While so many channel marketers struggle to get partners to take advantage of the market development funds (MDF) they offer, the situation at Red Hat, a leading provider of enterprise open source solutions, is substantially different.
In the past two years, the number of partners that are participating in the company’s MDF program has climbed more than 30%. And even as the company increased its MDF budget by 40%, more than 90% is being utilized by partners annually.
Like most companies, Red Hat’s MDF program was not always so effective or efficient, said Julie Hegner, the director of MDF. What made MDF management especially challenging for the company’s in-house team was that each of the company’s five regions had its own set of processes, which complicated important tasks such as auditing and paying claims and ensuring compliance with local regulations.
The company had a pretty good understanding of how much funding was being allocated for what programs, “but it was all being audited and paid manually through our AP systems and with the partner operations team. When our finance teams and our internal audit teams, at my invitation, started looking around the MDF program, we realized that there were a lot of gaps that we could cover.”
Hegner recognized that an investment in an MDF management solution would address many of her team’s challenges. But she also realized that Red Hat needed help auditing partner claims to make sure they complied with local regulations and internal controls, as well as other time-consuming services.
After a review of several RFPs, Red Hat selected Ansira, a channel marketing solution and services provider, to help develop and deliver a globally consistent MDF program, that could scale to support the company’s growth. Ansira was “able to give us the platform that we needed for multiple programs, our channel alliances and even intel for incoming MDFs so we can manage those funds better,” said Hegner.
To drive adoption of the new program, Ansira supported a full-service implementation and communications plan, with live and recorded training. “I think every company struggles with change management, but we were able to do it better because this was a consistent, documented, well communicated process that we were moving to.” Selling the changes to Red Hat’s regional teams was made easier because “they were going through some of the pains.”
The MDF challenges that Red Hat faced were not unique, said Karlyn Bentley, vice president, client partnership at Ansira. Many companies are “still offline tracking a lot of the programs on spreadsheets, requiring partners to submit requests for MDF via email.” But like Red Hat, more businesses are making investments in automating their MDF efforts, because “we’re making it a lot easier for the clients that we support to allow their partners to participate and engage in a program that’s easy to use.”
The new MDF program accelerated participation by many engaged partners with self-service tools. But it also focused their attention on activities that were known to grow their businesses and Red Hat’s sales too. “When it comes to reviewing many of the metrics that are associated with an activity or with a set of activities, it was much easier to do that at a global level,” said Hegner. That visibility allowed Red Hat and its partners to “do away with programs or things that were not moving the needle as much as we’d like. It gave us a global visibility to demonstrate what our marketers were doing — good, bad, or otherwise – and make some changes that were beneficial for us and our partners and the business together.”
In addition to helping partners market more efficiently and effectively, a key benefit of the enhanced program has been the acceleration of reimbursement of funds spent on approved activity. “We are probably about 40 days faster than we used to be, which is huge — a big win,” said Hegner. Ansira staff review claims, check the proofs of performance, and makes the payments. “That’s part of the service that we really love, having that human interaction, actual people reviewing the submissions and being able to work with partners.”
Encouraging partners to invest their MDF in more effective activities will continue to speed reimbursement. By streamlining time-consuming tasks with the Ansira platform and transferring several duties to the service provider’s staff, Red Hat channel marketers can work more closely with partners “on activities that actually drive business,” said Hegner.
The company is encouraging its partner to focus more attention on digital demand generation activities and content syndication, “activities that would produce more measurable results than we would see with C-level lunches or dinners or sports events or golf, all the things that we’ve gone through over the years,” she said.
Red Hat is aiming to compel more partners to take the lead on demand generation too. “What we’d like to see going forward are more projects where we can fund a partner with dollars for something that they to drive on their own inclusive of Red Hat content,” she continued. “There’s a lot of manual steps and hand holding with the partners, but that’s okay because it keeps us engaged with them knowing that we’re in this together.”
Further, by helping partners identify more effective marketing activities, providing compelling marketing materials and expediting reimbursement, Hegner hopes that partners will supplement MDF allocations with their own dollars. The message to partners – “If you also contribute you can get an even bigger benefit.”
Enhancing partner relationships and boosting satisfaction is certainly of goal of Red Hat’s MDF program, said Hegner. “Everybody says this, but Red Hat wants to be known for being easy to work with.” Capturing the attention of partners, especially those that are more proactively marketing their own brands as well as company they represent, is a challenge, she said. “There are so many vendors. But we’re continuing to try to make the effort and be relevant in areas where it makes absolute sense to do so. And this is what we’ve been able to do in the scaling model with Ansira.”
“I think what qualifies as a good MDF program is moving beyond just revenue based metrics,” added Bentley. “We’re looking a lot at different things and presenting them to our clients to consider when they rate and qualify the effectiveness of their marketing programs.”
Hegner expects that Red Hat will continue to grow its funding toward its partner base, “because we can demonstrate that these activities are beneficial to Red Hat but also to the partner. It keeps them engaged and keeps them interested in selling Red Hat.” she said. “Partners are using it, they’re growing and they’re adding to our bottom line.”