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Building A Better MDF/Co-Op Program

Sell-through allowances and sales spiffs are very often the go-to pillars of many channel marketing programs in the consumer goods market. These programs are a great way for manufacturers to provide some push through the channel without getting into discounting at the consumer level.

Frequently, co-op and market development fund (MDF) programs are viewed as more of an advertising cost center or “just” another marketing tool, but that really doesn’t do those programs enough justice.  The computing power that allows us to analyze big data sets is the same tool that is helping many companies move channel incentives out of admin and into strategy.  

MDF/co-op programs are no exception. 

Simply updating your brand’s approach to co-op and MDF programs can dramatically increase their effectiveness and thereby dramatically increase the benefit you get from them.   Here are a few areas to look at if you want to improve the way you use co-op and MDF programs as incentives with your channels: 

Pay PartnersQuickly 

Pay your channel partners fast and frequently and pay them when they want to be paid. Play fair: your channel partners are laying out money from their cash flow to help develop your brand and seeing that money come back to them quickly will make them much happier as well as increasing program participation and compliance.   

Technology has evolved sufficiently to the point where you can now build out a compliance engine to pre-approve co-op buys.  Do you think your partners would find pre-approval comforting and valuable?   Could offering pre-approval drive greater levels of participation by your partners?

Unlock The Secrets In Your Past Program Data

Right now you likely have partners out in the channel spending MDF/co-op dollars on ad buys that have little to no ROI for either of you. 

The reason?  That’s the way they’ve always done it!  

In fact, we’ve all done it: sticking to tactics that used to work incredibly well for us and so we just kept doing it, never checking in or testing anything new.   Realistically, there is little imperative for them to ever test or change and they certainly don’t need more tasks.  Now you can automatically coach back better practices to them that are based on real data, sharing what’s working in like marketplaces across many territories.

Receiving the correct information at the correct times helps you work better by helping you to build out your future co-op policies based on past successes. 

Modernized Co-op relevant reporting should keep real-time immediate spend breakdown right at your fingertips, including spend type analysis.  This way you always know what media types your partners are buying, and what they may be missing out on.  You can feed updated best practices to your channel to help them use their funds to greater effect. 

Get your incentives software connected to your CRM and ERP software and you can start to seamlessly leverage the power and efficiency of your existing systems and processes. 

Be Helpful To YourChannel

Dealers, especially many of your “long tail” or non-national dealers already have plenty of work on their hands and worrying about getting the very best results from the co-op funds is not likely to be at the top of that list.  Think of the franchisees and owner-operated or other smallish operations out in your channel.  How can you help them make better advertising buys? 

One great way is by offering pre-approved customizable advertisement media that they can pay for directly with their co-op dollars.  This has huge benefit for both parties: you have more advertisements in more markets and your dealers are not having to deal with design, copywriting, brand standards and worrying if their program is going to get funded once the work is done. 

Be Agile 

Traditionally, many incentive programs are run annually and rarely modified along the way. You need to be flexible and able to modify your programs in order to dominate market opportunities or competitive threats that may present themselves. 

Being nimble and open to customizing your programs helps you protect your brand, protect your partners and gives you the flexibility to grow into new territories with specialized, more aggressive offerings. 

Be Strategic

Related to the above:  these programs are regularly run on a national scale and have traditionally been unable to deal with specific social graphs, economics and other considerations that make each territory unique. Consider running various programs simultaneously that may be short term and/or brand, product, location or retailer specific.  Taking the time to craft strategically targeted programs always gives a noticeable life in effectiveness when compared to a one-size-fits-all, blanketed approach. 

So what’s in it for you and your brand?

AnalyticsTo Determine Next Steps

Offering more value and greater usability to your partners increases usage of your program’s resources.  This generates more data for you and that means increased measurability and improved strategic decision-making in planning future programs. Take your data insights to the next level by using them to inform the other programs you are running in those same channels, such as your sales spiffs or sell-through allowances.  

Build Engagement At The Dealer Level

When effectively used as an incentive, MDFs can increase the retailer’s willingness to participate. With greater buy-in, you get greater cooperation, which is really good when it comes to brand control. Your co-op programs act as the bridge between the consumer and the retailer, a very important touch point when you are building and protecting your brand value.  

In short, and as with any sales incentive, it’s up to you whether your retailers view your co-op or MDF programs as a fiscal drain, an ATM dispensing free cash or as an exciting opportunity to collaborate for fantastic mutual benefit.   No type of channel marketing incentive is inherently flawed; good design of your program is what makes it effective enough to get you and your channel partners the spike you are looking for.