How to Become an Optimal Microsoft Partner

Matt Sullivan

Good morning and good afternoon, everyone. We’ll give it a moment as I can see a lot of people joining.

All right, we’ll go ahead and get started. I’m sure we’ll have a few more people jumping in as we kick things off. I wanted to start with a quick introduction. My name is Matt Sullivan and I help lead the North American sales team here at inforcer. I want to thank everyone for joining today as we continue our webinar series on how MSPs can become better Microsoft partners.

Today, we’re joined by Justin Slegel, CEO and co-founder of Partner Masters. Justin, thanks again for joining us early on the West Coast and spending some time with us. I’d like to turn it over to you for a quick introduction. Could you share a little bit about your journey working with Microsoft and what you and the team are doing at Partner Masters?

Justin Slegel

Thanks so much, Matt. I’m really excited to be here with you this morning. I’m Justin Slegel, CEO and co-founder of Partner Masters. We’re a relatively new company; we started about two and a half years ago. My business partner, Matt Hosman, and I both spent a long time at Microsoft. I spent 10 and a half years there, and he spent almost 12 years there.

My time at Microsoft was 100% in the partner organisation. I started in 2012 with SMB partners, then moved into mid-market, then One Commercial Partner, then Global Partner Solutions and global system integrators. During that time, we saw a major shift. In 2012, Microsoft covered about 50,000 partners with people. That meant we had distributors, local events and contacts partners could reach out to for support. By the time I left in March 2023, Microsoft covered fewer than 500 partners that way.

What we saw was a huge number of partners building their business around Microsoft, but without the support they needed. They had Partner Center and the support that comes through Partner Center, but that does not always help them build their business. We started Partner Masters because we wanted to help partners and empower them to achieve maximum profitability from their Microsoft partnership.

Matt Sullivan

To that point, Justin, the Microsoft partner ecosystem can be overwhelming to navigate. One of the areas you and your team specialise in is the ins and outs of Microsoft’s incentives programme, and how MSPs can take advantage of it on top of the services they already deliver. What are some of the things you work with partners on, and what key updates should MSPs be aware of when it comes to Microsoft’s incentives programme?

Justin Slegel

The incentives programme changes all the time. Microsoft makes the big shift in July, and we’re currently about 43 days into the FY26 changes Microsoft released. I’ll go through the big changes so everyone can see them.

I download a new copy of the incentives guide every day to see whether anything has changed. In a typical fiscal year, especially near the beginning, Microsoft changes it every couple of weeks, then once a month, then perhaps every 90 days. Then the new fiscal year arrives and everything changes again. This year, everything changed on 1 July. Then, on 24 July, Microsoft changed it again by introducing new CSP rebates and incentives related to selling CSP licensing, and backdated those changes to 1 July. It can be very confusing.

I’ll share my screen and walk through some of this, because there are huge programmes for partners this year. I’d love to see in the chat whether you’re using Microsoft incentives. If you are, put yes. If not, put no, or say if you didn’t even know Microsoft had them.

I’m going to open the incentives guide and put a link in the chat so everyone can download it later. This is public information for any Microsoft partner. You’ll see at the top that it is 177 pages. The good news is that it used to be 286 pages, so Microsoft has condensed it a little to help partners understand the programmes.

There are still a lot of programmes. I often describe our services as similar to working with a CPA on taxes. You can go to the IRS website, download a huge guide and work out how to save money yourself, or you can hire a CPA who understands the guide and tells you what to do. It is similar with Microsoft. There is the incentives guide, Microsoft Learn, practice-building guides and a lot of other material. Our team understands this because all we do is Microsoft and all we do is work with partners. Most of my team came from Microsoft, so this is our lane.

I’ll start with some of the big programmes. I know many partners here will focus on Modern Work, Security and Azure, so I’ll spend most of my time there. If you’re a Dynamics partner, put that in the chat and we can go deeper into Dynamics if needed.

Starting with Azure, there are essentially three programme areas: CSP motions, hosting incentives and what Microsoft previously called Azure Migrate and Modernize, which has now become Azure Accelerate. Azure Innovate has also been folded into Azure Accelerate, so those programmes have effectively been combined.

Within Azure Accelerate, there are two types of programmes: a pre-sales programme and a post-sales programme. The idea is that if you talk to a customer about Azure, this can apply. For example, if you’re discussing migrating a workload from AWS, Google Cloud, on-premises or elsewhere into Azure, the core migrate and modernise programme works. There are other slides in the guide for data workloads, AI and enterprise application modernisation, but once you understand how to read the slides, the programmes make more sense.

For the pre-sales engagement, you provide end-to-end analysis and mapping of the customer’s infrastructure, physical and virtual, taking into account their plans, current deployment, usage, processes and data. You use Azure Migrate or Dr. Migrate, and Microsoft pays for those licences. Those tools create an Excel-based assessment report. If you upload that file to Microsoft and confirm that you completed the assessment, Microsoft will pay you.

The smallest engagement Microsoft will pay for is $15,000 a year, which is about $1,250 a month. If you’re talking to a customer about migrating a workload worth at least that amount, up to about $250,000 a year, Microsoft will pay you $15,000. If it is more than around $22,000 a month, Microsoft will pay you $25,000. The idea is that if you use one of Microsoft’s recommended tools to complete an assessment, Microsoft pays you for going out and talking to customers.

Almost all customers qualify, except strategic customers such as the very largest enterprise accounts. In the MSP and CSP world, you often are not dealing with those strategic customers. Enterprise customers in majors, SMC, SMB and commercial all qualify. As a partner, you do need a specialisation. That can feel like a blocker, especially if you do not yet have a solution designation, but it is less cumbersome once you know the rules. There is a checklist and a process. Microsoft is trying to help you build your business in a repeatable way. When you go through an audit for a specialisation, Microsoft is checking that you are not winging it every time you speak to a customer, and that you have a repeatable process.

Once you have spoken to the customer and Microsoft has paid you for the assessment, if the customer says yes and wants to move forward, there is another programme. The post-sales core migrate and modernise programme is for customers migrating or creating net-new workloads such as Windows Server, Linux, SQL Server, open-source databases or modernised applications in Azure.

For this, you have to do the migration. There are two proof-of-execution requirements to get paid. First, you run the Azure Calculator and upload the resulting spreadsheet. Second, you provide the subscription ID, because Microsoft wants to see the consumption that comes from the work you are doing.

Microsoft refers to the engagement sizes as t-shirt sizes. Engagements start as small as planned consumption of $5,000 a year, or roughly $420 a month. If you’re working on a workload of around $400 a month, Microsoft may pay you $2,000. At the top end, if you’re working on something worth around $22,000 a month or more, Microsoft may pay you $75,000.

Even better, you can do four of each t-shirt size per customer in the fiscal year. If you’re working with a customer and they want to move one workload, then a database, then another application, Microsoft can continue paying for eligible work as long as you follow the programme requirements.

There are checks and balances. Microsoft expects 60% of everything you submit to hit the minimum t-shirt size you claimed. That does not mean every single claim must hit the target, but 60% must. Most partners we work with are usually around 80% to 90%, so the key is not to overstate workload size just to chase a larger payout. Again, these programmes apply to almost all customers except strategic customers, and the required specialisations apply.

If you work with smaller customers and a specialisation is not currently achievable, Microsoft has also addressed that. There is now a core migrate and modernise programme for SMB. Qualification is different. Microsoft recently changed Azure solution designations to include an SMB track. If you work with smaller customers, you may not need as many prerequisites around exams and other requirements. You do not need a specialisation for the SMB track.

For the SMB track, Microsoft has removed the medium and large t-shirt sizes, but made the extra-extra-small, extra-small and small engagements available for your customers. You can still do four of each per customer. The Azure Calculator, proof of execution, subscription ID and 60% requirement still apply. Many partners work with at least five to 10 new Azure customers a year, so there is a significant amount of money available on the Azure side.

Matt Sullivan

Absolutely, Justin. I know when you discuss this with partners, you often hear that it seems too good to be true. On the surface, it can look that way, but as you mentioned, there is a specific process you have to follow. Where do partners commonly get tripped up, and what are some of the common challenges?

Justin Slegel

The most common reaction is exactly what you said: partners think it can’t be true and that it seems too easy. We see it every day. The reason I can say this confidently is that we do hundreds, even thousands, of these engagements. We know how straightforward it can be when you follow the process. I worked at Microsoft and was part of teams rolling these programmes out to partners. Microsoft has to make them usable because it needs partners to consume them. Microsoft’s business is based on recurring revenue over time, so it is willing to invest upfront to help get SaaS and cloud consumption in place because that revenue can continue for years.

Another common challenge is business process. In mid-sized and larger partners, teams may not have all their engagements in a CRM. The alliance person may not be directly tied into new project activity. The number one rule with Microsoft funding is that you cannot start working on the project until you have approval from Microsoft. If the team starts work before someone submits the funding request and receives approval, you cannot get the funding. You cannot backdate it and say you did a project last month and now want funding. You must do the claim first, get approval, and then start the project. Aside from partners not knowing the programmes exist, that is probably the biggest thing that gets in the way.

Matt Sullivan

You also mentioned solution designations and specialisations, which are top of mind for a lot of partners. Where do you start there? What do you and your team look at with partners when deciding what to drive first?

Justin Slegel

Let’s start with Modern Work, because I think many people on this call work with Microsoft 365. What we often hear is that partners think they will not be able to achieve a designation because it requires so many points.

There are two designations in Modern Work, and now there are SMB and enterprise tracks across several solution areas. What’s great with Modern Work is that you can qualify for both SMB and enterprise. With Azure, you cannot, which is one drawback.

For Modern Work SMB, partners often get hung up on skilling. For net customer adds, Microsoft compares how many customers you had this month last year with how many you have this month this year. Eligible customers must have between 11 and 300 seats. If you have many customers with only three or four seats, those customers do not count.

The eligible workloads include Exchange, Office apps, SharePoint, Teams and other Modern Work workloads, while most security workloads are excluded except Intune, which crosses over. If you are associated with a customer through claiming partner of record, you can receive credit even if you did not sell the licensing. CSP also counts, whether you are tier one, tier two or selling through another route. For net customer adds, Microsoft looks at the net number, so if you lost three customers and gained four, you have one net new customer.

For customer success, deployments and usage growth, it gets interesting because there is CSP and core. A CSP claim gives 2.5 points, while a core CPOR claim gives five points. You get twice as many points if you do the CPOR claim instead of relying only on CSP. If you own the CSP relationship and have a customer contract, you can go and do the CPOR claim. That can double the points for both deployments and usage growth.

On certifications, people get intimidated by the list, but the first exam, Microsoft 365 Fundamentals, also known as MS-900, is what I consider the salesperson exam. Everyone on my team has taken and passed it, including salespeople and operations. Anyone who has been selling Office 365 or Microsoft 365 for any period of time should be able to prepare for and pass it.

Some of the other exams are harder, such as Teams Administrator or Identity and Access Administrator. For the advanced section, MS-102 is genuinely difficult. But the Teams Meetings and Meeting Rooms technical assessment is an online quiz. It has about 30 questions, can be taken multiple times, and takes about 15 minutes. If you pass that, you can earn 15 points. One person passing that assessment and two people passing MS-900 gets you to 25 points.

That matters because, for indirect partners, starting on 1 October, Microsoft no longer requires a solution designation to get back-end rebates. In the past, partners had to get the solution designation, which many struggled with. Now, if you get 25 points, Microsoft will pay the back-end rebates. You can get there with two people passing MS-900 and one person passing the Teams Meetings and Meeting Rooms assessment, even if you do not sell anything.

Many partners do not realise how much money is available on the back end. If you sell Microsoft 365 or Office 365, you can receive 3.75% on the back end across what you sell. Additional kickers apply. If you sell Business Premium or E3, Microsoft gives an additional 3%, making it 6.75%. If you sell E5, and Microsoft has also included Copilot here, there is an extra 7%, so that can become 10.75% on the back end. Calling and conferencing can be 20% on the back end because Microsoft is not paying on the front end due to telecoms regulations.

New this year is the CSP growth accelerator. Microsoft wants to pay partners for growing their base. In this case, Microsoft pays an extra 7.5% for eligible customer growth compared with the previous 12 months. For example, if a customer is net new to E5 or Business Premium, or did not have that workload 12 months ago, you can receive the growth accelerator. If you sell E5, you might get 3.75%, plus 7%, plus 7.5%, which totals 18.25% on the back end. Depending on how you sell CSP and your front-end margin, there can be significant combined margin.

You do need to accept the terms and conditions and opt into the relevant campaigns and incentive programmes in Partner Center. A common blocker is that partners qualify but do not realise it and never click the button to enrol. Microsoft has made this much easier, and there is a significant payout available.

Matt Sullivan

You jumped into Partner Center a little bit. I think you’ve said before that, from a data standpoint, a lot of what you get in Partner Center is an underused gold mine. But when partners pull Excel sheets or reports, they can get thousands of rows of data. How do you make sense of that? How do you turn that data into opportunity and revenue?

Justin Slegel

That’s a great call-out. In Partner Center, you can go to the Insights tab and Microsoft gives you data on customers, usage, subscriptions, revenue, Azure subscriptions, Azure consumed revenue and utilisation. Some of it comes in charts and graphs, but a lot of it does not immediately make sense. You can also go into the Download Hub and create reports. Some reports are huge. One file I’m showing is 77 megabytes as a CSV file, with more than 139,000 rows and about 45 columns.

Microsoft gives you incredible data, but you have to know what to do with it. Most partners I’ve seen are not set up to work with a spreadsheet like that. We built our Partner Command Center to make this easier. Our mission is to empower every Microsoft partner on the planet to achieve maximum profitability, so we offer free tools and training, with reporting available as an upgrade.

For example, if you are working with a customer on Azure, we have a security ACR report. Microsoft says that if a customer is using Azure, around 8% of their spend should be on security, such as Defender for Cloud, Sentinel, logging and related workloads. Microsoft protects the data centre, but customers need to protect their own data.

We take the Partner Center report and turn it into something actionable. We look at each customer’s spend and how close they are to that 8% security expectation. In one example, a customer is spending $111,000 a month on Azure, but only $149 on security. That is a huge gap. We can then look at the workloads and see they have infrastructure, analytics and databases, which means there is data that needs protecting. That creates a clear opportunity to have a customer conversation.

If you can identify all the customers below the 8% security level, you can build a campaign around Microsoft security tools such as Defender for Cloud. You can create a top-of-funnel motion from your existing customer base and identify cross-sell and upsell opportunities. In the example I’m showing, moving those customers to 8% security spend would create another $35,000 a month in revenue, plus additional back-end rebates. That does not even include potential Azure programme funding such as pre-sales funding through Azure Accelerate.

For Microsoft 365, the same idea applies. You can pull data from Partner Center, but it comes as rows and columns. We turn it into reports that identify workload gaps. For example, a customer might own Teams meetings licences but only a small number of users are active. Maybe they are using Zoom, and that is a conversation you can have. Another customer could have thousands of Defender for Endpoint licences but little or no usage. That is an opportunity to drive adoption and improve security.

The data can tell you many things, but you have to be able to use it. In our view, Partner Center does not make that easy enough on its own, so we built reports that show partners what to do.

Another report we built combines earnings and payout data. Microsoft gives you an earnings report and a payout report, but it can be hard to understand how they connect. A partner might know they were paid $1,000 but not know what it was for. We take those reports and build Power BI views that show how much was paid, when, for which workload and for which customer. That helps partners understand payments for Copilot, security usage incentives, Intune, Defender, Purview and other workloads.

That matters because partners want to pay sales reps, understand customer profitability and know what they received on the back end. We can show, for example, what a customer generated in back-end rebates last month.

Co-op is another area where many partners leave money on the table. Many partners have co-op funds and do not know it. Microsoft puts co-op in Partner Center. If you do not spend it, Microsoft keeps it. Microsoft can say it is putting billions of dollars into partners, but if partners do not know about it or do not use it, the money is not consumed. My point is: go get your unfair share. Go get all the money you can from Microsoft.

Co-op funds must be used to better your Microsoft practice. You can use them for conferences, advertising on channels such as Bing, Google or Facebook, events, or services like ours, as long as the activity provides value to your Microsoft practice. You pay the vendor, submit the invoice to Microsoft for co-op, and Microsoft reimburses you.

If you do not go over $10,000 in a six-month period for co-op, Microsoft sends a lump sum every six months. Those payments are typically around 15 August and 15 February. If you receive a larger Microsoft payment and do not know why, it may be because you did not go over the threshold and received the lump sum. If you do not see a spike, you may have co-op that you need to claim.

To check, go into Partner Center, then Incentives, then Co-op Management. It is somewhat hidden. Choose Program View, and although it may say CSP indirect, you need to look under MCI because everything is housed there now. Select the right location ID and usage period. If the usage period is January to June, you have until 15 August to make your claims. If you have co-op dollars and do not spend them by the deadline, the money goes back to Microsoft. Go get your money.

Matt Sullivan

You work with a lot of Microsoft partners. On the topic of co-op funds, you touched on a few ways partners can use them. When you look at best-in-class Microsoft partners, how do you see them using co-op to drive revenue within the business?

Justin Slegel

The best partners are strategic about it. The first and most important thing is to use it, because it is reimbursement for things you should already be doing. You should be doing marketing, sales programmes, conferences and skilling. You can even use co-op for exams in some cases.

There is a full co-op guide. In our Partner Command Center, we include guidebooks that help partners understand what can be claimed. Eligible activities can include partner skilling, internal training, demand generation, digital advertising, direct mail, text messaging, customer offers and seller spiff programmes. Microsoft makes it fairly open as long as the activity improves your practice.

There are some things you cannot use co-op for anymore, such as partnership renewal, because that is considered something you have to do as a business. But if you choose to do an activity to better your company, your Microsoft practice or your partnership, that is the type of thing co-op is meant to support. The key idea is to use your co-op dollars to get reimbursed for things you are already paying for.

Matt Sullivan

We’ve got about 10 minutes left. The subtitle for today is the five pillars of being a top Microsoft partner, and I think we’ve touched on most of those. As we wrap up, is there anything else you want to leave the group with?

Justin Slegel

These are our five pillars. Across our team, we have hundreds of years of experience working with Microsoft partners, and this is what we think successful Microsoft partners are doing.

The first pillar is customer association. If you are not associated with your customer in some way, Microsoft will never know you are working with them. Microsoft is not going to call and ask whether you are working with a specific company. If you sell CSP to the customer, that is one customer association. If you sell CSP, you can also do claiming partner of record, which is highly recommended because Microsoft gives you more points when you do that. If you work with a customer on Azure but they are not buying CSP from you, you can use PAL, or Partner Admin Link. Customer association is how you tell Microsoft you are working with customers.

Once you are associated with the customer, you need to drive usage growth. You have to understand Partner Center analytics and the data Microsoft provides, because Microsoft wants to see you grow every customer. That is why CSP incentives pay for growth. Look at what the customer has, then sell them more licences, Copilot licences or relevant workloads that support their needs.

The third pillar is solution designations and specialisations. You need to get the points. Start with solution designations for Modern Work, Security, Azure or the relevant solution area. They are not as hard as many partners think once you know the rules. Once you have the solution designation, you work toward specialisations. Azure specialisations can be more difficult because they require a third-party audit, but if you understand the checklist and prepare properly, it becomes manageable. For Modern Work and Security specialisations, it is often customer references, certifications and revenue. Specialisations are the key to unlocking deeper engagement with Microsoft because Microsoft uses them to identify which partners are doing threat protection, Copilot and other specific work.

The fourth pillar is solution offerings. This is what you are doing in the Microsoft marketplace. People often think of AppSource and Azure Marketplace, and those are the key marketplaces for most partners. Microsoft is not going to look at your website to understand what you do. The way you tell Microsoft what you do is by putting your solutions into the marketplace. Even consulting offers count. If you do Copilot implementation or security assessments, those offerings can go into the marketplace. They do not have to be transactable and you do not have to be an ISV. The main point is to make sure Microsoft can see what you do.

My business partner worked in security engineering at Microsoft and helped create products such as Entra ID. Engineering teams would search the marketplace to see which partners had Sentinel offerings when they wanted to identify partners to work with. If your offerings are not in the marketplace, Microsoft may never know what you do.

The fifth pillar is co-selling. If you want to co-sell with Microsoft, you have to do the other things first. You use the Referrals area to tell Microsoft you are working with a customer. A common issue is that partners think they can achieve a designation and then wait for Microsoft to send leads. It does not work like that. Co-selling is more like saying, ‘I’m working with this customer and there may be an opportunity to move a workload from AWS to Microsoft. Can we work together?’ Or, ‘I have a workshop that helps Business Premium customers move to E5, and I want to work with these four or five customers. Can we collaborate?’

We often say, ‘Go sell before you co-sell.’ You have to get the fish on the hook before Microsoft comes to the table. Underneath all of this are foundational areas such as incentives and programmes, technical ability and securing Partner Center, but these five pillars are what it takes to be successful.

Matt Sullivan

I just got the five-minute warning, so I’ll throw one more question at you. You mentioned Copilot specialisation, and it would not be a Microsoft discussion if we did not mention AI and Copilot. But, as the saying goes, you have to walk before you run. What are some things you work with partners on when getting their own house in order before they go all in, whether that’s using Copilot themselves, selling Copilot, or advising customers on it? What are forward-thinking MSPs looking at today as they move into this new age of AI?

Justin Slegel

You stated the number one thing: you have to be customer zero. What we are hearing from Microsoft is that they are now calling this the frontier firm. They want partners to use it themselves first. As you start using it internally, you find new ways to use it and new ways to talk to customers about it. It should not be just one person in the organisation; it should be the whole company.

You may need internal adoption training where people collaborate and share what they have tried. That is essentially what we did in our company. We would have sessions where team members shared prompts, results and ways they used Copilot to respond to different Microsoft scenarios or partner needs.

The next important point is to go into customer conversations with a consultative mindset. Customers often come to partners saying they want to use AI, but when you ask what business problem they are trying to solve, the answer is not always Copilot. A lot of the time, it is automation. Sometimes it can be solved with Power Automate or other Microsoft solutions. You do not want to be an order taker who simply sells 20 Copilot licences because the customer asked for them. If you do that, the customer may not be happy because they were really trying to solve a business challenge that might involve automation, SharePoint, data readiness or something else.

If you do find that Copilot is the right fit, leverage Microsoft programmes, especially around security. We did not cover all the workshops Microsoft is providing this year, but if you have a Security designation, Microsoft may pay you to talk to customers about threat protection, data security and modern SecOps. Those conversations can form the foundation, because you have to get security and data right before you are off to the races with AI.

Matt Sullivan

I think the most important thing you said is that you have to tie it to the customer’s strategic business initiatives. It may not always be a fit, but you need to understand those initiatives. That is the shift we are seeing: it is not just selling technology; it is being an adviser and taking a consultative approach to tie technology to the business outcomes customers are looking for.

As we wrap up, Justin, I want to thank you for taking the time to chat with me and present today. This was really informative for me, and hopefully for everyone who tuned in as well. There are some links that we’ll share in the follow-up. Thank you so much for spending the time with us this morning.

Justin Slegel

I really appreciate you having me today. Thanks, Matt.

Matt Sullivan

Excellent. Thank you, everyone. Have a great rest of the day.