Market Development Funds - 5 stakeholder ROI reporting techniques
Posted by
Tony White on Wed, Jul 11, 2012 @ 10:30 AM
One of the continual worries for Market Development Fund managers is how to report the effectiveness and the efficiency of their programs to the stakeholders who provide program funding.
As each cycle of funding negotiation takes place within your organisation there are multiple other good causes that are competing for increasingly smaller available funding. So the big question is how do you increase the stakeholder belief that your Market Development Fund is good value?
Here are 5 different measures that can be used to ensure that stakeholders understand the scope and the value of your Market Development Funds (MDF). Each measure can be used stand alone or as part of a suite of measures to inform stakeholders of the programs performance. The most important thing is to ensure that the measure is sensitive to the context of your program.
Funding Leverage Value
Your MDF program investment is used to leverage other funding, in many cases your funding is a contribution to an activity cost and additional funding will come from the partner. Showing the leverage of the fund by the simple use of showing the proportion of total activity cost funded by MDF helps illustrate this point. When aligned with the other measures this can indicate where spending may be more effective.
Strategic Contribution
MDF funded activities can be reported on the basis of the strategic plans and campaigns to which they contribute. This approach also indicates how popular campaigns or strategies are with your partners and can be used a measure of partner engagement. In many cases activities can contribute to more than one campaign and you can report contribution on either a pro-rated or total basis.
Marginal Business Growth Rates
The MBGR measures the impact of MDF funding on marginal growth rates for a partner who undertakes activities.
The principle of the measure is to calculate the marginal growth rate of partners who do undertake MDF activities and calculate the differnce in growth rates when compared to the non MDF channel. This calculation is based upon the latest reported period and assumes that performance in the next funding period will reflect these trends.
This can then be used to extrapolate a marginal revenue figure based upon the partners revenue performance (or targeted performance) which gives an indication of the impact of MDF funded activities.
The investment in MDF can then be expressed as a marginal generation value showing how a unit of MDF will generate marginal units of revenue.
Original vs. Reusable Funding
This method defines how much of the MDF funding can be designated as reusable vs. original cost. Original cost is a one-time cost that applies to an activities such as publication costs where as other costs (such as creative or translation) can be either reusable or original depending on the activity. This measure helps illustrate how effectively funding is being utilised in the channel and can be used to indicate potential cost savings. These can be recognised through centralisation of production or implementing effeciencies of scale (adopting rate cards with sanctioned agencies) on behalf of the channel.
Return Period
This measure uses a simple method of defining when the likely return is expected from funding. The simplest method is to assign a standard return period per activity and using an average end date of the periods activities indicate when the return should be expected. Adding the two together gives an indication of when your program funds will create returns.
Using some or all of these measures enables the program manager to set the strategic need for their program and its funding. These should be used in concert with other measures already in place to increase the awareness of the program and its impact.
Do you use a similar set of measures? Why not download our analysis tool and see if your numbers tell an interesting story...
