3 Reasons Channel Partners Are Not Taking Your Money and How to Mitigate the Problem

By Gary Ritkes | Founding Partner and Chief Revenue Officer at SproutLoud

There are essentially three main problems that cause co-op or marketing development funds to go underutilized: weak internal promotion of the program to partners, cumbersome disbursement and reimbursement processes, and simply they don’t know how to spend it.

So how do you mitigate those encumbrances step-by-step, and can I illustrate with examples? Sure.

How to Mitigate Weak Internal Promotion

Every network is different (some are open and some are close, while some more apathetic than others), but they all respond to robust communication so let’s go through the steps:

1. Evangelize the channel reps by clearly showing them (with video, testimonials, stats, in-person / telephone meetings or whatever it takes) the value proposition of the co-op or market development fund so they can evangelize it for you throughout the network.
2. Directly contact the local partners definitely through email and possibly through phone calls or direct mail. (Yes, multi-touch point communications aren’t just for customers.) Make sure the promotion towards the partners is compelling, again using any means necessary to demonstrate the value proposition.
3. Make sure communication to channel reps and partners is timely; promote funds to local partners in time to opt-in to the great preconfigured marketing programs that run in accordance with partners’ peak sales seasons and or create dialogue with customers in a relevant-timely manner.

How to Mitigate Cumbersome Disbursement and Reimbursement Processes

In general, you will need to drop manual processes, divest of legacy technologies, and reject the tendency to manage promotional allowance with fragmented technologies.

1. Use a co-op funds management tool to assign, distribute, and reconcile funds that ties into the same marketing resource management platform where the preconfigured marketing programs are offered.
2. Make sure the tool has electronic funds distribution of disbursements and reimbursements, approvals functionality, and historical account statements to track fund usage behavior over time.
3. Revise what your internal processes and the tool can do to help partners with compliance for tax and legal regulations, and in providing an audit trail.

How to Mitigate the Problem of Partners That Don’t Know Where to Spend Funds    

Partners are not marketers and are so focused on operations they don’t know where to spend the available funds. When they do make decisions on digital and traditional ad spend those decisions can be knee-jerk, which leads to ill-spent funds.

1. Offer preconfigured marketing programs through your “Through Partner Marketing Automation” platform that is tied to the co-op funds management tool. Subsets of marketing programs should be packaged into marketing plays that can be run by partners within certain time parameters.
2. Educate partners on how to evaluate their local context and choose the correct marketing programs offered to them.
3. Provide easy access to a local marketing coordinator or marketing concierge service that is essentially a dedicated customer service representative to help partners customize and deploy their program.

Co-op and market development funds are and will continue to be the foundation upon which many indirect channel partner marketing programs are built. That is why their optimization must be prioritized over the optimization of the individual marketing programs themselves. You have seen from the explanation above that it’s possible with good internal communication, good technology and a robust local marketing strategy, you can mitigate your risk and get your channel partners engaged in a mutually beneficial co-marketing program.