In today’s ecosystem-driven economy, co-selling incentives play a pivotal role in fostering collaboration and enhancing execution between partners.
The landscape of channel business monetization has evolved significantly over the years, driven by changing market dynamics and advancements in technology. The traditional two-tier distribution model, which relied on manufacturers selling to distributors who then sold to resellers or end customers, was once a cornerstone of many industries. However, this model is now being complemented—and in some cases replaced—by the new ecosystem monetization model. This emerging approach focuses on building interconnected networks of partners, vendors, and service providers, creating opportunities for value creation and revenue generation beyond the conventional supply chain.
The Two-Tier Distribution Model
The two-tier distribution model has been a cornerstone of supply chain management for decades, especially in industries like IT, electronics, and consumer goods. In this model, manufacturers sell to distributors, who then sell to resellers before products reach customers. Intermediaries manage inventory, expand market reach, and provide financial support to resellers. Traditionally, value creation in two-tier distribution was linear and driven by self-interest.
Historically, this model was organized around a metal tier structure—silver, gold, and platinum—with established protocols fostering predictability. Each participant had a clear role: vendors created products, distributors handled storage and logistics, resellers managed sales and installation, and customers were satisfied.
Profit in this model operated on a Cost+ basis. Distributors added a margin to their cost from manufacturers, resellers added another margin and then sold and installed the product for the customer. This system worked well when innovation moved at a steady pace. However, with the exponential increase in disruption and change in recent years, the traditional two-tier model is being redefined and, in some cases, completely overturned.
The Partner Ecosystem Model
The ecosystem monetization model revolves around a network of partners, platforms, and services working together to create value. It uses digital platforms, APIs, and partnerships to deliver integrated solutions. This model fosters a symbiotic relationship where all participants benefit from the value generated by the ecosystem.
Unlike traditional indirect channels focused on financial transactions, ecosystems emphasize value creation, network effects, and partner innovation. Some partners influence deals, others refer them, and some provide vital support or add third-party offerings to enhance a vendor’s platform. Partners may or may not transact revenue, but all contribute to the ecosystem's success.
In this model, traditional tier structures like silver, gold, and platinum are outdated and ineffective. The ecosystem era has reshaped partnerships, shifting value from resale margins to broader opportunities. Value creation is mutual and networked, delivering more collective benefits than individual participants could achieve alone. This includes activities before, during, and after a sale, building stronger, lasting customer relationships over time.
Co-selling in the Ecosystem Model
The adoption of ecosystem tools is accelerating as businesses seek to enhance collaboration and streamline efficiency in their partnerships. Modern ecosystems are designed with the customer at the center, aiming to deliver comprehensive solutions and seamless, integrated experiences. In today’s dynamic buying journey, where multiple digital touchpoints shape the customer experience, effective coordination among partners has become essential.
Among the first adopters are co-solutioning and co-selling task forces, which rely on these tools to streamline joint efforts and drive shared success. Additionally, vendors are increasingly focused on building and enhancing co-selling channel ecosystems, leveraging these tools to foster stronger relationships and improve performance across their networks. This trend highlights the evolving nature of collaborative business strategies in today’s competitive market.
Co-selling is a collaborative approach to sales, where two (or more) businesses partner together to combine their resources, expertise, and offerings. Let me share an example; in the technology space on average in any given deal there are, 7 products as part of a solution, and 5 different partners involved in the customers’ buying journey. These partners may be transacting and non-transacting partners, yet all derived value from their contribution to a deal.
Leading vendors are enhancing multi-partner, multi-vendor collaboration with advanced channel technology tools. These include AI-powered attribution, referral systems, account mapping, through-channel marketing platforms, incentives automation and multi-vendor multi-partner deal or opportunity registration processes.
Co-selling Incentives Empower Collaboration
Incentives are crucial for building an ecosystem where diverse partners—such as influencers, referral partners, MSPs, and ISVs—collaborate to deliver exceptional value. This is particularly true in co-selling scenarios where many participating partners are not directly involved in the transaction and may not earn a margin from the deal. Instead, their value lies in their contributions, such as providing managed services that complement the deal. This synergy highlights a significant shift in how vendors, regardless of size, are redefining their go-to-market strategies. At the heart of this transformation is the convergence of partner ecosystems, which serves as the driving force behind this evolution.
This strategy helps deliver tailored solutions that better meet customer needs. By collaborating, partner businesses can expand their reach, strengthen client relationships, and create unique value. Co-selling is especially common in industries requiring complex solutions or a mix of products and services to solve customer challenges.
From a programmatic standpoint, any instance where a partner adds measurable value can be tracked, managed, and scaled through a repeatable process. For reselling partners, this value is acknowledged through front- and back-end margins (Rebates). For non-reselling partners, their contributions can be recognized through a co-selling reward and recognition incentive program in very meaningful ways.
Co-selling Rewards & Recognition Programs
Co-selling rewards programs empower orchestrators to dynamically structure teams based on a vendor's position within the tech stack. For example, this could involve bringing together sellers from Vendor A and Vendor B with partners from A, B, and C to form a collaborative group. The orchestrator can then acknowledge and reward contributions at various stages of the deal, recognizing specific efforts or milestones through video acknowledgments and awarding points toward significant prizes for all involved. This operates seamlessly alongside your existing channel incentive program, ensuring a comprehensive and flexible approach to driving collaboration and success.
According to Canalys research, by 2025, prioritizing measurable incentives during pivotal customer touch points will become a top focus for vendors and partners. This highlights the increasing need to align incentives with crucial stages of both customer and partner journeys, fostering stronger engagement, enhanced collaboration, and more impactful outcomes.
If you find that your incentive programs primarily focus on allocating the majority of your channel incentive budget at the transaction point, it may be time to reassess your strategy. A brief conversation with Claudio Ayub at the upcoming PartnerTechX could offer valuable insights to help you optimize your approach and stay ahead of emerging industry trends.
Join CarltonOne at PartnerTechX to explore breakthrough technologies shaping the future of partnerships. From IA Incentives Automation to AI automation to Agentic engagement tools, discover the innovations driving success.
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