Co-Sell vs Resell: Examining the Changing Landscape of Strategic Partnerships

Partnerships are a growing go-to-market strategy for businesses.

As organizations of all sizes look for more levers to expand growth and increase revenue, strategic partnerships offer one of the most effective ways for businesses to grow and reach additional customers.

There are a number of ways companies partner together. For many years “partnering” meant finding other companies (resellers or distributors) to resell your product. Today, there have been significant changes in the market that are driving a new kind of partnering motion known as co-selling.This shift is happening at even the largest companies in the world, such as Microsoft. The cosell model has "generated 36,000 project wins for Microsoft and its channel partners, worth more than $9 billion in end customer revenue"

Additional evidence is provided by WakeField research who interviewed “250 senior executives at IT companies, value-added resellers and cloud providers”.

The researchers found that:

• 77% of companies who offer a co-seller model have seen a direct or indirect profit increase since they began using it.
• Nearly 9 in 10 companies believe traditional reseller models require significantly more time and financial commitment than co-seller models.

This shift is happening for a number of reasons - which will not be surprising. First is the dramatic shift of software solutions to being built and delivered in the SaaS model. The second, and related change is the rise in companies providing public APIs for their SaaS solutions. Taken together, this means it’s become almost trivial for different companies and their SaaS solutions or services to easily come together and produce robust end-to-end offerings for their shared customers. When two companies come together and bring their joint solution to market, there is a natural need for the companies’ sales teams to join forces and sell their solutions together (co-sell).

In this blog post, we will take you through the main differences between co-sell and resell models, detail the negatives of resell and why people are changing to this new way of partnering and finally walk through the key benefits of coselling with partners and how you can get started today.

Lets begin!

Before diving into why co-selling is gaining popularity in the partnerships space, it is worth taking a step back and describing what each partnership motion is, and the key differences between the two.

Let's begin with resell partnerships.

A re-sell partnership is a model where one company, known as the reseller, sells a product or service of another company to its customers.

The main objectives of any resale relationship is for the reseller to increase revenue and expand their product offerings, while the supplier reaches more customers, expands their brand awareness and market reach through the re-seller.

The ease of resell relationships have made them a popular historical partnership choice for many organizations.

However, although resell relationships are easy to create and maintain, there are some negatives associated with this type of relationship, mainly from the supplier side.

First, you have no control over how resellers represent your product.

As mentioned above, the reseller owns the sales process, meaning that you are reliant on your partners' sales teams to pitch your product correctly and also mark the product up at a rate which is reasonable.

Speaking of mark-ups, this moves us to another negative of re-sell relationships, the impact to your bottom line.

In a direct sales motion, you receive 100% of the amount received from a customer, with a reseller relationship you are giving a portion of the sale to the partner.

The third and final negative of reseller partnerships is the effort required for training and enablement.

We earlier explained how you have no control over how resellers represent your product, which means there is a need to put in time, money and effort to train and enable your reseller partners on how to do this well.

It's a tough task, when many resell partners have thousands of solutions to sell, and so getting resellers to truly engage and make use of your training and enablement content is easier said than done.

It is with this backdrop, coupled with the advances in technology mentioned at the top of this article, that co-selling partnerships have become more prevalent.

Co-sell partnerships operate entirely differently to re-sell relationships.

Whereas resell partnerships operate around a singular sales motion, i.e. a partner selling your solution and there being either a win or a loss at the end, co-sell partnerships are far more collaborative.

With a co-sell partnership, each partner brings its own set of solutions or services to the customer, and these taken together produce a comprehensive whole solution for joint customers.

Co-sell partnerships involve teamwork, joint selling and marketing, and also remove many of the negatives that were outlined above that relate to resell relationships.

So let's drill down into this in more depth.

Here are some of the major benefits that make co-selling more attractive as a partnering motion.

Expansion in revenue

Partnerships are a revenue driving part of your business, so boosting revenue is always going to be important.

Co-sell partnerships are better at driving revenue due to the impact of the solution you are presenting to the customer.

In a resale relationship, you are selling a singular product or service.

With a co-sell motion, you and your partners are coming together and strategically bringing to market something which will solve a real pain point for your customer.

The power of selling this joint solution, leads to a greater number of closed-won deals.

Additionally a co-sell deal usually has a significantly reduced sales cycle, as you remove time spent typically qualifying a deal as you have worked with your co-sell partner ahead of time to account map (more on that later), and understand which customers are likely a good fit.

Increased market reach

Co-selling can also be a great way to expand market reach.

As a software company, there may be various markets that you have yet to explore due to a lack of time and resources.

Having a network of co-sell partners in different regions can help solve this.

Co-selling creates a network ecosystem effect, where your partners become an extension of your own sales and marketing teams, meaning that instead of setting up a HQ in EMEA, you can use your co-selling partnership, and leverage their sales teams on the ground to attract customers from that region.

This expansion in reach through co-sell partners can also be a way to test a region before investing money and time and making a formal move into that market.

Using that example above, your co-sell partners could bring you lots of leads from the EMEA region.

This would be a good signal that your business would do well in opening a permanent base in EMEA to double down on this momentum.

Deeper Customer Relationships

An additional benefit of resell partnerships are fostering trust and strengthening relationships with current customers.

Being able to package different solutions together to solve almost any customer problem is magic.

Instead of not being able to offer solutions to all of your customers problems, you can start to offer a bundled package that includes the solutions of you and your cosell partner.

The ability to help customers, by providing different solutions to their problems builds trust, and will ultimately have your customer view you more than just a vendor.

Instead you are looked at as a solutions architect, somebody who is able to stitch together solutions and help solve problems for your customers, making you more than just a vendor.

Leverage both partners’ influence and relationships

When you are co-selling with partners you also have the benefit of being able to leverage the relationships that they hold at other organizations.

For example, if you are selling into the IT organization of a potential prospect and are struggling to win over the Director of IT, your partner may have a pre-existing relationship with that person which they can use to help influence the outcome of the deal.

The best way to think about the network effect co-selling can have on your list of contacts is to think about the number of records you hold in your own internal CRM.

Then imagine your co-sell partners CRM, and the number of contacts that exist there.

The benefit of a good co-sell relationship is you’re in effect, opening each other's contact lists, and then leveraging this to speed up sales cycles and close more business.

An additional benefit of going to market with a co-sell partner is the enhancement in reputation and credibility you will get by working with a partner that is well known across a particular industry.

This is especially important when you are launching into markets where you don't have name brand recognition.

Co-selling with a partner who has a good reputation in this new market, can reduce hesitancy prospects may have in buying from an unknown entity. The process of co-selling acts as a seal of approval on you and your product.

Strengthen ecosystem partnerships

The most important part of any partnership is trust.

With resell partnerships, where you aren't involved in the majority of the sales cycle, you aren't able to build rapport and trust with your partners (or even your indirect customers).

In a co-sell partnership the opposite is true.

You are actively working together on joint solutions with your partner, which involves careful planning, preparation and coordination.

Due to this closeness when preparing joint solutions, you build stronger partnerships and relationships, which leads to more buy-in from both businesses and ultimately additional revenue through these relationships.

So at this stage of the article, you are probably thinking "Co-selling sounds great, I want to get started".

Before you dive into co-selling formally with partners, there is preparation needed internally at your organization.

There must be a process created to understand what types of partners you are going to recruit and how you are planning on supporting them.

There are some important factors to consider in this planning phase.

They include:

Mapping market demands

A good first step to defining what type of co-sell partners you need, is to create an overview of your industry and more specifically the trends and changes in customer behavior you are seeing.

This mapping exercise will enable you to detail what you think your customers will need in the immediate and distant future.

At the end of this exercise you will have a clearly defined list of things that customers are doing to need in your market.

Consider internal strengths and weaknesses

Once you have completed your market demand analysis, the next step is to align this with where you stand as a business, and more specifically if you are well positioned to respond to this customer demand.

For example, let's say you are a marketing automation software platform.

You have mapped the key trends for your industry, and realized that AI is something people are going to want when it comes to content creation.

You realize that adding AI to your product is not on your product team's roadmap for the next year.

This would be a good "gap" that could be addressed with a co-sell partner that has AI content creation as their core product.

Understanding how you will support partners

The other factor you need to take into account is the type of support you will be offering your partners.

This could include activities like marketing, enablement and training.

This is another internal conversation that needs to be had, and includes stakeholders from across your organization.

If you are planning on marketing with your co-sell partners, then you’ll need to connect with your marketing team to know if they’ll have capacity to support your planned co-marketing activities. (Note: partner co-marketing can give you twice the coverage at half the cost - a fact any budget-constrained marketing team should be all over.)

What resources can they put towards co-sell partners?

What marketing capabilities do they have internally that can be offered?

For example, if your marketing team doesn't have a team member who handles webinars, either remove webinars from your list of co-marketing options or talk to your partner to see if they have the ability to run webinars.

Co-sell Expectations

The final "pre co-sell" factor that you need to get set up in order to begin a successful co-selling relationship is setting expectations.

Setting expectations is important as it will often form the basis on your relationship with your partner.

What type of commitment do you expect from them?

What types of revenue are you hoping to drive through co-selling together?

This is important, as there needs to be a mutual understanding between co-sell partners of the effort, resources and time each will commit in order to co-sell together, in addition to what revenue goals each partner is looking to hit.

A partnership that has no direction, will likely fail, as there is no accountability between parties.

So, you have gone through the checklist above, and you are ready to start co-selling.

You have recruited your first co-sell partners and you are ready to go to market together.

So what happens now, to ensure co-sell success?

The key ingredients to driving success with a co-selling partner can be distilled down to three things, robust joint partner account mapping, comarketing and finally clear management of leads and opportunities.

Let's dive into each of those in a little more depth.

Joint Partner Account Planning

The first step with any new co-sell partner is to sit down and plan what accounts you want to jointly target and build joint account plans for you and your partners to most effectively close business together.

In order to do this effectively, you and your partner counterpart in addition to stakeholders from each of your organizations such as marketing and sales, should sit down and develop a comprehensive plan on how you are planning on going to market together.

As part of this account planning session, you can bring CRM data, discuss opportunities to work together, and build account-by-account plans for which partner has the strongest relationships, where there are needs in the account, what use cases could bring value, who are the likely buying teams, etc. for both partners to prospect jointly and develop co-sell opportunities with.

If you want to save time on account planning, WorkSpan Co-Sell solution, allows two (or more) partners to work collaboratively on joint account plans for each account you’ll be targeting together.

Co-Marketing

As you’re planning how you and your co-sell partners will go to market, you may want to align your marketing teams to do co-marketing activities to drive leads and opportunities to co-sell together.

In a similar way that planning is needed at the account planning stage, similar planning is needed when discussing co-marketing to work out roles and responsibilities, and coordinating activities.

A good idea at this stage is to create a “co-marketing calendar”, which lists all of the key events you are looking to do to generate demand for your partnership.

Producing a co-marketing calendar with your cosell partner ensures that both sides are invested in the relationship and there is activity queued up in order to drive success throughout the year.

It is also important during this stage to lay out a way of working together. For example, if you are planning a kick-off webinar to announce your co-sell partnership and generate leads, each marketing team will have a set of deliverables that they are responsible for in order to execute.

It's important to define how this coordination will happen.

Will you have regular check in calls?

Will you set up a joint Slack?

Organization, and mapping during this co-marketing stage is critical to ensure impactful co-marketing is planned and executed on, and thus more leads are generated for both parties.

If you’re looking for ways to streamline and automate your partner co-marketing activities, check out the WorkSpan Co-Market solution which allows you to tap into joint calendars, plan and execute joint marketing activities, and set up real-time alerts based on assigned tasks, making coordination between teams easy.

Referrals and Opportunity Management

The final pillar in driving success in your co-selling strategy, is how you manage and share referral opportunities.

There is nothing better than seeing new opportunities come through from your partners.

But before sales reps go off and work them, it's important to define “rules of engagement” to prevent confusion and to ensure greater conversion on these deals.

Your first step should be training your sales teams on how they should engage with partner sourced opportunities.

This could include defined processes for things such as:

• Who they should reach out to on the partner team
• Additional information the partner may have about the account
• How they should track these in CRM
• How to run a joint sales call

The “rules of engagement” should be open to change, and as a partner manager, once you start to hear feedback from both your partner and sales team on how it's going, you should be open to tweaking and changing things to achieve optimal results.

An additional difference that your sales team will need to be educated on, is how cosell deals have different outcomes than a traditional sales cycle.

Unlike resell deals where there are only two outcomes of a deal (win or lose), with co-selling there are actually four possible outcomes:

• You win / your partner wins (yay!)
• You win / your partner loses (bummer)
• You lose / your partner wins (ouch)
• You both lose your deals (double ouch!)

This expansion in deal outcomes means it can be more challenging to track how each co-sell deal is going, the outcomes, and how you’re both going to manage each of these outcome scenarios.

For these reasons, it’s really important to constantly monitor the deal outcomes mentioned above, and analyze success.

Taking a periodic (monthly or quarterly) look at how deals are performing is going to give you data points to optimize your co-sell model, and increase success with your partners.

For example, If you are seeing a high number of deals where you are winning and your partners are losing, you should reassess how you are working to co-sell together.

A co-sell management solution like WorkSpan can help organize all of these activities with direct connections between both partners’ CRM systems so account executives with each partner continue to work where they are comfortable, but can collaborate on co-sell deals and partner managers have full visibility to help facilitate and remove roadblocks - it’s win-win-win-win!

In today’s world of cloud computing, easily connected SaaS solutions, and value-driven buying, the world is quickly moving to co-selling.

It presents more than just a transactional relationship with another business.

It presents a way for two companies to jointly create solutions, and go to market together.

As organizations shift towards a more customer-centric approach, co-selling is the way to differentiate from competitors and drive growth.

If you are looking at getting started with co-selling, this blog post has hopefully given you some of the most important factors to be on your way.

For an even deeper dive on co-selling, check out our Ultimate Guide to drive Co-Sell Partnerships.

We’d also be happy to have one of our co-sell experts walk you through more about co-selling and how to make co-selling successful in your organization.