Forget What You Know About Tech Channel Marketing and MDF

Marketing in the tech channel has evolved, and relying on traditional MDF (Market Development Funds) to drive results doesn’t cut it anymore.

The old days of using MDF as your primary marketing engine are gone, replaced by the need for more creative, strategic approaches.

Today, it’s not enough to simply cash in on MDF dollars and pump out generic content. You need to build long-term relationships, define your unique value proposition (UVP), and supplement MDF with your own marketing efforts. Creativity and strategic investment are critical to standing out and driving genuine results in this new landscape.

Understanding how MDF fits into this new reality—and how to use it effectively—can be the difference between barely getting by and dominating your space.

Successful tech marketers are finding ways to supplement MDF with their own marketing resources, focusing on customer relationships and brand awareness and creating authentic, targeted content that speaks to their audience’s unique needs.

Sam Grise, Director of Strategy, 4B Marketing

Tyler Jacobson, Director of Marketing, 4B Marketing

Aaron Rosenbluth, Director of Content, 4B Marketing

Sam Grise:
My name is Sam Grise, Director of Strategy with 4B Marketing, and we’ve got an exciting discussion for you today. We’re talking about MDF and the tech channel. Forget what you know today because it constantly evolves and has changed so much over the past five years, let alone one year.

Today, I’ve got a couple of panelists joining me from our marketing team at 4B. But before we do that, I want to introduce 4B Marketing. We are a tech channel marketing organization. That’s where we were born, and all of us had careers. Our founder had a 20-plus-year career in the tech channel. I had an eight-plus-year career selling in the tech channel from value-added resellers, systems integrators, and even the emerging tech market.

We focus on business outcomes. We want to drive revenue, so this topic of MDF needs to be a revenue driver. We need a marketing budget to help facilitate sales and close deals. When we create a strategy, we’re talking about multiple different budgets we’re using to achieve that. We’re focused on five business drivers: driving revenue, reducing cost, reducing risk, cash flow optimization, which is a big budget piece of it, and asset utilization.

Today’s conversation will go in-depth into what MDF is, how MDF is playing in the market, and what we need to change about utilizing MDF to drive revenue. I’m excited about our panelists today because they’ve been living in this world of MDF budgets and driving revenue. So, I’ve got Tyler Jacobson, our Director of Marketing. Tyler, do you want to do a quick introduction?

Tyler Jacobson:
Yeah. Hi there. Tyler Jacobson, Director of Marketing here at 4B. I’ve worked in the tech sales channel since I started working with 4B. What is that now? Eight years, close to it. And so I’ve had much experience, especially with MDF and MDF programs. So, I’m excited to present some of the things we found and help us forge a path to success here.

Sam Grise:
Awesome. I’m excited to have you join the discussion today. Our Director of Content, Aaron Rosenbluth, is here, too.

Aaron Rosenbluth:
I’m Aaron Rosenbluth, Director of Content. I was the first employee of the agency. We’ll call that officially about eight and a half years ago. Still, about two years before that, I started working with Greg, our founder, ghostwriting content for him and managing social media feeds for partners in the channel. I’ve had a firsthand seat to witness the changes and see how things have ebbed and flowed, where it’s begun, and the pitfalls of both sides. It’s been interesting, and I’m stoked to run through it with you guys today.

Sam Grise:
Awesome. We have a chat open. So, if you have questions as we go through this, let’s keep it an open dialogue. Right. The whole point of this today is to help with what we’ve learned and help those out there know more about MDF and how to utilize it effectively. So feel free to drop questions or notes in the chat or thoughts you may have. I will be monitoring that during the discussion as well. Make sure you stay until the end. We have an offer for you guys at the end to help you understand this process and maximize your efficiency.

So, with that, let’s go ahead and dive in. Starting from the beginning, it comes down to expectations and how we realign them. And to give you insight into the MDF market, it’s changed a lot. As I’ve mentioned, the days of getting 40 grand, 50 grand, 60 grand, and 70 grand in a quarter to drive marketing efforts are gone. It doesn’t happen anymore, right? OEMs are tightening their purse strings for multiple reasons. COVID had a significant impact on that. Also, the return of value on that MDF fund through the partner channel was a big piece of it as well, which comes back to the expectation side of the house of really what the OEMs are trying to accomplish out of it and what the partners are trying to achieve out of MDF.

It is a budget to drive revenue, get opportunities, etc. But how has that changed, right? With the limited budget, what are the requirements? What do we need to come back to show that we’re driving that revenue? And I would love to get your feedback, Tyler and Aaron, about how you’ve seen it change over the years. I’ll open it up to both of you.

Aaron Rosenbluth:
I just want to say, real quickly, the most significant shiny object change that I’ve seen was not related to content or anything in that sense, but watching some of these monumental parties and events that people used to throw with massive open bar budgets and all of these things, these big, shiny objects that I think people got used to being able to organize and throw that would hit a ton of people at one time and give them a good time, but didn’t always result in a ton of opportunity. It seemed like a giant waste. So I’ve witnessed a steep decline in events like that, refocusing, and people scrambling to figure out, like, that’s the old way of doing things. What do we do now?

Tyler Jacobson:
But there are better ways to go about it than that. Events continue to be in-person, and experiences continue to be a great lead generator for this industry. One thing we don’t find is a lot of leads coming in through SEO for this. Specific channels don’t work in this space, and there are specific channels that do. Events can be an excellent place to start building that relationship.

So, let me take a step back here. When I was introduced to the MDF programs, I saw an inherent flaw: these are quarterly programs meant to generate results within a quarter. And that’s different from how the buying cycle goes for the people you’re selling to. Right. And so, it can take a long time to get leads and sales. You might see those materialize a year and a half later. So inherently, that’s flawed. And how we judge the effectiveness of an MDF program might be flawed right out of the gate. So, we need to think about the staged cycles. And I know that we’re going to get into some of this. Okay, what can we expect if we’re introducing ourselves to a new audience today?

Aaron Rosenbluth:
That’s a great point. Yeah, the way it’s been done virtually ignores the reality of the buying process and the buyer’s journey. It doesn’t reward thinking about things in the long term. We called it, and we wrote a piece about it, “quarter mania.”

Sam Grise:
Yeah, that’s a great point. Great point.

Tyler Jacobson:
Yeah, that’s a great point of expectation. What’s expected with that investment going into it? It goes into where they’re trying to insert themselves into the buyer cycle, and we’ll get into that from a marketing funnel perspective and the importance of touching every piece of the marketing funnel. However, when taking MDF to a wide range of partners, some of it starts to lead to lazy efforts. How do we quickly get the value proposition from a partner perspective out there without being generic and the same?

And so, I wanted to share something we pulled up off LinkedIn from a marketing perspective. And, of course, we blurred people out and so on, but it’s funny. When you go onto LinkedIn, if anybody’s done this, you take the quotation marks and insert the piece. It was a lot of fun with ChatGPT when it first came out; if you did regenerate response because people were just copying and putting it right on LinkedIn, you could tell right away that it was coming from ChatGPT. But what’s happening is allowing some partners to not be aggressive in their marketing, not get their value proposition out there, and just stick with the status quo, right?

And right now, we are not in a status quo in the market. Buying cycles have changed. More signatures are needed. A deeper value is necessary to close deals, right? Speaking throughout the industry with many of my buddies who are sales reps at different companies, whether partners or OEMs, I see there are challenges to closing deals right now. And these big deals are being delayed. And, of course, a big deal can make your year; it can make a company’s year, right? So, how is MDF going to come in and make that change? But I want to stop here. Any comments from Aaron on this?

Aaron Rosenbluth:
I would love to speak to this. This is a game I like to play. And yeah, you made a good point about the regenerate response. If you’re bored and want to entertain yourself, that’s a good way. But, you know, with this, and I, we blur people out because these are lovely humans, many of whom we’ve seen who post this content, and we don’t want to put anyone on blast. But the point I want to make is that they’re all grabbing literally the same content, the same caption, the same links, the same hashtags from a partner portal and then publishing the content. Most people who publish this don’t realize that virtually everyone else gathers identical content and does the same thing. So this is all I could grab in a screenshot. But if you look at the whole journey, two, three, and four pages on LinkedIn of people publishing identical captions.

I’ve always viewed this as just being odd. Going back to the earliest days of this, I came in as a novice, not from tech, but from a different area of marketing and branding. But this is what we talked about ten years ago. It comes from that mindset of wanting everything to be unique, campaign-driven, and oriented around the differentiator of the partner, the client, or the brand. This blew my mind. These people are just lazily publishing and expecting results from the same content.

Tyler Jacobson:
I want to address the idea of laziness because I’ve heard that word several times. But what we’re seeing here, and in these three persons’ personas, you’re not looking at marketers. You’re looking at people getting instruction from an OEM with the war chest to afford the world’s best marketers. Why wouldn’t you trust this? The OEM is saying that its intentions are great and that they’re trying their best to offer support here. So there’s a lot of good faith here. There’s a breakdown in execution because you end up with a situation like this. You’re not getting into unique value; you’re not getting into target audiences. You don’t even have to be considerate of the recipient of the message and what their needs are because, theoretically, the work’s already been done for you, and you’ve been given a budget.

These three people look like they’re getting about the same results. A couple of people are giving likes, but there are no comments. It’s probably not translating to leads. It’s not translating to sales. But then, when that MDF report comes, you have to start filling in, “Well, what did I get for the money that was given to me by the OEM?” It can’t feel good for these guys. It can’t feel suitable for the OEM. So there’s something that needs to change.

Sam Grise:
Yeah, that’s a great point. Great point. Right. Do the OEMs have the best interest at heart? And they are doing the right thing by enabling the partner community. It’s how the partner community takes what they’re being given and maximizes that for their value proposition to the marketplace and the audience they’re talking to. And that’s a good segue into our next topic. And especially from the integration of sales and marketing, where we need to play in this, right? Often, from an MDF perspective, the expectation is opportunities. We discussed it, and there’s new terminology, like MIP and marketing influence pipeline. And that’s what they want from an MDF perspective, with the quarter mania of “we need opportunities right now” instead of just leads to start developing that and what that looks like.

Also, from a seller’s perspective in the past right, if I got a lead from a webinar or something like that, that’s information-gathering time. That’s not necessarily an opportunity right off the bat, but I would love to hear from you, Tyler because you were starting to get into a little bit of, you know, the audience and what we’re trying to accomplish out of that. I’d love to get your perspective on this.

Tyler Jacobson:
Yeah, I listened to something recently where they said the only thing that matters is the journey with money at the end, right? And if we take that perspective, like, listen, I know the reputation of marketers in this industry, and I understand why it exists. I think the expectation from VARs is, “I want a stack of leads, and I want those leads to turn into business.” And that has been a recipe for disappointment in the modern era, right? Because that’s not going to happen. If you get a stack of leads, they won’t convert. They won’t be strong leads because the natural buying journey in this industry doesn’t lend itself to that.

What marketing does in this space is we are the cheerleaders for sales. We are the ones who help sales begin having those opportunities to create relationships and make sure that there are touchpoints within that relationship. But ultimately, sales have to carry that ball, right? Nobody’s just going to be marketed their way into million-dollar contracts. This system has created tension between sales and marketing. It doesn’t exist only in this industry or in the channel. Still, things like this are what create that tension between sales and marketing, where sales are thinking that marketing is just here as the creative prima donnas who just want things to look and sound beautiful, which there’s an element to that, but people respond to that, that’s the thing.

And then the idea of marketers saying, what are sales doing with all these leads we’re getting? The system is just bound to create tension between the two sides and silo them, and it’s unnecessary. It all works together, with the same team and the same goal. We have yet to look at it from that perspective.

Aaron Rosenbluth:
And there’s something related to this, but going back for me, like, the word “leads” has always rubbed me wrong. “Opportunities” is excellent. “Leads”—when you’re just looking at people as leads, we want more leads, and you’re stripping humanity from that word. And I think when you’re thinking about it that way, you stop looking at the whole person and that person that you’re marketing to that has goals, challenges, desires, and problems that you can solve for them in their work life, whatever it is. So when you start looking at people as simple numbers and leads, like a word like that, I think you stop seeing the person you’re trying to sell and market to. And that’s an important distinction.

Sam Grise:
I love that. I love that. Do you want to go to the Persona side, Tyler?

Tyler Jacobson:
Well, I was going to say, I think that’s why you can’t just throw out marketing altogether and just put all the effort into sales because you do have to understand your Persona, you do need to understand their needs, and you need to know how you uniquely are a better choice for these people, for those people very precisely than any competitor. That’s why just going out there and publishing something that an OEM gave you that everybody else in your industry is posting will not help you. It’s not going to move the conversation forward.

Aaron Rosenbluth:
Yeah. There’s no direct connection there. You’re not going to nurture the relationship that way.

Sam Grise:
Yeah, that’s a great point. I’ll give you an example of my past life as a seller in this space. From a leads perspective, with the way MDF is right now, sellers are putting in everybody who comes to the event. We can hit that metric to see how many leads are coming in. But is that the correct Persona I need to talk to from a sales perspective to close the deal?

There are several sales methodologies out there, such as medic and SiPAB. There are many that you can follow. But is that the decision-maker I need to have a conversation with to get the ball rolling? Or is that the right person to talk to? An excellent example of that is in my past life. As I mentioned, I was in the contact center and had leads come through in the data center.

Now, because I’ve had a career all over the space, I know how to shift the conversation for cloud utilization and retirement of cloud utilization and those aspects to get the conversation going. But that wasn’t the right person I was supposed to talk to. But because of the way the system was set up, it qualified as a lead. So then I’ve got leadership from a sales perspective saying, “Hey, marketing’s throwing you all these leads. Why aren’t you having conversations with them?” And is that the best use of my time from a sales perspective to follow up with them? Or is there a better way for us to nurture this together to understand that that account is interested in something that we’re doing, finding additional people, and utilizing marketing and sales together to nurture that relationship within that account so that my time is being spent properly, marketing’s time is being spent properly, and we’re working together to get to that opportunity where I can engage and drive revenue?

I love that insight into where sales come into the mix and help with this. From an MDF perspective, I would love your feedback, Tyler and Aaron, on where you think the most effective kind of insert point is. I gave my viewpoint from the sales side of the house, but from a marketing side with MDF and utilizing that budget, where would the most effective time for them to come in and support be?

Tyler Jacobson:
That’s a great question. If you’ve put together a brilliant marketing or, you know, sales and marketing mix, marketing, use it all over the place. If you can bring that all in, marketing is setting up the opportunity for you to start forging those relationships. You might not be selling at that point. You will create those relationships and understand the client’s needs. So, as long as marketing has helped identify, again, who are you going after? Where do you play the best? Where’s the niche you can thrive in and then help create those opportunities with that audience? Then, again, it should run parallel like there is, you know, the sales insertion point as early as possible because that relationship will need to be developed. It’s not just going to be transactional; it’s “Who do I know, who do I trust when I have that need?”

Aaron Rosenbluth:
I was going to say, yeah, precisely. Same page. It’s eternal. You know, that’s the word that comes to my mind. They’re always in lockstep, a constant cycle of building and generating awareness and loyalty. Marketing’s always got to be running constantly.

Sam Grise:
Love it. And I asked that because, from the seller’s perspective, sellers often go, “Oh, that’s marketing’s job,” or they go, “Oh, that’s sales’ job.” And really, it’s a joint effort. A combination of both parties needs to work together to move this sales cycle and pipeline forward. An aspect of it from an MDF and a marketing budget perspective is that we’ve discussed where MDF is inserting themselves because of the short quarter timeframe by which they’re measuring things. However, some funnels must be touched from a partner’s perspective to help drive them.

And so, diving into it, I’d love to talk about the marketing funnel and what this looks like because, to me, from an outsider’s perspective as a seller, I always think of opportunity. That’s a consideration. When I think of a lead, it’s a consideration. But really, some pieces to the funnel need to be hit. MDF expects to “use it for the consideration phase so that we can get opportunities and move these deals down the line.” But then the partner is missing the opportunity for awareness, getting people interested, understanding what’s happening with their business, and so on.

So we’d love for you to touch on this as well.

Aaron Rosenbluth:
No, go ahead, Aaron.

Aaron Rosenbluth:
The awareness. People have to know who you are, what you do, and what you’re about, and they have to trust you so that they will consider you and convert. So, it’s such an essential part of the equation that it gets missed. You can’t skip that process.

Tyler Jacobson:
And I’m the guy who says that any client worth having probably already has five salespeople in his ear in your vertical today. They are already on the road to forging that relationship. So, while it makes a seller’s job considerably easier to only be there in the consideration stage, you have to develop those relationships and carry those relationships so they aren’t considering outside parties when that time comes because that window for consideration is going to be very brief in the entirety of that relationship. And so you’ve got to build up to it. So there’s that idea when, again, when we’re talking about realigning expectations, that’s part of it, right? Is that you’re not just going to consider people? And that’s where you’re expecting things to happen. In that case, your deal is lost because somebody has already spent the time in awareness, fostering that relationship, and making sure they’re known and trusted and that the prospect has really good feelings about the product they’re potentially getting ready to buy.

So this is, again, while I think that there’s good faith from everybody involved, I believe that this is where the MDF program has traditionally been a bit more self-misguided and where I feel that the marketing influence pipeline is a much better way to look at it because we do have to look at how long do we have to be in this person’s awareness, and how long do we have to be building that trust before that brief window of consideration opens up?

Tyler Jacobson:
I agree with that.

Aaron Rosenbluth:
Well, that makes me think about the creative aspects of marketing and what MDF has done to that, where you see, like—and I, forgive me for using the word lazy again, it’s just what comes to mind—but you see sort of this catch-all approach to just generating content and putting more things out there, even if it’s the same thing that anybody in this, any of my competitors can get, is the way to do this, rather than having my own skin in the game and kind of relying on my own money and resources in, you know, with MDF, which is what you have seen people have to do now and really digging into, well, if I’m a managed service provider and I know that I’m offering basically the same thing as everybody else who does this and the same technologies, then, you know, if I’m taking this sort of standard, old-school approach to MDF and the way that OEMs are delivering prefabricated content to me, then I’m not going to be able to stand out and have that true differentiator that has somebody go, “Wow, I really want to work with these guys over these guys because they just get me.”

It goes back to being human versus lead versus number. In that sense, you get who you’re talking to. Your messaging, words, and brand tone of voice are so targeted, and everything is dialed into that specific person that they can’t help it.

Tyler Jacobson:
And where you’re focusing your energy, that’s one of the big takeaways here. Where MDF should be more supplemental to that is I already understand where my audience is that I need to go after. And now I’ve got some marketing dollars because that OEM knows I have already set my sights on their next sale. My next sale is their next sale. So that’s where MDF should be supplemental to that. But that’s the thing. It should be supplemental to work that’s already being done.

Aaron Rosenbluth:
Yeah, this isn’t—you don’t throw all your eggs in that basket, you know, you can’t. And we’ve seen it go. It just becomes, I don’t; I keep using the word lazy. I can’t get away from it. That’s the only way I can look at it. It trains, and it’s not intentional on the partner side. It just trains them to operate in this standardized, bland way.

Tyler Jacobson:
Well, it always yielded poor results. That’s the thing. It always yields disappointment. So, anybody in that space wonders why it’s not working for them. And I don’t blame them. They’re not marketers. Again, yeah, they’re being instructed to do something that, unfortunately, isn’t yielding. Like, nobody’s satisfied with that.

Again, that’s Sam’s first question: How has MDF changed? One way it’s changing is that it’s like, okay, wait, this is continually unsatisfying, then how are we going to make it satisfactory?

Sam Grise:
Absolutely. And there are a couple of things to consider as well. From a dollar perspective, when we had $50,000, $60,000, and $70,000 a quarter, we only needed our marketing budget to drive things because we were getting that dollar value from vendor A, vendor B, and vendor C. And those numbers have dwindled to $4,000, $5,000, $6,000, $7,000, $10,000, and some $20,000 depending on your business.

The l way was that we’re leading with technology, and we’re leading with that product from a reseller perspective. And resellers have popped up all over. There are thousands and thousands of resellers saying very similar things and utilizing that dollar to push the same thing. And it comes back to what are you doing that’s differentiating? Also, now that that budget has shrunk, we can’t just not invest. We still have to invest in this to get to the channel right and get into the market and the audience we need to see.

And the challenge is, since that dollar value has shrunk so much, how will we do it? We aren’t seeing the marketing influence pipeline because we’re only investing $10,000 for vendors A, B, and C instead of $60,000 for $60,000. So there’s a big gap, and part of the ROI and investment you need to make it. Still, I think it also comes back to—I’m going to skip ahead two slides because we touched on awareness, we’ve touched on consideration—but, the UVP side of the house, what is your differentiator from a partner perspective? You need to be able to communicate that. And with MDF, you can communicate that with the technology that you have because we’re partnered right there. We’re trying to drive the value for that OEM and that technology, but you also need your differentiator.

We see a challenge in the space: we’ve got the best engineers and customer service. Is that a differentiator? I mean, it’s something that—I’ve worked for three or four different resellers selling in the space, and almost all of us have very similar taglines from that perspective of we’ve got the best engineers, we’ve got the best customer service.

I’d love to open this up from a content perspective of how you communicate your unique value proposition. Tyler, the multi-channel facet strategy is: What is your unique value proposition, and how do you communicate that?

Tyler Jacobson:
Yeah, and that’s more important. The first thing to do is figure out what your UVP is. And to Sam’s point, it is not your best engineers; it’s not your best customer service. And the reason that’s not your unique value proposition is because it’s not distinctive. Everybody’s saying that, and you might have them, and I believe you when you say you have the best engineers, right? Your end buyer is hearing that from everybody. So defining your UVP is essential, and it’s got to be important to your audience. It can’t just be important to you guys on your side. It needs to be important to the audience.

One of the ways that you can define a UVP is who you go after. Who are your prospects? Is it businesses of a specific size in a very particular industry that you have a long track record in, that you can then niche down and say, “When it comes to MSP, for, I don’t know, small medical practices, we’re the ones. We have a track record. We’re known at all the conferences; you see us in your trade magazines and newsletters.” And so that’s the first and most important thing that will keep you from reposting the same marketing collateral that every other person who doesn’t have a UVP is posting.

Aaron Rosenbluth:
You’re right. You’re right where I was thinking, same page. I’m thinking from a content perspective, how this looks like taking your UVP, defining something genuine beyond our deep engineering bench, etcetera, and then understanding how that fits into your critical Personas’ life, their needs, and then speaking their language to them, conveying what your UVP means for them. It’s all about—it’s not about you, it’s about them. It’s about what you do is going to solve their problem. And so I see this a lot on web copy. You guys hear me say it often. You know a lot of “us, us, we, we, we,” and not many “you, you, you” when we’re looking at websites and rewriting copy. So I always want to take the perspective of taking the UVP, getting dialed into what your actual genuine value and differentiator is, and then understanding how—what that means for your customer and, more importantly, their customer—and then fitting the content, the messaging, the stories you tell, everything around that from their lens so they can see themselves in it.

Sam Grise:
Yeah, definitely. The UVP side from an OEM perspective will differ from the UVP side from a partner perspective. A lot of times, through the channel, the UVP, from a partner perspective, will win a deal and an opportunity. From an OEM perspective, it will be sold, they will get the deal, and so on. And they’ve got their competitors that they’ve got differentiators against. But how do you win that deal from a partner community that’s reselling technology A, the partner that’s selling technology A, and another partner that’s selling technology A?

And so thinking about that from a perspective of, you know, the ICP or TCP, right? Target customer profile, ideal customer profile. We can say a couple of different acronyms for the same thing, but it comes down to really honing in on your differentiator. And, Tyler, you always say it, so I will tell it: “The riches are in the niches,” right? The riches are in the niches. What is that vertical market that you’re going after? What is the differentiator within that vertical market that you’re going after? What do you specialize in?

Another aspect that may have been overlooked is that you’re known, liked, and trusted. That’s a significant aspect of it. But Tyler, I see your hand up. I’d love you to jump in.

Tyler Jacobson:
Yeah. One of the things I want to inject into this is that Cisco is a safe solution. If Cisco is the OEM, that might be their differentiator. That’s some reliability, some technological leaps forward, and it’s essential. Now, when it comes down to the partner level, you also have to be a safer choice than the other guy selling you that exact Cisco unit—trying to sell you that same Cisco unit. And so that’s where it’s crucially essential there. You have to be a safe choice for whatever your needs are because people, in the end, are buyers here and care about a couple of things. They care, “Am I going to get fired, or will I get bonused and promoted?” That’s really what you have to manage to do.

And that’s why, Sam, what you said, people know, like, and trust. Yeah, that trust is—makes you a safer choice. That’s why you have that long-tail nurture going on there. So, yeah. So I think you need to be thought of like that, not just because we sell safe hardware, but because of where you are from.

Sam Grise:
Perfect. Okay. There were a few technical difficulties there, Tyler. You were cutting out a little bit, but that’s okay. We did get a question in the chat. I see the question. When we start answering many questions, I will hold that for the final thoughts. But I want to let you know that I do see that.

And so we’ve talked about the highlights of MDF, its role in the marketplace, and where things are sitting today. There’s a lot of background, and starting to get into differentiators and how you do this thing. But a significant aspect of it is money. Money is a significant aspect of it. How do you get the budget? How do you get a better budget? One of the aspects that is important to me, and I keep on touching it, is that this slush fund of money has shrunk a ton. It doesn’t mean the OEMs aren’t investing in the partner community. They are. They’re expecting results, and they want to drive business. They’re very focused on that.

But what does that look like from a partner community? And how has that started to limit what partners can do? I’d love to open that up again to Tyler and Aaron based on your perspective on what you’ve seen over the past eight years working with tech channel players. The marketing budget that we had shifted, and now they may be investing. I would love just to get your feedback on that.

Aaron Rosenbluth:
I’ll go—looking back.

Tyler Jacobson:
Sorry, Tyler.

Aaron Rosenbluth:
Yeah, I was just going to say, from my perspective, what it’s done, the way that things have worked—and we can get into, I think, the opportunity and how it’s—what’s changed—but the way it was before, it just—people just got used to this kind of various, as we’ve hit—kind of beating a dead horse at this point—but this standard approach to doing things that I feel like genuinely limited the creativity in the output. Creativity is a word that might sound fluffy; it’s kind of a soft word, but ultimately, that is what marketing is: fueled by creativity. The way that you can create these campaigns and assets and ideas out in the marketplace that resonates with people beyond just a superficial level is by having the money, the desire, and the structure to be able to foster that space for the kind of creativity and storytelling that’ll do it.

I’ve always looked at Cisco’s marketing and how it differs from what they gave to partners. Their marketing tends to be unique but looks different from what they offer the partners. But I think that’s because it was always that supplemental, to the point—it was never intended to be the entire thing you do. That’s just how people got used to doing it. And I think its structure and budgets facilitated that approach, and it was kind of rigid in terms of proof of performance and the things that you had to do. So, it didn’t always allow for extensive creativity that tells a different story and differentiates you from your competition.

So now it’s evolving, and people must put more of themselves and their money into this. But there’s an opportunity there. When it’s your dollar versus the dollar coming from an OEM, you’re going to be more careful with it, but I think you also want to invest more in creativity and storytelling. Ultimately, we’ll see better marketing.

Sam Grise:
Love that. And Tyler, one piece I wanted to call out was the supplemental side before you jump in. That’s what it is; it’s supplemental to your partner marketing and what you do, right? And what do you do differently, right? And it’s supplemental. It should be part of the budget to drive your differentiator in the market and drive your business. Because what they’re doing from an OEM perspective is they’re selling the technology, and they’ve got some services they’re selling as well. But on the partner side, a lot of times, it’s more than just the hardware resale, right? It’s the professional services, the managed services, and the architecture and design of the environment they provide. And so that’s being missed when all we’re using is the funds coming in from MDF. But Tyler, I saw your head nodding. Did you have anything to add there?

Tyler Jacobson:
I’ve been working on a “Tyler-ism” in my brain the last few days. I’ll try it out here: I don’t think anybody, any business owner ever, said, “Man, I wish I had a smaller marketing budget,” right?

Aaron Rosenbluth:
Nope.

Tyler Jacobson:
So why are we treating it that way? Why are we treating it like we only want to exist on this small amount of money given to us? Even when it was a significant amount of money, that’s all we want to put into the pot, especially when your competitors, and this is how I view it, say, “Yeah, the budgets used to be bigger, and now they’re smaller.” It doesn’t matter. You are inherently disadvantaged if your competition is willing to put more skin, more in the pot, and more resources than you are. And that’s not how you want to run a business. You want to run your business advantageously. So if all of your competitors are existing just on the MDF, then that’s going to limit what they can do, and it’s going to limit how far they can go. So, if you put anything more in there, you can go further. Now, you want to be able to spend that money intelligently. You want to have it be an investment, not an expense. But that’s why. Because you are—that’s why I’m saying you need a better marketing budget- because you are going up against the competition, which has to make the same decisions that you do. Some will say, “Yeah, I don’t want to put more in.” Some will say, “Yeah, I want to put a lot more in and dominate this vertical. I want to dominate this space.” And that’s who you’re up against to thrive.

Sam Grise:
Love it, love it. And we did have another question come into the chat, which leads to this question: “How do you justify the budget?” That challenge of, “Hey, we had this slush fund that was our full marketing budget. Now that’s coming down.” For somebody who’s a marketing leader or a sales leader who’s saying, “Hey, we need to go to leadership, and we need to get more budget to drive this,” I would love to hear your process of getting more budget to do this. I know from the question in the chat that to lead into this is, “Typical marketing budget from a partner reseller space—can you calculate it based on a percentage of revenue or net income? What does that look like?” All that goes into how you justify the budget because we’re in a capitalistic society. It’s about driving revenue, reducing cost, risk, asset utilization, and cash flow optimization. And cash flow is king, especially in this business. It is vital to be a successful business.

But I would love to get your perspective, Tyler, from a Director of Marketing, on how you would justify this budget and what that percentage should be in this partner reseller market.

Tyler Jacobson:
Yeah, so how you’re going to justify the budget has to start with a plan. You can’t just ask for more money and then not know how you will spend it. And all these things we’ve been discussing cascade back down to that plan. Who is our target audience? How well is it defined? Can that target audience help us? And not just help us—can our financial goals be met with that audience? Is there going to be enough buying happening within our timeline for that to happen?

Once you’ve defined that, you’ve defined your unique value proposition and will have to dominate that space. You want to avoid coming in third, fourth, or fifth. I just saw that this was a completely different market. Still, I just saw that the top ten competitors accounted for over 50% of that market in a particular category with hundreds of competitors. So, being at the top is a precious space, and you want that. That also keeps competitors out. We were talking about Cisco being a safe option. I might not even consider anybody other than Cisco because I know that’s what I want. After all, I know that it’s going to be reliable and it’s going to meet the needs of my company.

By the way, I’m not here to do a commercial for Cisco, just using them as an example. So I think once you’ve defined that, you do have to come back and say, “Okay, this is how we justify the amount of money I’m asking for.” We have some calculators to get to that, but you can say, “Okay, listen, we want to do it as a percentage of revenue.” So before other expenses, it could be 2% or 5%. Some studies from Gartner say that typically, agnostic of industry, companies spend between 9% and 11% of their revenue back on marketing. I have not seen that in the tech channel. Usually, if there’s anything, we’re having this because some people rely strictly on MDF, which means you’re using no percentage of that budget for marketing.

You can do it based on margin. You could do it—this isn’t. After all of our expenses have been paid, how much money do we have left over? Okay, can we take 5% of that into a marketing budget? And will that be enough for us to get on the road with this plan? There are several different ways to slice and dice those numbers. But I would suggest slicing and dicing those numbers and making them based on something in reality.

And so when I say that, we work with a company that’s a couple billion, and they gut-check their marketing budgets. They gut-check that allocation. And it’s hard for them to say that it’s based on anything, which means it’s hard to grow those resources when you need it because it’s like, “No, we just put a million dollars a year into this.” Well, what if you need two million? What if your competitors are doing that? What if the market is growing, and you need resources to take advantage of some situations? So it should be based on something.

Sam Grise:
Excellent point, great point. It comes down to a couple of things. We can’t reinvest revenue. We must reinvest margin and gross profit because those are the dollars we can access. A big part is setting baselines and understanding your existing clientele today. What was the customer per acquisition cost? Do you have any insight into that? Let’s start by adding some numbers to that.

On top of that, what’s the lifetime value of that customer? Do they stay for one year? Is it one purchase? Is it a five-year contract? Do we have them, on average, for seven years? What does that look like?

A big piece of that comes back to the different sides of the business, specifically your business. If your hardware resale, that market is typically from 3% to 5% margin. Sometimes it gets up to 11%, 12%. That’s industry-leading, if you will. If you’re doing software specifically, it’s a higher margin percentage, 15% to 20%, to reinvest in long-term contracts. All those pieces need to come into play to justify that to leadership.

A big part of it is when you’re taking it to leadership; you must remember that they’re thinking about it capitalistically. What do I need to do to drive revenue, and what will the ROI be? ROI is always a challenging marketing aspect of awareness campaigns. But that data of customer lifetime value helps you back into that. Having those data points before you go to leadership to say, “Hey, I want to run this campaign. We need to go—customer lifetime value, if we land one customer, is a million dollars, and our margin on that is 10%. So it’s $100,000 that we can reinvest back into the business. We expect to have ten potential buyers here. They’re in the consideration phase. We believe that we can get one of those customers to come back. The investment of $50,000 for that event looks a lot better than it does if you just go, ‘Hey, I want to go to an event.'”

That will hopefully answer your question. I know it’s not a set-in-stone number, and as Tyler said, part of it was because of the MDF interaction today, right, of relying on MDF for the total budget. But Tyler, I saw your hand come up there.

Tyler Jacobson:
Yeah, yeah. I’m so glad you discussed cost per acquisition and lifetime value. Those vital metrics can be neglected, especially if you don’t even know they exist. But the cost per acquisition, if you think about “This is our marketing budget, and this is how many client customers we got out of it,” and then this is what their lifetime value is going to be, you might see that you know, your cost per acquisition, that what you’re putting in there is a deficient number, and that might be fine. But again, you are going up against competitors. And if the competitors have done that math, and they’ve said, “You know what, instead of putting in 1% of that LTV, I’m going to put in, you know, 5%,” well, they’ve done that math, they’ve made a calculated risk, and they’re going to, you know, 5x your marketing efforts. That’s going to come back to them. That investment is going to pay off. So that’s why I think it’s—yeah, I want to figure out what that cost per acquisition is and what you’re getting in return for it.

Sam Grise:
Love it. Yeah, I’m happy you put that in. So, I’m going to jump to the final slide here. These are the final thoughts and notes. And before we dive into our final thoughts, we did have a question in the chat that I want to propose to both of you. The question is, “What are your thoughts about lead campaigns and appointment setters? Is this a sustainable option?” So, I’d love to open that up to both of you. I’ve got my opinion on it because it comes back to the funnel and positioning of that aspect. But I would love to hear your perspective, Tyler and Aaron, from what you’ve seen because I know that we’ve utilized some of that in the past, using some MDF funds to do that as well. I would love to get your perspective.

Tyler Jacobson:
Yeah. If I can take this one. So my opinion is that it could be more practical. It doesn’t follow the typical trajectory of how sales are made in this industry. And a lot of marketing agencies offer it, and the reason they offer it is because it’s in demand. But again, that goes back to that expectation, like, “Hand me a list of leads that will ultimately turn into customers.” Well, that’s not going to happen. If it does, it will be a minimal hit rate.

That said, if you have done this and seen success in it, keep investing and don’t stop, right? Don’t let my opinion of that affect it. If it’s proving valuable to your business, keep doing it. It’s unnatural for the buying journey. That’s why I’m like, “I think it just goes back to that whole thing of ‘Give me a stack of leads that I can just then start closing deals,’ which I don’t see happening.” But if it’s working for you, keep it going.

Aaron Rosenbluth:
Yeah, I agree. We haven’t seen it work well, like a spray or throw-spaghetti-at-the-wall approach. I also have flashbacks to working in some of that—in that arena years ago when we first started this thing, where it was like, that’s how everyone did it. And we would do these—you know, you do these BANT call-out campaigns, and half the time, as a person who actually at one point was sitting dialing for dollars, like, using the phone and calling a lead list day after day after day—and at one point realizing that what was paid for was kind of nonsense, you know? Like, it could work, but there’s so much shadiness, I’ll say, around some of the process that it leaves a bad taste in my mouth. And we just haven’t seen it effective.

Tyler Jacobson:
I’ll tell you one of the reasons why it wouldn’t work. And I’m going back to something I said earlier: any client worth having probably has five salespeople in their ear right now. So why would they take that meeting? Why would they take that call and be serious about it? So I think it might be attractive—if it is attracting sales, it’s probably not attracting high-dollar sales or great clients. It’s perhaps grabbing people who don’t know where else to go.

Sam Grise:
I agree with both of those sentiments. And there is a place for it. It has worked for some organizations in the past. And if it’s working, like Tyler said, invest in it. For those organizations that it’s worked for, it’s strategic. They have a game plan around it. These lead campaigns aren’t just pulling down a list from ZoomInfo or finding them on LinkedIn and then just calling and calling and calling, or those appointment setters, if you will. They’re using it strategically: “Hey, we’ve had Jimmy Smith at four of our events, which has been fantastic. It’s time to add him to our cold-calling list of people to call and go, ‘Jimmy, we’ve seen you at four of our events, man. This has been great. We’ve loved getting to know you. Fill us in; what are you doing? What’s the topic of today? We’ve seen you at the collaboration, networking, and data center events, right? Are you managing all three of those?'”

And really, it goes back to where in the funnel are they? And that’s a significant aspect of it because right now, what I see with those appointments setting and those lead generation campaigns is skipping a piece of the funnel. We’re focused on considering them right away to get them to purchase immediately, which doesn’t match the buying cycle of 12 to 18 months for a giant tech purchase because we’re all in the business of making money, right? We all want to ensure we’re driving revenue for the company. So make sure that it attaches to that.

I apologize for my laugh. Somebody just asked, “Does a mustache or facial hair, in general, help you become a better marketer and or business leader?” And the answer to that is 110%. That’s where the power lies. It’s all in the facial hair.

Aaron Rosenbluth:
That’s where the marketing…

Tyler Jacobson:
I have a different opinion, though.

Sam Grise:
That’s fair. That’s fair. So, if you have any other questions, please drop them in. We’ll stay on for another couple of minutes, but we want to ensure that we help you with this. This is all a bunch of information we’ve just thrown out about how the market’s changed from MDF, budgets, etc. And really, we’ll jump in and help you out. We’ll help you build that optimal budget assessment if you will, and that budget you can take to leadership to determine why we should invest. Is it suitable?

This is a session with me diving into the business, going into that cost per acquisition, that customer lifetime value, our margins, our key trends, and what will be effective in driving the business forward. So, if that interests you, feel free to email me at optimalbudgetassessment@samourbmarketing.com, and we’ll set up an hour to dive into it and help you guys build that game plan to take to leadership.

Do Aaron or Tyler have any additional thoughts while we’re waiting for the chat? Does anybody else have any questions?

Aaron Rosenbluth:
I’ve got one: authenticity. I use that word a lot, but I want to—I’d like to end with sort of floating that idea out there because everything we’ve even—we’ve talked about, even what maybe what brought it to mind was the appointment-setting question, like thinking about the lack of authenticity that can come through that, you know, when you’re skipping the entire funnel, you’re skipping awareness and you’re just going to cold-calling or buying a lead list from somebody who—you don’t know the quality of that list. Even if they tell you that it’s a great list, it might not be. There’s a lack of authenticity in all of this.

Even I’m heavily relying on—only relying on MDF and then publishing the same or very similar content to a competitor. There’s nothing genuine about that. And I think people respond to authenticity, to genuine messages that relate to who they are, what they need and want, their goals, and their jobs. So I think just focusing on bringing your authentic self to the conversation, whether it’s an individual or a company, it’s everything to me. It’s essential.

Sam Grise:
Yeah. And Tyler, let me jump in really quick on that. On the authenticity side, I love it because we often get in the rumble, we get focused on “quarter mania,” we have to go close deals, and we forget that we’re dealing with people. They have jobs; they’re trying to get a promotion. We need to talk to people as people. They aren’t robots. They aren’t sitting behind signing purchase orders just automatically. It all comes back to the authenticity and the person we’re talking to. That personal value of your business value, your value of what ethics and standards you need to get through because you’re dealing with people, correct? That’s who you’re dealing with. You aren’t dealing with selling a million-dollar contract just to the poster behind me, right? There are people behind that that are signing. And so that’s so important. I’m glad you brought that up. Tyler, final thoughts?

Tyler Jacobson:
Four magical words: “I know a guy.” Those are magical words in business. So, the expectations of the relationship between marketing and sales need to adjust slightly. We’re on the same team. We’re running in parallel. It’s a three-legged race here. We’re supporting one another. Nobody’s going to hand you a stack of leads. And if they do, those leads will not become customers, meaning we wasted everybody’s time. We need to change the perspective of what we need to do together, how marketing is intended to pave the road and make it a smooth journey for the target audience to know to customers, right? And then into maintaining that relationship.

Again, think about yourself and your business as being in a very competitive space and wanting to dominate that competitive space. Because if you’re only thinking about surviving, that’s probably what will happen. But if you think about thriving, you think, “Okay, well, what are these guys doing here? And are they trying to out-resource us?” Where can we find some advantage, and when are we ready to step in and step up our game to start capturing more of those prospects?

Sam Grise:
I love it. And I’ll wrap us up here with my final thoughts. So, a big piece—MDF is a part of it and will still be a part of it. We need to leverage it to be successful, but it is a piece. We must invest our piece to drive our unique value proposition to the marketplace.

And a big piece of what we’ve discussed today is that net new customer. Don’t forget about your existing customers. They still need to be a part of this mix because the only way to grow a business is to grow existing customers and get net new customers. So don’t forget about those buying from you today and how you can develop those customers. Referrals are always a faster way to do things. As you mentioned, “I know a guy.” Some of that comes back to investing in those existing relationships and customers and potentially leveraging some of those MDF dollars or your budget to achieve customer appreciation. That’s important. Remember that these are the two significant revenue drivers for the business.

Thank you, Tyler and Aaron, for joining and providing your insight. I appreciate all of the attendees joining in. Like I said, email me, and we’ll help you build that budget plan. Thank you so much for exploring the MDF opportunities with us here. Have a great day, everyone.

Aaron Rosenbluth:
Thanks, everybody.

Tyler Jacobson:
Bye.