In this second article of a two part series, ZS Associates Principal John DeSarbo and Semdrive Executive Vice President of Sales Darren Yetzer discuss how channel partners can better manage their MDF spend and its impact. "How Channel Partners Should Invest MDF To Accelerate Profitable Growth” was originally published by Channel Marketer Report on December 2, 2014.
Not so long ago, “lunch-and-learns,” sporting events and trade shows were the keys to a channel partner’s marketing success. Marketing was about getting “butts in the seats” — i.e., assembling as many IT buyers in a room as possible in the hope that the sales team could meet and create opportunities with prospects and customers in person.
Today, that type of marketing approach just won’t cut it. IT buyers increasingly prefer to engage with solution providers online as new social media networks, technological innovations and digital marketing platforms change the game.
With 62% of technology consumers going online for at least some part of their shopping experience, according to a 2013 Ernst & Young survey, IT vendors and channel partners must revisit, revise and digitize their marketing techniques.
In our last article, we addressed ways IT manufacturers can make the move to digital marketing through better allocation of market development funds (MDF) to their channel partners. Now, we’d like to articulate strategies channel partners should follow once they have these funds to reach customers and drive profit in the year ahead.
In that regard, we stress one fundamental question for all IT channel partners: Are you ready to commit to digital engagement and invest in industry-standard marketing tactics?
Wine And Dine Vs. “Click” And “Data Mine”
When used properly, MDF can generate growth for both the channel and vendors. In fact, channel partners can witness as much as a 15% to 20% growth increase when they spend MDF properly. Plus, with the use of new tools, partners can achieve more than a 500% ROI on MDF-funded digital marketing activities.
However, numerous partners struggle to invest these funds wisely and continue to apply MDF to tactics that are familiar, though not always the most impactful.
Many partners have historically prioritized investments in sales and engineering resources over marketing. As a result, some struggle with lean marketing teams and insufficient access to modern marketing tools and advanced digital technologies. It’s no wonder, then, that they typically spend less than 20% of their marketing budget on digital marketing. Consequently, they risk wasting a significant portion of their manufacturer’s marketing funds on activities that are out of sync with IT customers’ buying preferences. The result is often underperforming marketing campaigns and an inability to grow beyond the current customer base.
In fact, 90% of IT buyers begin their research online via search engines, according to marketing agency Modern Marketing Partners, and often end up on a partner’s web site. Unfortunately, many partner sites are outdated and difficult to navigate. Prospective customers have a hard time finding relevant information for solutions that address their business challenges. It is also often difficult to determine which vendors are affiliated with the partner. In turn, customers who have been driven to a partner’s web site by vendor marketing activity frequently do not find the information they are looking for — and the vendor’s marketing investment is wasted.
In that same vein, channel partners typically have a limited social presence and lack an understanding of how to use and connect their social channels, such as Facebook, Twitter and blogs. Some channel partners are quick to get excited when their content gets a “like” on Facebook or “re-tweet” on Twitter, and consider this a reliable indication of customer interest, which is not always the case.
True, attending solution partner seminars and industry conferences are often essential steps in a customer’s purchase process — but channel partners cannot just wine and dine today’s customers. New customer acquisition and account penetration is dependent upon expanded digital marketing capabilities that enable partners to engage customers in their preferred forum at the right time in the buying process.
Efficiency Through Digital Transformation
A wholesale distributor of high-technology products recently realized the vast majority of its resellers were not “digitally enabled.”
Prospective customers frequently searched for solutions built on the vendor’s technology, which ultimately needed to be purchased from a distributor. Unfortunately, these customers were often not directed to the actual resellers selling the solutions. Therefore, the distributor needed to help resellers improve their digital marketing capabilities in order to benefit from the vendor’s investment in search marketing to build pipeline and increase sales.
To improve the digital presence of each partner in its network, the distributor invested in centralized business intelligence and partner-level digital marketing investments — and saw a 600% increase in revenue generated from online leads, which also experienced an equivalent increase.
In this instance, effective digital marketing connected the channel components in a more streamlined and efficient manner, increasing revenue for each channel stakeholder — the vendor, distributor and channel partner.
Movin’ On Up To The Digital Side
To evolve in today’s world, partners should start by objectively evaluating their online presence and ensure it is aligned to the vendors they support. To thrive in a world with fundamental shifts in how technology is researched and purchased, channel partners should take the following steps:
Step 1. Assess Digital Marketing Capabilities
We note in our prior article that vendors should assess their partners’ digital marketing capabilities. It’s important for channel partners to take a step back and complete their own personal evaluation as well. In doing so, they’ll better assess their digital savvy, identify areas for growth and utilize vendor support and guidance appropriately.
The assessment should include two questions:
- What is the effectiveness of each digital marketing component (search engine optimization, pay-per-click, syndicated content, responsive sites, micro sites, etc.)?
- Are all of these components integrated and connected to maximize lead generation and revenue impact?
Step 2. Invest To Address Gaps And Build New Digital Marketing Capabilities
Partners should invest available marketing budget to build foundational capabilities that will enable a greater focus on digital marketing. Investment in critical enablers such as a robust marketing automation tools will enable partners to execute more sophisticated digital marketing campaigns. Similarly, an easy-to-navigate, solutions-focused web site and expanded social presence are core requirements for any partner who plans to focus more on digital versus traditional marketing tactics.
Step 3. Leverage Analytics To Identify Opportunities To Improve ROI
Digital marketing campaigns are much more measurable than traditional tactics. For example, partners can measure their customers’ response rates to online tactics more quickly and accurately compared to offline tactics such as trade shows. Increasing investment in digital marketing provides partners with more information that can be analyzed to quickly identify opportunities to improve marketing mix and boost ROI on marketing activities.
With 2015 just around the corner, the time is now for channel partners and vendors to work together and modernize their marketing approach. Digital marketing focus will help channel partners better manage their MDF spend and its impact. In doing so, they will truly provide value, capture prospective customers, increase their current customer base and drive profit.