7 Steps to Unlocking Long Term Value Through Co-Marketing

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f you’re an Independent Software Vendor (ISV) or a Value-Added Reseller (VAR) you should be taking advantage of co-marketing funding through Marketing Development Funding (MDF) programs from your upstream channel partners. High performing ISVs and VARs can attract up to 100% funding from Tier 1 product vendors for approved campaigns. What you may not realise however, is that even businesses that represent only mid-tier or small revenue or those don’t resell Tier 1 products can still access co-marketing funding via slightly more ad hoc request processes for either full or partial payment for a proposed activity.

On the face of it, this is a very attractive value proposition and one which you might expect to be widely subscribed amongst ISVs and VARs. Surprisingly, this is often not the case. Firstly, ISVs and VARs aren’t always aware of the product vendor programs that provide access to funding; this could be because their channel partner lacks capacity in their patch, or simply because the programs are not well promoted by the product vendor. Secondly, the terms and conditions under which co-marketing funding is offered often seeks to restrict the beneficiaries to the exclusive promotion of the funding-partner, rather than allowing co-marketing funding to contribute to a own wider, longer-term strategy.

In a previous post of ours titled The Vibe of Branding, we touched on the fact that heavily sales-driven companies rarely invest in branding initiatives because the return can’t be measured within quarterly sales targets. For this same reason, long-term strategic marketing initiatives aren’t prime candidates for co-marketing funding, which is measured by the short-term sales targets of the vendor and distributed in small amounts each quarter. This means that ISVs and VARs inevitably end up being forced into allocating the spend to a standalone sales promotion for the product vendor which doesn’t fit within the ISVs or VARs strategic marketing plan.

Often, significant time is spent by each party about the balance of objectives when planning co-marketing spend because each has objectives which – while having some overlap – are often poorly aligned.  Perversely, often more time is spent negotiating the balance of objectives than actually executing the resultant campaign. This inevitably leads to wasted funding and effort because neither party really ends up getting what they really want out of compromise. Sometimes the campaign simply doesn’t go ahead at all.

We've put together seven steps which will assist ISVs and VARs get the most out of their MDF program.

7 Steps to Unlocking Long Term Value Through Co-Marketing

1. Identify Product Vendor Objectives. These will typically be about increasing indirect sales, but mapping these out formally can offer some great insight to both parties.

2. Identify ISV or VAR Objectives. These will come from your strategy and can include a range of things, from increasing product sales through to increasing brand awareness within your market.

3. Categorise Objectives. Categorise the objectives of both parties in a way the allows differentiated treatment. Immediate objectives will usually relate to leads, sales, revenue etc., and should be framed into SMART targets that are measurable at the conclusion of the campaign. Operational Objectives may relate to sales growth targets or increase in market share and may be measurable over a period of around twelve months. Strategic Objectives could relate to matters such as brand awareness and brand recognition, customer return rates and even customer satisfaction measured through Voice of the Customer or similar methods.

4. Agree on campaign objectives. We have found that simply mapping the objectives of both parties can identify a lot of common ground, not just on immediate objectives but also in identifying the mutually beneficial nature of aligning operational and strategic goals. Leverage this common ground to agree upon immediate, operational and strategic campaign objectives.

5. Allocate co-marketing funding. Having agreed upon the campaign objectives, allocate the agreed funding amount to the achievement of objectives on each horizon. The 70: 20:10 rule is a good starting point for splitting the funding allocation: 70% on the achievement of immediate objectives, 20% on operational objectives and 10% on strategic objectives.

6. Map activities to objectives. Now armed with an idea of spend allocated to each set of objectives, develop your list of campaign activities required to achieve the campaign objectives. This may include sales promotion activities to achieve immediate objectives as well as longer term branding initiatives to achieve strategic and operational objectives.

7. Follow-on opportunities. As the relationship between the two parties matures and trust is established, look for opportunities to negotiate the aggregated use of co-marketing funding. If 10% of your annual co-marketing budget is allocated to strategic initiatives, then aggregating this 10% for the whole year into a single strategic initiative can have far more impact that spending the same amount on an ad hoc basis throughout the year. After all, growing sales channels is good for everyone in the long-term.

If you are seeking co-marketing funding from a vendor or you are a Channel Manager trying to encourage ISVs and VARs to take advantage of the opportunity to drive awareness of their company and your brand, then schedule a meeting with us and find out how we can help with the planning and execution of marketing plans. We have expertise on both sides of the coin so we are perfectly placed to help make the most of co-marketing programs.

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