2024 is the year when businesses have realized that their old sales strategies are broken and need to invest in the sales transformation process. Today, buyers have changed how they purchase products and services, and deal closing has become even more complex.

Co-selling Guide- Why traditional sales approaches are fading out

Moreover, according to Accenture, 76% of business leaders express that current business models will be unrecognizable in the next five years. To truly elevate this discussion, one of the main reasons for this transformation is the shift to ecosystems. And this shift is only going to accelerate. By 2030, ecosystems will play a significant role in every aspect of the global economy, driving around $80 trillion in annual revenue.

This shift has caused businesses to switch from "channel-first" to "partner-first" strategies. This is just the beginning of the sales transformation process that CROs are considering across industries.

The co-selling guide: How b2b companies are forced to evolve their GTM strategies

To outpace competitors, you must embrace agility to provide the comprehensive and value-based solutions customers are looking for today.

Businesses can achieve this agility with co-selling and make their sales transformation a top priority in 2024. co-selling is a journey that needs the right people, technology, and process. It enables businesses to expand their growth by teaming up with their ecosystem partners, co-innovating to bring solutions to market faster, and co-selling collaboratively to accelerate deal closing and increase win rates. Moreover, innovative firms are even partnering with multiple co-selling partners to provide a comprehensive customer experience. Let's dive deep into the blog and understand co-selling in detail.

What is Co-selling?

Co-selling, also known as solution selling, is a partnering process in which two or more peer-level partners, each with complementary offerings, collaborate to provide a holistic solution to a shared customer need and sell together.

The ultimate idea is that by combining the skillsets and expertise of multiple individuals, partner brands and businesses can sell more effectively to their joint customers.

In a co-selling partnership, partner brands need to be highly in sync. They must refine their go-to-market strategy and messaging throughout the sales process to complement each other's efforts rather than conflict with them.

Co-selling empowers your sales teams with various exclusive resources, data, and contacts to help them close more deals faster. It also allows your sales teams to provide prospective clients with increased confidence and protection"”all through the power of your partner.

One of the most popular examples of a successful Co-selling program is Microsoft. Through this program, the multi-national tech corporations partner with thousands of brands that work with Microsoft employees to sell services built on Microsoft Technology.

To your surprise, Microsoft successfully made $8 billion in partner revenue (according to CRN) in the first two years alone through its co-selling program initiatives.

Companies today increasingly leverage co-selling strategies because they know their old sales strategies are broken.

How is Co-selling different from Reselling and Co-Marketing?

Reselling is when a partner sells your exact product or service independently without any added value through joint solutions. In reselling, neither their offerings nor your business's sales process are part of the equation.

Reselling is a traditional channel sales model where a partner purchases products or services from a vendor and then sells them to end customers. In this model, the reseller assumes the risk of holding inventory, sets the final pricing, and manages the customer relationship. The reseller adds value through expertise in local markets, customer service, and support capabilities. They often bundle the vendor's product with their services or complementary products to create a complete solution for the customer. The reseller's profit comes from the margin between their purchase price and the price they sell to the customer.

Compared to the Co-sell approach, reselling is not beneficial for customers because they don't receive a collaborative solution built purposefully to meet their needs. From a strategic standpoint, reselling can be characterized by a limited scope of engagement between the partner and the company. This limited engagement often results in a transactional relationship where the partner's success is tied to their ability to sell the product, with less emphasis on value-added services.

Conversely, Co-selling is a collaborative sales model where a vendor and partner work together to sell to end customers. In co-selling, both parties remain actively involved throughout the sales process, sharing resources, strategies, and customer relationships. The vendor and partner jointly identify opportunities, develop proposals, and close deals. Co-selling allows for a more strategic alignment between the vendor and partner, leveraging each's strengths to deliver a more comprehensive solution to the customer. The profit is typically shared based on each party's value to the deal.

Unlike reselling, co-selling involves deep integration of partner company's solutions, resulting in tailored solutions that address specific customer needs.

Co-marketing is a strategy in which two or more companies collaborate on promotional efforts for a co-branded offer. In a co-marketing partnership, both companies promote a product or service and share the results of that promotion. By working together, companies can increase their reach, share resources, and attract more customers than they might be able to. Co-marketing aims to amplify brand awareness, reach new customer segments, and drive demand generation through targeted marketing activities.

Deciphering the Co-Sell Approach

As you embark on co-selling with your ecosystem partners, it is essential first to understand the 'what and how' behind the process. This section will walk you through the collaborative steps required to craft a comprehensive co-selling strategy with your partners and succeed together.

Partner co-selling:

Partner co-selling is a massive opportunity as organizations co-selling with their ecosystem partners are estimated to generate more than $300 billion in revenue. Using this co-sell approach to grow your business and foster long-term relationships through partner-aligned goals has become a cornerstone. co-selling can be categorized into three major processes:

Co-Sell Joint Account Plans Management: When the ecosystem partners build and manage joint account plans focusing on key accounts with their top co-sell partners.

Co-Sell Leads Management and Marketing: When Ecosystem partners develop and execute co-marketing programs with their key partners after deciding which target markets to go after. This involves coordinating joint leads that both partners mutually manage.

Co-Sell Referrals Management: Here is where the real action happens in co-selling. The ecosystem partners handle incoming and outgoing referrals alongside their co-selling partners, who work together to close deals.

How to Pick the Right Co-Sell Partners?

When you jump into partner co-sell, it is crucial to think through which partners you want to work with and the strategy for going to market together. Some of the critical factors to consider include:

co-selling Guide- How to select right partners

It's essential to grasp the level of commitment and executive connections you desire from potential partners. Moreover, make sure to obtain responses to inquiries such as:

Do your potential partners have the right culture to match your organization?
Are there any shared customers?
Can your partner bring you into a new market?
What areas does your customer base overlap?

Once these aspects are apparent, you can begin focusing on a group of partners to develop your extensive go-to-market strategy. This involves selecting highly competitive solutions with the proper reach, influence, innovations, and capabilities, positioning you to become unstoppable in your market.

The Co-Sell Process: Driving Successful Partnerships.

Now that you have identified your target audience and partners, it's time to drive partnerships. Co-sell processes involve three significant steps: Joint Account Plans Management, Marketing and Leads Management, and Co-Sell referrals. Let's go through them one by one.

1. Joint Account Plans Management:

Here, you and the partners of your partner organization work together to map accounts they will prospect jointly to develop co-sell opportunities. These opportunities become referrals by either party to collaborate in joint sales efforts. The steps involved in this process are:

Picking the right partners.
Conduct joint planning sessions to create a strategy with partners.
Map out relationships and ensure alignment.
Determine opportunities to co-sell together.

2. Marketing and Leads Management:

When strategizing co-marketing plans with your ecosystem partners and handling the associated leads, follow these key steps:

Determine the target market.
Execute a joint market plan.
Manage incoming leads.

Collaborate with your key partners to develop co-marketing plans based on the joint solutions chosen, potential target markets for these solutions, and anticipated customer demand.

3. Referral and Opportunity Management

In this final step of co-selling, each phase involves specific tasks that either your team or your co-selling partners carry out. Let's break down each of these steps.

Step 1: Identify Opportunities

In Joint Accounts Plan Management, you and your partner's managers work together to find potential customers to sell to. These opportunities then become referrals that both of you can work on selling together.

It's important to have clear rules in place to do it smoothly. Breaking these rules can cause problems and conflicts between direct selling and co-selling efforts.

Pro tip: Have a systematic agile process where your partners can identify pre-pipeline opportunities to pursue each week. So they can respond to referrals quickly since responding to incoming requests increases confidence.

Step 2: Accept Referrals

A referral is when one company identifies an opportunity to work with a partner company on a co-selling basis. Compared to a lead, a referral holds more value. It's a qualified opportunity nurtured and developed by the referring partner.

In this stage, you take the referrals identified earlier and subject them to a marketing and channel sales qualification process. Your partner is also responsible for doing the same.

Pro Tip: Expect a 30% drop-off rate, meaning that out of every ten leads identified, only three will likely meet the qualification criteria. The other seven may not qualify for various reasons related to sales, marketing, or partnership dynamics.

Step 3: Engage with Referrals

You or your field sales teams will engage with referrals in this step. After the sales teams have engaged, keep a close eye on the lack of activity, identify the issue, and implement corrective actions. As the opportunity progresses, pay attention to any unanswered queries between your team and the partner, tracking action items collaboratively and providing guidance as needed. Remember, your sales team may not have the same level of insight about the partner as you do, so step in when necessary to represent the partner's interests and support your sales team in overcoming obstacles.

Pro Tip: Regularly update your partner on the progress you're involved in and schedule a weekly review call to stay updated, record cadence notes, and close action items. This approach will establish you as a reliable and valued contributor to the sales process.

Step 4: Close Deals (Both Partial and Complete)

Scenario 1: Partial Deal Wins/Losses:

This phase occurs when one partner has a successful deal while the other has not yet closed or may have lost the deal.

In this scenario, each co-selling partner can either emerge victorious or face a loss. For instance, while customers may select your software, they might opt for self-implementation, reduce service requirements, or award services to a different partner.

Scenario 2: Complete Deal Wins/Losses

Once the sales team has successfully closed a deal, notify all relevant parties, including partner teams, sales teams, sales management, and management. It's crucial to note that collecting the appropriate incentives boosts profitability for your company. This process involves several interactions with co-selling partners, so refrain from moving opportunities to this stage until all necessary tasks are finalized.

Step co-selling: Collect Incentives

Your partner or organization might provide incentives beyond deal commissions and rebates, such as reimbursing proof-of-concept (POC) and trial costs, offering consumption incentives, and more. To maintain effective channel management, ensure these incentives are implemented correctly. Also, be prepared for inquiries regarding activities or proof of performance during the claim review process.

Step 6: Focus on Discontinued Referrals

After completing all post-pipeline collaborations with your partners, move the opportunity to the "done" stage. Throughout your partnership journey, there may be leads and opportunities that you or your partners decide not to pursue further.

Pro Tip: Even if a lead or opportunity is discontinued, remember it might still be eligible for settlement with your partners.

What are the Types of Co-Sell Partnerships?

There are two main types of co-sell partnerships:

1. Tech

Co-selling partnerships are prevalent in the tech industry, where sales representatives from partner companies collaborate to market their products simultaneously to the same customer.

For such collaborations to thrive, partner brands must offer complementary products. This will enable them to deliver more compelling and holistic solutions for their end customers.

Many tech organizations co-sell by this approach also pursue product integrations, a partnership where SaaS businesses connect their products to enhance the user experience. By integrating and co-selling their technologies, brands pool their strengths to effectively market a new and joint solution to a shared target audience.

2. Channel

Co-selling is also fairly common among brands from different supply chain segments. Rather than jointly promoting two separate products, channel partnerships typically involve collaboration between entities like vendors and resellers. These partnerships leverage the vendor's product expertise and the reseller's customer insights to pitch a unified product offering to end customers effectively.

Here, a vendor knows the product best, and the reseller knows the customer best. By collaborating, they will be better positioned to successfully pitch a solution to their end customer and sell more efficiently.

Co-selling significantly overlaps with supply chain partnerships, encompassing various collaborative efforts such as environmental sustainability initiatives or resource pooling to enhance supply chain efficiency. However, co-selling partnerships are distinctly focused on sales activities and enhancing selling effectiveness through strategic collaboration.

How to Measure Partner co-selling?

Partner co-selling is quite different from the traditional partner reselling approach. This means a unique approach and metrics will be used to measure co-sell activities. Here's a look at some of the metrics that are important to track and measure in the partner co-sell approach:

Referrals and Leads:

Total number of sourced referrals or leads.
The monetary value of those sourced referrals and leads.

Pipeline:

Pre-Funnel metrics:

Referral opportunities sourced from the ecosystem, brought by partners.
Joint opportunities strategically targeted with partners.

Sales Funnel Metrics:

Total number of ecosystem-sourced pipeline deals.
The monetary value of these referrals.

Closed Revenue:

Measure your partner-sourced revenue by the number of deals.
Measure your partner-sourced revenue by the monetary value associated with these deals.

Cloud Consumption:

When partnering with hyper-scale cloud partners like Microsoft, AWS, Google, or others, their sales teams receive compensation based on the following:

Computing, storage, and network consumption for specific customer use cases of the joint solution.
Cloud partner compensation based on cloud consumption models.

6 Best Practices for Successful Co-Sell Partnerships

1. Implement co-selling effectively across all Partner Frameworks

To harness the benefits of ecosystem partnerships, all partners must align seamlessly and work as one team while co-selling joint solutions. Partner business models are evolving, and successful partner co-selling entirely depends on your adaptability. Both you and your partners should embrace modern tools, technologies, and methodologies to facilitate and empower multi-partner sales business models with shared visibility into collaborative opportunities. Such a model ensures higher win rates, shortened sales cycles, and increased revenue.

2. Utilizing Cross-Company Collaboration

The lack of standardized and secure processes is one of the major challenges when managing co-sell partnership programs or with the growing number of co-selling relationships. A digitized partner program workflow offers a solution to many of these challenges. Imagine running all co-sell activities from one unified platform that is visible and accessible to partners and stakeholders at all times. With shared workflows across companies, everyone knows the status, next steps, timelines, and accountable parties.

For example, SAP and Cognizant have revolutionized their co-sell partnership engagement through digitization.

Here's a video where Marc, Senior Vice President of Global Business Development and Ecosystems at SAP, and Jack Miller, SAP Global Markets Head at Cognizant, discuss "In the Age of Cloud, how Partnering is all about co-selling."

3. Monitor and Report as a Direct Sales Team

More than 63% of partner professionals express concerns about evaluating their success. Having advanced and up-to-date reporting in place delivers data and analysis for work that doesn't work in the business ecosystem. While direct sales teams have measurement systems, it's now imperative for partner leaders to establish, monitor, and report key performance indicators (KPIs) for partner managers and partners as effectively as a direct sales team.

We discussed many essential factors that affect the performance of your co-sell program. Consider those factors when monitoring performance, making necessary adjustments, identifying top-performing partnerships, and, most importantly, showcasing the value of partnering with company leadership.

4. Leverage the Power of Collaborative Partnering

In today's dynamic business landscape, it's common to collaborate with multiple partners on a single opportunity during go-to-market activities. Partnering today is no longer confined to one-on-one relationships with a single partner. Previously, channel partners played a role in facilitating connections among partners.

However, as channel partners are getting eliminated, SI and MSP partners, on the other hand, gain more influence in the customer's buyer's journey. Taking control of how you engage partners in this process is essential. Relying solely on channel partners in this critical control point is no longer sustainable. Instead, leverage your entire partner ecosystem's collective influence and expertise to accelerate deal closures. Multi-way partnering allows you to expand your reach significantly and uncover numerous additional business opportunities.

Co-selling. Establish Infrastructure for Pre-Funnel Pipeline

A robust, reliable, and up-to-date pre-funnel pipeline is a powerful catalyst for boosting sales. Key pre-funnel activities include engaging co-sell partners in collaborative joint account planning and prioritizing joint account nominations and referrals. By adopting a synchronized approach to pre-funnel processes, you can collaborate on sales strategies with your partners and efficiently track partner contributions to deals and revenue from the outset.

6. Adopt a Shared System of recording Partner Achievements

Channel partner teams, on average, contribute to one-third of all revenue and company valuation. Despite their significant role in securing substantial deals, these teams often find themselves under-appreciated and underfunded compared to their counterparts. Moreover, co-sell partner teams lack a systematic approach to execute their partnering processes and demonstrate their value quantitatively.

Implementing a shared system of record can be a game-changer. It provides a reliable partner collaboration platform and enables accurate, comprehensive reporting. This shared system approach can enhance the effectiveness of channel partner incentive programs, ensuring that partner teams' contributions are recognized and rewarded appropriately.

What are the 4 Common Pitfalls to Avoid?

As you develop your co-selling program, you must dodge certain pitfalls hindering your progress. Here are a few common mistakes to avoid:

Delay in Operationalization: The biggest mistake is not operationalizing your co-selling program sooner. This means not putting the right people, processes, and technology in place.
Lack of Dedicated Support: A Co-sell program can't run itself. It requires a dedicated channel manager and support personnel who can assist partners throughout the sales cycle, provide timely technical support, and ensure they maintain their industry expert status.
Absence of a Partner Team: Without a partner team, managing various arrangements like co-selling, co-marketing, co-innovation and strategic partnerships can pose significant challenges. This can further lead to issues like lack of specialization, inefficient resource allocation, inconsistent communication, and difficulty tracking and measuring success.
Siloed Partner Team: The partner team should not exist in a silo. They should be integrated throughout the organization and regularly interact with other teams.

Co-selling Partnerships to Take Inspiration From.

Google and Cisco

Google and Cisco have collaborated on various co-selling initiatives, focusing on integrating their technologies to offer comprehensive solutions. Specifically, they have partnered on joint offerings such as:

Google Cloud and Cisco Webex: They integrate Google Cloud's collaboration tools with Cisco's Webex platform, enabling seamless communication and collaboration for teams across different locations.
Google Cloud and Cisco Meraki: They combine Google Cloud's infrastructure capabilities with Cisco Meraki's networking solutions, providing businesses with scalable and secure networking solutions for their cloud environments.

Microsoft and Adobe

Microsoft and Adobe collaborated to leverage their strengths in cloud computing, data analytics, and customer experience to deliver integrated solutions that address the evolving needs of businesses across various industries.

Wrapping Up

Co-selling isn't a new thing. The best enterprise sales representatives have been doing it for years. The question arises how effectively to do it. A successful co-sell program should be centered around customers and target accounts and should not be designed around your organizational chart. An effective co-sell program should bring together everyone from channel reps, partners, and sales teams into a unified process instead of treating each team as a separate silo. However, co-selling can unlock immense opportunities for businesses to thrive in today's competitive landscape with the right approach. Embrace this approach as a strategic pillar of your growth strategy and watch as your partnerships propel you towards new heights of success.

Are you ready to scale your co-selling program and grow faster?

At HSV Digital, we are already transforming co-selling strategies for some leading organizations, driving growth across extensive partner ecosystems. Our proven techniques and technologies empower leading enterprises to maximize their co-selling potential and achieve accelerated growth.

If you're experiencing a decline in sales productivity and are concerned about your future growth, we're here to guide you on how to operationalize an enterprise co-sell strategy and accelerate growth with your top partners. With HSV Digital, you can leverage co-selling to its fullest potential and unlock unprecedented growth opportunities. Reach out to us today, and let's transform your co-selling journey together!

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