Lenovo Canada succeeding with Made in Canada messaging on SMB and channel strategy

Colin McIsaac, Lenovo Canada’s executive director and GM, and Chris Fabes, Channel Leader in  Canada, discuss Lenovo’s Canadian strategy and the role of the channel in it.

Colin McIsaac, executive director and general manager at Lenovo Canada

Last week’s Lenovo Accelerate partner event in Orlando saw Canada receive a shoutout in the keynote for reaching the top position in the total PC market in Canada. But it was a good year for Lenovo in Canada overall, with good growth in the Data Center Group [DCG] business as well as the Intelligent Devices Group [IDG] which contains the PCs. The company is putting special emphasis on the SMB market in Canada, and has introduced measures specific to Canada to further stimulate channel business here.

“We have had a very aggressive appetite for new business,” Colin McIsaac, executive director and general manager at Lenovo Canada, told ChannelBuzz. “In PCs, we have just come off our best year of existence in Canada, both with our internal numbers and through IDC. With IDC numbers, our numbers in the last quarter meant that for the first year ever, we became number one in the total PC business in Canada. That was driven by a renewed focus on SMB space. In Q4 alone, we grew 48.4 per cent in SMB specifically, and grew at 33.7 per cent overall. We shipped over a million PCs for the first time over.” Canada saw a 15 per cent top line revenue increase in DCG, and an exceptionally strong 28 per cent in IDG.

McIsaac said that while Lenovo is committed to the united focus of their IDG and DCG businesses with their One Lenovo strategy, they are also concentrating on expanding newer businesses, and see Canada as positive terrain there.

“PCs are one of our three anchors, with data centres and our Moto phone franchise, but with broader digital transformation we have to be more than that,” he said. “Intelligent transformation requires continuing to invest in and grow the core assets, but also to grow beyond them. We now have real tangible offerings in the IoT space with the SE350 edge server for managing analytics, the IoT Nano and even the non-IoT Nano. “The IoT market is exploding. It isn’t cannibalizing already installed PC clients. It’s a net new opportunity and net new end users. This is an important stake in the ground for the organization.”

McIsaac said that newer offerings like Augmented Reality [AR] solutions are also beginning to see some interest in Canada.

“We have had some success in Canada with our Mirage Solo AR headset, particularly in the education market,” he stated. “Ontario is looking at the augmented technology as part of a 21st century way of looking at learning. But a new way of doing things takes time.”

McIsaac also stressed that Lenovo has a more differentiated identity in Canada today compared with the not-too-distant past.

“In North America, at our core we are a North American organization with a very strong Canadian presence,” he said. “That wasn’t always the case. It was the result of a decision that we took three years ago. There was a time when the Canadian existence got lost in the Lenovo landscape. We now have an extended leadership team in Canada, and very supportive North American teams, compared to the way it was before.”

Greater penetration of the SMB space is a Lenovo goal, especially on the DCG side, and while McIsaac said that SMB in Canada is relatively stronger than in the U.S., it’s still a top priority.

“Canada is an SMB market, with 1.1 million logos identifying as that according to Stats Canada,” he said. “Certainly I think we still have work to do, but the issue isn’t as significant as in the U.S. The ThinkPad is the halo device that identifies us first, and then the company after that. With the DCG products, it is more of an issue. There are SMB clients who still don’t know that Lenovo is in the data centre business. One of the opportunities we have is to build on our channel relationships in the SMB landscape. It’s one of the key issues for the new fiscal year. Many SMBs need to know Lenovo better around our data centre offerings.”

A big theme at this year’s Accelerate was continued mea culpas by Lenovo for unpopular channel program changes made in late 2017, primarily as a result of inventory management issues, so that while Lenovo acknowledges the changes were problematic, they also stress they were necessary. McIsaac stressed that he thinks Canada did a good job of arresting potential damage.

“Much has been written about the impact of these changes on our long-time and loyal commercial channel,” he said. “However, we have some very specific and durable relationships in Canada, and we got out in front of that issue, even overcommunicating to some degree. I think we successfully did that in Canada, although it did cause some disruption. We have greatly improved our relationship with our partners in Canada this year with our renewed program stack, particularly in servers, our investment in customized channel communities, our broader automation, and our emphasis on the entire Lenovo portfolio.”

Chris Fabes, Channel Leader, Canada, Lenovo Canada

Chris Fabes, Channel Leader, Canada, Lenovo Canada, said that Lenovo has been emphasizing innovative channel initiatives in Canada, including Made-in-Canada ones. Fabes has been with Lenovo in Canada in a variety of channel-focused roles since 2008 since joining the company from reseller PCM, before assuming the Channel Leader role in April 2018.

““I have overall responsibility for Canadian channel management, but Stefan Bockhop [Lenovo’s Toronto-based Executive Director DCG Channel North America] and Kamal LaBreche, Channel Sales Director, Canada  or the Lenovo Data Center Group, ultimately lead the charge for DCG. It’s my job to make sure we are aligned as possible. The emphasis is making sure we act as One Lenovo, with both sides of the business acting as one.”

The SMB has been a huge area of focus.

“We have done well with larger customers,” Fabes said. “What we are doing now is going after logos that may have been undefined, because many of these customers buy through other means than the traditional channel which touches distribution. 50 per cent of customers in Canada don’t pass transactions through distribution. To grow our business, we have to find them and invest in them. That’s why we are pushing deeper into the SMB and asking partners to commit in that space.

“Historically we looked at partners to drive SMB,” Fabes continued. “Last year, we created a tiering program and aligned incentives to customer execution, to address partners like those who are more service oriented, large regionals, and more customized businesses. We likely didn’t talk to them at a meaningful level before. In the nine months, we have had much more customized conversations and more meaningful conversations. We have also worked on being faster to market, especially in the SMB, and have introduced tools around automation specifically to keep it as deadpan simple as possible.”

The Canadian channel has north of 4000 registered partners, as resellers have to be registered with Lenovo to buy through distribution.

“About 3200 are active in a quarter,” Fabes said. “It’s a four-tier program, and about 1800 of those are Silver and Authorized

Before the program was tiered in July 2018, Fabes said that it was harder to make commitments and plans.

“We were spread out to the point where it becomes too thin,” he said. “We wanted to satisfy everyone, and there was so much complexity. We dropped the number of program line items  from 12 to 4 so they know what to drive towards.”

Fabes said that while there are a few top partners in Canada that Lenovo doesn’t have relationships with, mainly in the DCG business, this isn’t a huge issue.

“There are some though with whom we want to have more meaningful relationships,” he said. “We have a good core of partners – but many are going through a lot of change, like moving from buy-sell to Monthly Recurring Revenue, adding in more security or being more specialized. We need to better understand their businesses and speak at that level not a product level. That’s where we become sticky and meaningful.”

Differentiated programs for the Canadian market are a core part of the strategy

“Canada maintains our own budget, so we can design some things on our own,” Fabes said. “While we removed the social model, we created a unique program, Amplify SMB. It aligned several hundred core partners with distribution and aligned them with additional back end dollars investments if they achieved revenue targets up and above market growth. It’s at the Authorized and Silver levels, because those in higher tiers already have access to automated programmatics.

“Partners also wanted gear, so we put regional budget aside fore more partners to acquire Lenovo branded units at an extreme discount,” Fabes added. “This is our Internal Purchase Ambassador Program [IPAP] which we introduced in July last year. We want them to be ambassadors for us.”

Fabes said this program has advantages over traditional Not-For-Resale [NFR] equipment programs.

“Those have certain limitations,” he said. “This one allows partners to make decisions about how they want to use these products – and they can go sell them after 12 months if they want.”

The Satisfaction Guaranteed program, introduced in April, is another one that Fabes said should  resonate.

“I feel we have to stand by messages we put out in the market,” he said. “With Satisfaction Guaranteed, a partner can nominate up to five customers per quarter to get Think-branded products with no risk. They can return them back to us with no questions asked if they aren’t happy.

Finally, Lenovo continues to be on the lookout for new partners in Canada.

“We are always looking for more partners, and we are doubling down on relationships with strong partners as well,” McIsaac said. “Being channel-first is important to us. But it’s not a ‘one size fits all’ situation. There is a role for every single partner today and for new partners.”

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