Driving Co-Sell Partnerships- How to Involve Your Ecosystem Partners?

The partnership industry is different from what it was a year back. A constant shift towards ecosystem partnerships is in full swing.

According to McKinsey, ecosystems will drive around $80 trillion in annual revenue, a third of the global revenue. Hyperscalers like Microsoft already make 95% of their revenue from their global ecosystems. One such accelerant of their growth is the IP Co-Sell Program, encompassing thousands of Co-Sell-ready partners that have generated an incredible $8 billion in contracted partner revenue since the program began in July 2017.

As part of this landscape, the Microsoft AI Cloud Partner Program also stands out as a vital avenue for businesses looking to leverage AI technologies and cloud capabilities.

Similarly, according to IDC, Salesforce is expected to generate over $1 trillion in new business through ecosystem partnerships in 2024.

But the question arises: How can you drive your co-sell partnerships that are ecosystem-ready, and how can you make your ecosystem partners execute your programs for maximum success in this new industry shift?

By the end of this blog, you will know exactly what ecosystem partners are and how to involve them in co-sell initiatives and drive revenue growth with them to get the maximum value out of them.

Understanding Ecosystem Partnerships

Ecosystem partnerships are the strategic approach where businesses collaborate with numerous organizations and other firms to compete in the digital marketplace. As digital technologies revolutionize how businesses operate, these relationships are determined by the data and operating resources they provide. This means the current business models will be unrecognizable in the coming five years, with ecosystems being the primary change agents. With 75% of world trade flowing indirectly, ecosystem partnerships have become increasingly important. High-growth brands are three times more likely to incorporate ecosystem partnerships into their strategy than no-growth firms.

In co-selling and ecosystem partnerships, co-selling encompasses collaborating with these partners to develop a combined solution and then promoting it to your customer base. The success factor hinges on the synergy between sales, marketing, and partnerships. This multi-team collaboration boosts revenue and fosters more robust relationships with ecosystem partners. Companies engaging in co-selling with partners are projected to exceed $300 billion in revenue. Ecosystem partners increasingly recognize the benefits of this collaborative innovation and joint selling, aiming to deliver enhanced value to their mutual customers.

Dive deeper into the world of co-selling, where collaboration is the key to revenue growth. Learn more about its benefits, Co-Sell Approach, and best practices in our comprehensive blog: The Ultimate Co-Selling Guide.

Examples of Ecosystem Partnerships

Nike and Apple

The first example of an effective partner ecosystem can be seen in the collaboration between Nike and Apple. This partnership, which began in 2006 with the release of the Nike+iPod Sport Kit, has evolved into a robust ecosystem that includes various products and services.

With Nike and Apple, you have a partner ecosystem comprising millions of users worldwide. These users contribute to both companies' revenue and ensure the adoption and stickiness of their products.

This ecosystem partnership ensures the continued success of Nike and Apple's products and allows their partners to grow and scale.

Microsoft and Adobe

Another shining example of ecosystem partnerships is the deep-seated collaboration between Microsoft and Adobe. They have seamlessly integrated Adobe's Creative Cloud suite with Microsoft's productivity tools, such as Microsoft Teams and SharePoint, creating a cohesive and efficient workflow for creative professionals and businesses. This integration enables users to edit and collaborate on Adobe files directly within Microsoft applications, enhancing productivity and streamlining workflows.

Moreover, Adobe and Microsoft's joint solutions, such as Adobe Sign integration with Microsoft Office 365, have further strengthened their ecosystem partnership. These integrated solutions drive improved customer satisfaction and generate substantial revenue for both companies.  

Finding the Perfect Fit: Identifying the Right Ecosystem Partners for Co-Sell Partnerships Success.

Identifying the right ecosystem partners for your business is a critical step in supercharging the success of co-sell initiatives.

Building a solid network of ecosystem partners enables organizations to leverage complementary strengths, expand reach, and unlock new revenue streams. According to McKinsey & Company, businesses with solid ecosystems grow revenue at twice the rate of their competitors. However, identifying the right partners can be challenging, with 67% of companies needing help finding partners that align seamlessly with their strategic goals and values.

Challenges in Ecosystem Partner Selection

• Misaligned Goals between Target Markets and Customer Biases: This misalignment between partners can hinder co-selling efforts and limit the potential for mutual success.
• Lack of Transparency: Hidden agendas or unclear expectations can lead to distrust, limit collaboration, and hinder joint efforts.
• Cultural Clashes: Different company cultures often create communication barriers and limit smooth cooperation.
• Incompatibility of Solutions: Incompatible offerings or technical hurdles can make integration difficult and reduce customers' value proposition.

These challenges can significantly impact co-selling initiatives. 40% of B2B partnerships underperform due to a lack of strategic alignment.

Businesses can follow the following strategic approach to identify the right ecosystem that fuels co-sell partnerships.

1. Define your strategic business objectives: Before you identify ecosystem partners, it is essential to define clear business goals and objectives. This step will help you identify partners who align seamlessly with your strategic vision and contribute to your success. For example, if your goal is to expand into new markets, reach a specific customer segment, or enhance your product offering, partnering with a company that already has a strong presence and established relationships in those markets or with those customer segments can accelerate your growth and increase your market reach.
2. Evaluate Partner Capabilities: Assess your partner's capabilities and expertise per your business needs. Seek out partners whose strengths complement yours and can bridge the gaps. Analyze their existing customer base and network reach. Partnering with companies with a strong presence in your market can quickly help you tap new customer segments and grow your reach.
3. Seek Complimentary Strengths: Look for partners whose offerings complement yours, creating a combined solution that's more powerful together than separately. Take a deep dive into their market presence, customer base, and industry know-how to ensure it's a strategic fit.
4. Conduct Joint Planning Sessions: Once you have decided on your ecosystem partners, arrange joint planning sessions with the key stakeholders from each partner organization. This helps formalize the strategy with the partner and ensures everyone is on the same page.
5. Account Mapping: Identify potential cross-industry ecosystem partners with whom you can co-sell. This not only helps you open new markets but also provides holistic solutions to your customers.

How can Collaboration with Ecosystem Partners help with Innovative Growth?

Collaborating through partnerships to expand market reach and drive innovation is a strategic approach that businesses increasingly adopt in today's highly competitive landscape. BCG research shows that 83% of digital ecosystems involve partners from four or more industries. This collaboration helps businesses tap into new markets and fosters innovation by bringing together diverse skills and resources.

By working with complementary partners, businesses can unlock tremendous market expansion and innovation potential. Here's how:

Amplifying Market Reach

• Exponential Growth: According to a BCG study, businesses with robust ecosystems achieve 30% faster revenue growth than their isolated counterparts. This rapid growth is attributed to the strategic partnerships forged within these ecosystems, where partners contribute their established customer bases, efficient distribution channels, and specialized regional expertise.
• Diverse Customer Acquisition: Such partnerships offer new co-selling opportunities by opening doors to previously untapped customer segments. By collaborating with partners who serve different customer demographics, businesses can access new markets and expand their customer base beyond their traditional audience. This strategy mitigates the risk of over-reliance on a single customer segment or market, providing resilience and adaptability in fluctuating market conditions.

Innovation

• Combined Expertise: Partners bring unique skills, knowledge, and technologies. This cross-collaboration fosters a culture of innovation, leading to the development of groundbreaking solutions that address complex customer needs.
• Faster Time to Market: Collaboration allows companies to leverage each other's resources and expertise, streamlining the innovation process and accelerating product development cycles.

For example, John Deere is a 180-year-old company known for its tractors. John Deere introduced an ecosystem platform to differentiate its products and compete better with less expensive commodity tractors. They no longer sell just tractors; they now sell digital farming, and the ecosystem makes it possible.

Partner Relationship Management (PRM) and Ecosystem Business Management (EBM)

Businesses must establish seamless and interconnected systems to connect with their ecosystem partners. This enables all partners to swiftly adapt to changes in demand and provide agile solutions to customers. For this, two management strategies have emerged as critical players: Partner Relationship Management and Ecosystem Business Management. Both these strategies offer unique advantages and cater to different business needs. Let's delve into this and learn which is better for your business.

Partner Relationship Management (PRM)

Channel Partners, also known as Partner Sellers, are organizations that market and sell products or services of other businesses to their prospects or customers. In exchange for this partnership, channel sales representatives typically earn commissions, bonuses, or incentives. Partner Relationship Management (PRM) entails the tools, processes, and training required to support these partner businesses in effectively selling third-party products.

PRM is often confused with Customer Relationship Management (CRM). Still, the distinction lies in their focus: while CRM centers on managing relationships directly with customers, PRM is geared towards optimizing interactions with partner businesses.

A Partner Relationship Management (PRM) tool assists organizations in automating and streamlining the activities of their distributors, resellers, Managed Service Providers (MSPs), and Value-Added Resellers (VARs). This includes tracking operations, managing inventory, pricing, and applying discounts. Furthermore, these tools facilitate efficient sales management, enabling businesses to focus on reselling products and services seamlessly across different channel partners.

It fosters strong, mutually beneficial relationships with individual partners to nurture trust, align goals, and ensure seamless collaboration. Here are some critical aspects of PRM:

• Selectivity: PRM involves carefully selecting partners with complementary strengths to create a win-win scenario.
• Structured Engagement: PRM frameworks establish clear communication channels, joint marketing initiatives, and performance measurement processes.
• Focus on Integration: Technical and operational integration between partner solutions ensures a smooth customer experience.

Ecosystem Business Management (EBM)

Ecosystem Business Management (EBM) is a comprehensive approach to managing and optimizing relationships and interactions within a business ecosystem comprising partners, customers, suppliers, and other stakeholders. The need for EBM arises from the increasingly interconnected and complex nature of modern business environments, where collaboration and coordination among diverse ecosystem participants are crucial for driving innovation, creating value, and achieving sustainable growth.

EBM tools are used to facilitate strategic planning, governance, and orchestration of the entire ecosystem. They provide functionalities such as ecosystem analytics, ecosystem mapping, partner relationship management, collaboration tools, and value-creation mechanisms. EBM platforms enable businesses to identify and onboard new partners, manage relationships effectively, align ecosystem activities with strategic goals, optimize resource allocation, and foster collaboration and innovation.

The importance of EBM lies in its ability to create a cohesive and interconnected ecosystem where all participants work together towards common objectives. By leveraging EBM tools, businesses can improve ecosystem visibility, enhance communication and collaboration, drive value creation for all stakeholders, and adapt quickly to market changes and customer needs.

Let's look at what sets EBM apart.

• Openness & Collaboration: EBM thrives on open communication, knowledge sharing, and joint innovation initiatives between all co-sell partners.
• Platform-centric: It revolves around a central platform facilitating collaboration, application development, and data exchange within the ecosystem.
• Focus on Value Co-Creation: The core objective of EBM is to create a shared value proposition where all participants benefit from the joint success.

PRM vs EMB: A Tale of Two Worlds

Let's delve deeper into the key differences between Partner Relationship Management (PRM) and Ecosystem Business Management (EBM):

1. Scope: PRM is focused on managing relationships with business partners. It's about optimizing interactions and transactions with partners to maximize mutual value. On the other hand, EBM takes a broader view, managing an organization's entire ecosystem. This includes not just partners but also customers, suppliers, and internal communities.
2. Customization: PRM often offers a standard approach to partner management. It provides tools and processes that are applied uniformly across all partners. In contrast, EBM is designed to provide customized experiences for different partners. It recognizes that each partner has unique needs and tailors the approach accordingly.
3. Efficiency: EBMs are designed to support a diverse ecosystem efficiently. They can handle the complexity of managing multiple types of relationships. PRM, on the other hand, is more efficient when dealing with only one type of relationship—with partners. It may not be as effective when dealing with the broader ecosystem.
4. Flexibility: EBM platforms offer greater flexibility. They allow for automatic connections to suppliers and partners, reducing the need for manual work. While PRM systems can be flexible within the context of partner relationships, they may offer different flexibility when dealing with other types of relationships.
5. Visibility: EBM provides visibility across the entire supply chain, including visibility for both upstream (suppliers) and downstream (customers). PRM typically offers a lower level of visibility. It focuses on providing visibility into partner relationships but may need to provide insight into other parts of the chain.

Managing Co-Sell Channel Sales with EBM Platforms

Co-selling with your top partners is crucial for boosting your channel revenue. However, the lack of digital tools to manage your co-selling activities makes your partner managers suffer. Partner managers run their businesses on spreadsheets, so they need more visibility into what's happening in the business. As a result, partner leadership operates blindly.

With EBM, organizations can oversee a complete cycle of ecosystem activities, from defining and launching collaborative solutions to joint account planning, co-marketing initiatives, co-investment, and co-sell partnerships.

How do EBMs drive Co-Sell Partnerships?

• Co-Sell Joint Business Planning: Digitized joint business plans allow organizations to execute and track them seamlessly on a shared platform.
• Partner-to-partner collaboration (P2P): It enables organizations to collaborate with multiple partners on shared opportunities.
• Co-Build Management: Easily create repeatable joint business solutions with their go-to-market strategies and launch them into the market faster to accelerate revenue.
• Multi-Company Reporting: Get a clear picture of your partner's shared data for better insights and decision-making.

How to Maximize Co-Sell Revenue Growth with an EBM?

Having an effective EBM in place enables businesses to:

1. Extend your PRM for Partner Co-Selling
2. Getting the most out of Technology
3. Effortlessly manage P2P Partner Collaboration.

Extend your PRM for Partner Co-Selling

While your PRM is effective for tracking direct and resell opportunities related to your product offerings, they cannot monitor opportunities with co-sell partners involving multiple deal sizes, close dates, product and service catalogs, partner deal teams, and other crucial information—all of which should be integrated into a single co-sell opportunity.

An EBM platform enhances PRM data, like joint accounts and plans, by linking it to your partner's PRM data. This integration allows each organization to keep its autonomous systems in place while extending its PRM's power to enable trusted partners to co-sell with your teams and achieve more successful deal closures.

Getting the most out of your Technology

Your top partners drive 80-90% of indirect revenue. Consider asking your partner managers how they handle business with these crucial partners. Surprisingly, they do not use a PRM system; instead, they rely on spreadsheets to manage 80-90% of your organization's revenue.

PRM tools were initially designed to manage the "long-tail" transaction reseller partners. They were not meant to manage peer relationships with these top partners and share co-sell opportunities securely, collaborate on them, and close deals effectively.

An EBM platform revolutionizes how you nurture relationships with those partners responsible for 80-90% of your partner revenue. It facilitates secure sharing of limited PRM data based on policies, streamlines relationship management, and provides real-time reporting across partners, regions, solutions, industries, and more. By investing in this Technology, you're prioritizing the most productive segment of your business: co-selling with your top partnerships.

Effortlessly Manage P2P Partner Collaboration.

PRMs were initially developed for reselling within channel sales partners. They were created for a vendor to host a portal exclusively for partners, retaining control over all data and security rights, requiring others to log in for uploading and accessing information.

However, they lacked collaboration and peer-to-peer partner relationships. As partnering dynamics have evolved, the partnership with top strategic partners has also changed.

An EBM enables a unifying network where the company and multiple partners can come together as peers and collaborate securely on joint opportunities to drive co-sell partnerships.

Wrapping Up

The continuous advancements in Technology are compelling businesses to enter new markets to fulfill and meet customer expectations and accelerate their revenue. However, the intensifying competition leaves you with limited time and resources to conceptualize, develop, and market innovative solutions independently. Therefore, collaborating with your partners is the most effective strategy for swiftly delivering agile solutions to your target audience. Now is the perfect moment to drive your co-sell partnerships and adapt to the fluctuating requirements of the partner ecosystem.

Stay ahead of the curve in this rapidly evolving partner landscape to enhance your co-sell partnerships! Curious about how HSV Digital can elevate your business with improved co-sell motions? Reach out to us today!

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