Businesses love giving away gift certificates because the breakage is low. A few years back, Consumer Reports estimated that $972 million in gift cards went unused in one year. According to The Consumerist, Best Buy alone held onto $16 million in unredeemed gift cards in 2006.
It’s amazing to me how many people don’t redeem these freebies, but it’s a proven fact of consumerism.
Similarly, resellers are not using marketing development funds (MDF). This money is available from vendors to help resellers promote their products and services. Like gift cards, it represents “free money”. But while a consumer might give up a few bucks on a stale gift card, a VAR could potentially be missing out on millions of dollars of marketing support!
The problem is two-fold. Many technology vendors don’t actively promote the use of MDF to their VARs — either clutching the dollars in a short-sighted view of “savings” or from the lack of marketing staff to develop viable programs for their VARs. Then there’s the reseller who is so focused on driving the business that he doesn’t turn his attention to the potential opportunities that can be gained from some added help. Or he sees the paperwork involved as an overwhelming obstacle.
So the money sits there, gaining no appreciable value. The VAR isn’t making the extra effort to sell more product, which means that the reseller isn’t growing and the vendor isn’t selling more product.
In any economy — let alone one that is as constricted as undersized spandex — vendors and VARs need to get together to unleash the power of MDF. Put it on your action list to start this discussion today!