Structural failure in how the channel funds growth

Traci Maynard, ICT channel and partnership specialist.

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Throughout my career, I’ve worked across many technology vendors, and I’ve seen the landscape of channel funding shift dramatically.

In my early days, particularly during the "HP printer era" when users printed "more pages than God’s got sheep", our modus operandi was simple: get as much Market Development Fund (MDF) support as possible.

As a representative for one of the largest distributors, the goal was clear − we wanted the vendor to cover 100% of the coststo make up for the low margins of broad-based distribution. We knew the rules, submitted our plans in advance, and often walked away with the lion’s share of the funding bucket.

But today, we face a reality that many in the industry are hesitant to address: roughly 60% of allocated MDF funds go unused every quarter. This isn’t just a minor rounding error; it is a structural failure in how the channel funds growth.

According to recent data, 43% of partners use less than half of their total MDF allocation. As I see it, the MDF budget itself isn't the problem − the delivery system is.

To make the most of these resources, we first have to understand what they are. MDFs are financial resources vendors provide to support their partners' marketing activities, encouraging co-branded campaigns that increase awareness and drive sales.

Unlike co-op funds, which accrue backward based on a percentage of past sales, MDF is discretionary and forward-looking, allocated against a specific strategic plan.

In the current market, these funds are integral to programmes like the Microsoft AI Cloud Partner Programme, or the AWS Services Partner Tiers, allowing us to promote everything from Azure and Teams, to complex cloud migrations.

We face a reality that many in the industry are hesitant to address: roughly 60% of allocated MDF funds go unused every quarter.

However, as I’ve learned the hard way, these programmes often come with "fine print". I once worked with a hyperscaler whose rules involved a 30-page handbook with unique qualification criteria for every subcategory. If you don't stay on top of those details, you end up "holding the proverbial can" when reimbursement is denied.

For managed service providers (MSPs) and distributors, claiming 100% of your allocated spend isn't just about "free money" − it's a strategic necessity.

For a distributor, every dollar of MDF helps offset the razor-thin margins inherent in the volume business.

For an MSP, these funds provide the financial assistance needed to create high-impact campaigns, like webinar series or industry-specific workshops, that would otherwise be a significant burden on the balance sheet.

Leaving money on the table is effectively giving competitors a head-start. In fact, many vendors use a scorecard systemfor annual awards that measures growth and the percentage of new partners signed up.

If you aren't utilising funds to drive these metrics, you aren't just losing the money; you’re losing your standing within the vendor’s ecosystem. Utilisation is a direct indicator of process health, and if the rate is low, you must diagnose the leakage in the internal workflow before the vendor reallocates those dollars to a higher-performing partner.

If there is so much money on the table, why is the median utilisation rate across regions like EMEA only 54%?

Based on my observations, the causes are more operational than strategic. The "utilisation gap" usually breaks along predictable lines: larger partners with dedicated teams thrive, while SMB partners leave money on the table because the programmes are too complexand the portals are a nightmare to navigate.

Furthermore, the approval cycles are often far too slow. The median approval cycle is 38 days, but the top-performing programmes − those with over 78% utilisation − enforce a 14-day maximum approval cycle.

When you have to wait over a month for a "yes", the campaign window often closes before you can even start.

If you want to secure funding and actually see a return, you need to change your approach. Here is what I’ve found works best:

Prioritise the relationship: Developing a strong relationship with your vendor’s channel manager is the most critical component. You need to help them understand how their product fits into your broader service catalogue.

Think digital and measurable: Vendors are tired of funding "lunch-and-learns" or "presentation and drinks" evenings that don't produce results. Focus on digital tactics − paid social, Google Ads, or webinars − that find prospects and qualify leads.

Leverage campaign kits: The most successful vendors provide "pre-built campaign kits" − standardised ads, e-mail sequences and landing pages that are ready to run within 48 hours. If your vendor offers these, use them. They cut execution time from weeks to days.

Simplify the paperwork: One of the primary reasons partners disengage is the "reimbursement lag". I recommend vendors move to a simplified, three-field proof-of-execution form: campaign name, proof file upload and completion date.

We must also be realistic about what won't be covered. Most vendors, like Cisco, have strict lists of non-reimbursable expenses, including alcohol, personal travel, or high-risk activities like skydiving or "mechanical bull-riding".

Even "swag and merch" are increasingly scrutinised because vendors struggle to equate printing a logo on a shirt to a sales ratio. For instance, Cisco often caps promotional merchandise at $75 per unit.

You must also respect the timeline. Most funds are managed on a quarterly basis, and if you don't acknowledge the funding or submit your claim within the "fund period," the money is forfeited. In the world of MDF, if you don't "use it", you most certainly "lose it".

The landscape is shifting from transactional models to outcomes-focused modelsthat reward partners across the full customer journey − from advisory to renewal. MDF is no longer just about trade shows and e-mail blasts; it’s about co-innovation and customer success.

My advice? Plan your year in advance.I remember sitting down in the final quarter of the previous year to map out our marketing, sales enablement and partner incentive plans for the year ahead. We knew our expectation of funding before the first quarter even started.

The partners who figure out how to actually deploy these dollars, and the vendors who make it easy for them, will be the ones who compound their advantage every single quarter.

Don't let your budget expire − align with the vendor’s strategic goals, fix your internal approval bottlenecks, and go get that 100% reimbursement. Your margins depend on it.