Market Development Funds (MDF) used to get a bad rap (covered below), but when deployed properly and productively, they’re critical for efficiently expanding into new markets or segments. Although it may sound obvious, MDF are funds specifically allocated to developing markets. This can take shape in many forms, like events, sponsorships, advertising, or any marketing activity that boosts brand awareness and drives sales.

Imagine you want to develop your financial services market or strengthen your presence in the Southeastern United States. MDF allows you to invest in the development of those markets.

In this blog, we look at how you can purposefully use MDF to get the most out of your go-to-market (GTM) dollars!

The Value of Partnerships in Market Development

Collaborating with partners already catering to your target market is the path of least resistance in market development. It’s the quickest route to real opportunities for you and your partners.

For example, consider the alternative: A company spends a million dollars to break into a new market or segment on its own. To drive awareness, it might buy billboards, bus bench ad spaces, and radio slots. However, building trust and relationships takes time – people need to hear and see the company’s name repeatedly before they start trusting it.

Instead, the company could invest $50,000 in local coffee shops to feature its logo and messaging on their coffee cups. These shops already have a customer base that trusts them. By associating its brand with the coffee shop’s brand, the company started with a level of trust right out of the gate.

The $50,000 investment is a form of MDF to your partner. They use these funds to buy additional coffee cups, create engaging designs, and possibly organize an event to announce your collaboration and drive traffic flow (deal flow). These funds are allocated and earmarked for this purpose, with expected outcomes clearly defined. That’s the value of partnerships!

This simple coffee shop example can be used across any industry worldwide. When done right, MDF offers the lowest possible customer acquisition cost (CAC), making MDFa much better use of capital than spending a million dollars going direct to market.

Why MDF Sometimes Gets a Bad Rap

Market development funds have a negative connotation in some organizations. It’s common for folks to say, “We don’t do MDF,” or get worked up when you bring up the topic. It can feel like MDF is sometimes a thing that must not be spoken of or mentioned. This usually stems from past experiences where MDF initiatives personally burned someone in the past.

When this is the case, it’s essential to hone in on why. The issue is almost always overspending. Many organizations have overspent on campaigns with partners without ensuring proper accountability, a compelling value story, an understanding of customer pain points, or effective co-selling processes. As a result, they generated plenty of top-of-funnel opportunities but struggled to convert them into meaningful outcomes, leading to wasted resources and failed campaigns.

That’s a poor use of MDF. Whether you label it as MDF or not, you’re already investing in market development efforts. The key is to use these funds effectively, mainly through strategic partnerships.

Pro tip: If your organization isn’t using MDF or has banned its use, find out why—schedule meetings to get to the root of failure. Often, the reason is writing checks to partners without a clear strategy or joint accountability. Instead, focus on co-marketing initiatives where both parties define goals and scenarios (such as joint net new, expansion, or customer retention) and measurable outcomes. Don’t just write checks and hope for results; emphasize structured, collaborative, outcome-focused initiatives that stretch every marketing dollar you spend.

Effective Use of Market Development Funds

When partnering with another organization, GTM needs, and strategies can vary widely. It could be a quarterly focus, tied to seasonal trends, or specific to the context of your co-marketing efforts.

For example, you might use MDF to do a roadshow with physical events at Dave and Buster’s, where you host games. Or webinars might be your focus, requiring investments in tech and related services. The key is aligning the fund allocations with agreed-upon tactics and expected results.

Managing MDF efficiently can be challenging. You have to coordinate money exchanges between partners and account for every expenditure. You question if you’re spending efficiently and buying the right tools and services from the right vendors. No matter how good your strategy is, if your execution falls apart from selecting a vendor with no idea how to tell a value story, do account-based marketing, or drive leads, your program can fail.

This is where our expertise at Forecastable comes into play. While we may not be co-marketing experts, we’ve curated a network of top-tier, trusted vendors that can deliver on anything you can use MDF for. We simplify the process by allowing you to launch a campaign using MDF credits, which convert dollar for dollar.

Whether you need to launch a webinar, a physical event, or other marketing activities, we make those purchases on your behalf, using the best vendors and securing the best rates. And we provide detailed reporting on fund allocation and campaign performance. It’s the easy button for MDF!

You no longer need to worry about writing blank checks or navigating vendor selections blindly. Instead, you have confidence in your campaigns and stretch every dollar into two, three, or four, depending on the number of partners involved in that co-marketing or co-selling initiative!

Beyond Marketing: Leveraging MDF for Sales Execution

It’s crucial to understand that MDF usage goes beyond marketing activities, despite the common mistake of calling them marketing development funds.

Developing markets is not just about marketing. You still have that last mile. Once you get leads in the door, you need to get cash in the door. Paying customers are what truly matter. From lead to cash involves a complex sales cycle, especially when partners are involved.

Forecastable is responsible for navigating the complexities of multiple sales reps, pre-sales engineers, and architects. We manage the entire sales cycle on your behalf, including:

• Building comprehensive buyer maps
• Managing detailed close plans
• Handling calendaring, organizing, and storing call notes and recordings
• Providing insights into the progression of leads from stage to stage
• Analyzing lost deals to identify causes related to qualification, sales execution, or partner alignment.

Leveraging MDF in this way drives top-of-funnel activity and ensures last-mile execution, leading to closed deals and increased revenue. Plus, it’s easy to test this strategy in small bite-size ways.

Conclusion

From understanding the value of partnerships in market development to navigating the complexities of using MDF for co-marketing and sales execution, the takeaway is clear: MDF, when managed purposefully and collaboratively, can double, triple, or even quadruple your market development dollars.

Outsourcing MDF management to a trusted third party simplifies processes, creates accountability, and delivers predictable outcomes, so you can have absolute faith in how your funds are being leveraged. Why wait?

Pick a partner! Forecastable can help you define your play in 30 days or less, leveraging MDF in a low-risk, high-impact manner.