Lexmark has reoriented its channel to add a strong SMB focus to their historic focus on the high end of the channel space, with a new branded line covering the whole gamut of the product line, with channel-friendly pricing and policies.
When Lexmark recruited Lenovo channel chief Sammy Kinlaw to run their channel last February, the company was already generally channel-friendly. Friendly does not mean optimized, however. Kinlaw recognized that several changes needed to be made. One major move has now fallen into place with the unveiling of the Lexmark GO Line, a new category name for products in the SMB and Open Market categories that are tailor-made for small businesses, with a set of base margins, spiffs and incents to make sales profitable for partners.
“The channel has always been Lexmark’s primary vehicle to market, but it was a channel that was focused on bigger businesses, specifically on managed print opportunities and Fortune 1000 type customers, like big pharmas and big retail shops,” Kinlaw told ChannelBuzz. “Beginning in 2017, they developed a desire to grow more in the SMB and focus more on channel led deals. The first step was the recruitment of a channel leader – me. Now we are doubling down on execution. There is so much opportunity in the channel today, that at Lexmark has been going just to a few partners. The sheer size of the available VAR community means that we had to adjust our coverage model.”
One of the gaps, Kinlaw said, was the lack of a branded family of products for the channel, which they know will make them money, and know will be in stock.
“In 2017, before I arrived, Lexmark announced the BOLT category, and I assumed it was the name for this kind of product,” Kinlaw said. “It wasn’t. It was internal-facing. We hadn’t been doing anything to take the ball over the goal line to differentiate products that had promotion ties with channel partners. Part of what I perceived as the revelation of clarity that we needed was this need to distinguish product categories more clearly for partners. So I listened to what partners liked and what they didn’t like, and now, within six months, we have come up with a partner-facing naming convention with GO. It is designed as a channel-friendly product line that the partner knows will be on the shelf.”
Kinlaw stressed that this SMB initiative with GO is not intended as a substitute for the Lexmark enterprise channel, but a complement to it.
“My priority in the last eight months has been to get a line like this announced, not because we are moving away from big business, but because of the opportunity in this area,” he said. “The timing is right. This is an opportunity to go after incremental and net-new revenue streams where Lexmark has not been focused in the past.”
Kinlaw acknowledged that print as a total category is in decline, but stressed that companies with the right products at the right prices, with the right channel strategy, can still do well.
“Print as a category is like PCs as a category,” he said. “It is declining slightly. But Lexmark is still having a very good year in the channel, growing at a premium to the market, between 7.5 per cent and double digits.”
The GO line is designed to continue this momentum by giving the channel an entire line of products specifically optimized for it.
“It begins with entry-level mono and moves up through multi-function color, from entry-level to high-end, covering the entire gamut of product categories,” Kinlaw said. There are 16 GO SKUs in total — five mono single-function printers, four mono multi-function laser, three colour single function, and four colour multi-function laser.
“There is also built-in profitability,” Kinlaw said. “That comes from a higher margin on GO than on our classic line, which has a special bid model, from spiffs, and from a wide range of margin incentives.”
The GO line is also being complemented by other initiatives designed to deepen SMB channel coverage.
“On October 1, we opened a new inside sales component to work with these partners, and have created white glove onboarding programs,” he said. “These are all major stepping stones to build a channel model that’s sustainable. All of these things have to be put in place to build a bigger channel.”
Kinlaw stressed that Lexmark has no innate hurdles to overcome to build out this kind of SMB channel, even in a market that is declining slightly.
“Lexmark has an open-mindedness about growing with the channel and building out strategies appropriately,” he said. “Our task to develop this is just to create channel-friendly opportunities. It just takes knowledge and commitment. We have a brand name. We are recognized in the print category as a leader in security, in MPS, in entry-level products. We can check the box on most areas a partner would be looking for. Partners want an alternative, and are willing to listen. The issue in growing in the VAR community has been having the right product, the right incentive program and trust. Everyone has made some missteps, but we don’t have a reputation for bait and switch, or for taking things direct.
“I’m just as excited now as when I joined the company,” Kinlaw said. “We have done some major things to lay foundation for growth in 2019, with a new coverage model, new incentives and now these new products.”