Lenovo restructures DCG partner benefits for new fiscal year to better incent channel

The multi-faceted changes to the DCG program are designed to refresh policies which new DCG channel head Steve Biondi saw as having disincented strong partner growth activities instead of encouraging them.

Steve Biondi, Head of Partnerships and Channels, North America Data Center Group at Lenovo

On April 1st, the start of the new Lenovo fiscal year, the compensation and processes for channel management in their North America Data Center Group [DCG] changed significantly. Since coming to Lenovo, Steve Biondi has overhauled the models to incent stronger performance. While several of the changes give more rewards to the company’s top-performing partners, the alterations overall are consistent with the emphasis on ‘channel-first’ the DCG adopted last year after Kevin Hooper took control there.

Biondi joined Lenovo in January. While it was reported then that he succeeded Stefan Bockhop in the North American channel role in Lenovo’s North America DCG, and that much is true, his role has been expanded, as his title as Head of Partnerships and Channels also incorporates Joel Artzt’s alliances organization as well.

“They combined the alliances organization and the channel organization together,” Biondi said. “The logic was that dealing with the big alliance partners requires the kind of business development sales motion and behavior that you would equate to an OEM function. I put the Alliances function under my OEM leader, because many OEM relationships are also alliances, and vice versa.”

On the IDG [Intelligent Devices Group] side of the business, Lenovo kicked off their new fiscal year on April 1 with a new benefit package that was explicitly identified as a stimulus to help partners cope with the effects of the coronavirus. Biondi said that it would be a mistake to see the DCG changes as motivated by the same objectives.

“It’s different from standpoint that IDG went down the path in terms of their program to incent to normalize things while the crisis was upon us,” Biondi said. “I came in in January and decided that we needed a program for growth that we would announce at beginning of the fiscal first quarter, which is April 1.”

Biondi said that the issue with the DCG program that he inherited was that it was designed for different objectives than Lenovo wants to incent now.

“When I got here in January, the program in place was built for a purpose in time and was very behaviorally focused,” he said. “It didn’t focus on incenting partners to get to the next level or do more for us as far as exceeding their growth targets and acquiring new accounts. You got the same amount of money for these regardless of your tier and regardless of how many certifications that you had.”

That has been changed, Biondi said, as part of a change in focus to emphasize growth

“We are putting the emphasis on partners who can move a lot of dirt with us,” he stressed. “Growth is the goal. We are taking three steps to get there. We are allocating more resources to growth. We are putting the needle on partners who can deliver. And we are looking for partners to make more noise in terms of showing up for opportunities.”

Biondi also identified three core buckets to the new approach. The first is a heavy incentivization to lead with Lenovo, with additional rebates for both exceeding growth targets and acquiring new accounts. These rewards are pegged to tier status in the partner program, rather than the flat bonus that existed before for bringing in new logos and exceeding targets

“The base margins haven’t changed, but these incents for new logos and exceeding growth targeted will now be worth more money depending on their medal status,” he said. “This makes the incentive very meaningful.” Platinum partners now get up to a 5% additional rebate. At the lower end, revenue targets have been reduced to make it easier for Authorized partners to reach Silver status.

Biondi indicated that the additional resources are net-new, and not a matter of cutting the pie differently.

“Last year, when Kevin Hooper came in to run the DCG in North America, he promised channel-first, and this takes that to the next step – new funding to allow partners to make more money,” Biondi said.

The second bucket is enhanced pre-sales and technical support to provide partners with faster, personalized responses.  This comes from using distribution to support Authorized and Silver partners who were previously supported by DCG, freeing up about 30% of back office support resources to support the Gold and Platinum partners.

“Before, there were pooled resources and our team was spread from Authorized to Platinum,” Biondi indicated. “Now distribution will do Authorized and Silver bands and I’ll use my resources on Gold and Platinum.” This will enable a dedicated pre-sales and technical support rep for all Platinum partners.

Improved technical support will also come from a new partner portal, which should be live by summer.

“The old portal was good in terms of deal registration and getting quotes, but it wasn’t the best repository for information, for training modules and certification modules,” Biondi indicated. “The portals were also different in Europe, Asia and North America. This new portal will be global and better for training and certification, providing partners with a much easier line of sight.”

User acceptance testing on the new portal began in March, and the goal is for a summer launch, in the July-August timeframe.

The final bucket is going more aggressively after white space accounts by moving them over to the channel.

“When I was at IBM, I ran hardware sales including the X series, which of course is now at Lenovo,” Biondi said. “When I got here in January I was surprised that the market share for that had fallen so much. It’s a good product. So with Kevin Hooper committed to channel first, I’m getting 8000-10,000 accounts which were being handled one by one by the direct guys, out to partners. We just weren’t going after those accounts aggressively before. I’ll pump them out to the channel and we will see a lot more opportunities. Doing it this way will be a lot more efficient and a lot more practical.”

To help with this, the Competitive Opportunity Partnership Program (COP) will now be built into base rebate.

“This means that new customer acquisition bonus as well as regular sales will all count towards the partner’s tier requirements,” Biondi said.

The partner configuration and pricing tool, which Biondi said was sadly out of date, has been updated, and will have a four-hour turnaround time.

“Our partner quoting tool was archaic,” he stated. “It was the old 1990s IBM Passport Advantage tool! So we wrote a new Partner Automated Quoting tool and it will be built into new partner portal.”

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