial move for promoting an enhanced partner mind-share and greater participation. Tools like WorkSpan can help you dramatically boost efficiency and return on your partner incentive funds spending.

After designing your program strategy and policy and choosing your platform, the final step is to plan your program implementation. Your implementation process should reflect the strategy and policy you’ve developed by now. This process can be divided into six phases:

Partner ecosystems are driving new market opportunities for companies (like IoT, cloud, and more) faster than ever before. This means your partner incentive models need to adapt just as quickly to help your company stay ahead of the market and your program needs to be ready for quick execution from fund request to claims payout.
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Today, the traditional reseller channel MDF Tools don’t work for strategic alliances and modern ecosystem partner funds programs. It’s critical that your partner incentive programs strengthen your strategic alliances goals with clear visibility, dedicated compliance, and real-time operation updates. This can be achieved by automation platforms that enable you and your channel partners to gain better accountability and governance of your MDF and partner funds programs. Using these platforms, you can directly engage with your partners – track program milestones, and ensure diligent compliance with program guidelines.

Partner funds automation tools like WorkSpan enable you to analyze your spending on funded partner initiatives by providing a holistic view of your program funds and their allocation. With these insights, you can improve your program investment returns and manage your funds and distribute them to your ecosystem partners logically, resulting in increased margins and no funds leakage.

Partner Funds Management Platforms provide real-time status of your partners’ activities, their claims, and payment requests. Your partners can self-monitor their activities and program progress using dashboards and reports all through the lifecycle of your partnership.

Take a look at this video with Joan Richards, Director, Global Alliances and Partner Marketing at Red Hat sharing some amazing results that she and the Red Hat team have achieved since implementing WorkSpan to manage their global MDF program.

Through automated features like ROI reporting and funnel metrics, you gain access to your program’s performance metrics in real-time. As you gain clear visibility of these insights, you can better assess your partners’ performance and offer them any support, if needed. These insights also enable you to analyze your partners’ forecasted spends and measure program profitability after program completion.

As discussed earlier, you can offer multiple incentive programs to your partners depending on their brand value, goals alignment, geography, and funding arrangement. But, let’s face it – managing customized partner incentive programs for different partners on spreadsheets is daunting and can result in compliance issues. With an automated platform, you can manage multiple customized partner programs efficiently. Additionally, you can even automate program exceptions for your specific partners according to their business case.

Partner funds management platforms help you with automated and agile management of funds from fund creation to claim payment. A modern platform designed to automate your partner fund processes provides the capabilities to allow agile changes to your programs and scale the automated system to meet the evolving market demands. Such an agile and scalable system architecture for your partner incentive programs can offer competitive advantage to you and your ecosystem partners.

Figure 8: Partner Funds Proposal and Claims Process on a Shared Platform – A Partner Funds Management Platform like WorkSpan enables ecosystem partners to work collaboratively to receive, review, approve, execute, claim, and drive revenue together faster and with more agility.

With an automated funds program, you gain control of your partner incentive programs – from inception to completion. Additionally, automation platforms help eliminate work on spreadsheets, paperwork, and email back and forth. When you leverage automated submissions and customized workflows, your funds processes (like approvals, claims, payments, and more) become faster with reduced cycle time.

We all know the value of a centralized network in the tech world. A modern partner funds automation platform that can not only help you manage your partner-incentive programs but also offer an integration with crucial tools like your partner portals, partner database, bookings database, payment systems, contact creation, and signature management tool, and more. This is done using APIs and Technology integration connectors and you get end-to-end information, saving a lot of your time, money, and effort on manual integrations.

A standardized approach for managing partner incentives and MDF programs using multiple audit points ensures compliance. But, as vendors can have several ecosystem partners, it is almost impossible to audit in real-time. By automating your partner funding program, you can monitor and audit your partners’ initiatives (requests, approvals, exceptions) in real-time with shorter turnaround times.

The opportunity for your company to grow revenue and your overall market by working with your partners is unlimited – and the more you and your channel partners are aligned with the right incentives at the right time, you’ll be working in lockstep to meet market demands and customer expectations together.
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With that in mind, as the leader of your partner incentives programs, you have an incredible opportunity to shape the way your company influences partner behavior to drive the best overall customer experience, exceed customer expectations, get the next renewal, and grow overall revenue with your channel partners. Now that you’ve learned how to drive partner funds for your partners in this guide, you are all set to orchestrate incredible partner programs for your business.
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Choose the right approach and right platform to digitize your partner funds program and unlock the potential of your ecosystem strategy to drive more channel sales. Dive into your partner ecosystem, and start driving your partner funds or market development funds program, to win in the market with your channel partners!