By Gerald Baldino It’s the same story every year. Vendors allocate hefty co-op and MDF (market development fund) budgets, only to watch them go to waste due to low engagement. As a result, channel partners wind up missing out on easily accessible funds that could go toward connecting with target audiences and driving revenue. This is puzzling, especially when considering how effective incentive funds can be for achieving growth. Promotional allowances can lead to cost savings, better visibility, stronger relationships and improved ROI. In fact, BrandMuscle found that most partners who generate growth north of 10 percent attribute their success to co-op marketing alone. Yet 64 percent of affiliates don’t take full advantage of their co-op funds, while one in 10 don’t use any. And altogether, about half of the roughly $70 billion that goes toward annual co-op advertising winds up unused. Further research from Zinfi shows that 60 percent of development funds get wasted on a quarterly basis. It’s up for debate as to whether continued underutilization will impact future MDF and co-op budgets. However, the trend is becoming a growing issue for decision makers across multiple industries — especially with incentives programs evolving and becoming increasingly scrutinized by CMOs and finance teams. For now, the message for channel partners is clear: When it comes to funding, use it or lose it. “Obviously the strongest ROI for incentive programs is achieved with high partner engagement, which explains why 87 percent of our participants are concerned about unclaimed incentive budget with 35 percent being very concerned,” said 360inisghts in its latest “State of Channel Incentives” report. The report also sheds light on some key drivers behind utilization. Respondents said the strength of a partner’s relationship is the strongest driver for claiming and redeeming an incentive (60 percent), as well as the timeliness of payments (40 percent), and program simplicity (39 percent). Interestingly, only one-third (33 percent) believe the generosity of incentives to partners accounts for proper utilization. Co-op and MDF funds continue to go unused, resulting in missed opportunities CHANNEL MANAGEMENT Top Drivers of Incentive Program Utilization Among Partners The strength of the partner relationship 60% Timeliness of payments 40% Simplicity of program 39% Generosity of program 33% Source: 360insights Dollars Lost 42 CHANNELVISION | JANUARY - FEBRUARY 2024
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