Lenovo overhauls rebates, structure and lead times

Lenovo has finally taken significant steps to speed up lead times, ensure products are more aggressively priced and minimise channel conflict.


Lenovo has finally taken significant steps to speed up lead times, ensure products are more aggressively priced and minimise channel conflict.


The culmination of an operational review, revealed by MicroScope in April, Lenovo has also shaken up its rebate structure and vowed to pay resellers within a month of quarter-end on all products in the portfolio, not just Top Seller as has been the case.


Vincent Fauquenot, newly installed Western Europe vice president and General Manager for Channel Partners, told MicroScope it was introducing a special bid process for the Top Seller range that is stocked in distribution for next day delivery.


“This is not something we were doing in the past (special bid was only available on corporate configurations) and the benefit to the reseller is a faster price quote and faster delivery,” he added that its configuration service would continue to be available.


Resellers would sometimes bypass Top Seller to secure special bid pricing from the corporate team but deliveries had relatively substantial lead times. Some dealers even carried stock to overcome the problem.


However Rob Tomlin, business unit director at Interface Solutions International, reckoned the fundamental issues had been solved by Lenovo.


“The challenge [with Lenovo] has been the three week lead times when some rivals could deliver next day. This should be a good opportunity to grow the business,” he said.


Another area under change is channel incentives for Premium and Premium Gold dealers; rebates will be accrued on all products including special bid and services, with an accelerator available on services that could double existing rewards, the vendor said.


The rebate – which can be tracked live online - will be calculated on a partner’s total revenue and paid in cash directly into their bank account, not given as a credit note via distribution. The administration will be covered by a third party.


“The commitment we are making is to come to the reseller with a direct payment on the back-end margin they have earned within a month of quarter-end, whereas in the past it may have taken up to three months,” said Fauquenot.


The vendor has just put the finishing touches on an EMEA-wide internal restructure initiated in the UK first, merging the transactional and relationship channel teams which targeted SME and corporate customers respectively.


This had led to some channel conflict in the past as transactional resellers sought more aggressive special bids from the relationship team.


Fauquenot said this new structure should expunge this issue as the company is no longer divided in two and the sales team is “in charge of the total Lenovo business in front of the channel partners they are dealing with.


“This is how we get rid of the internal competition we could have gotten in the past where a transactional or relationship sales rep could have been competing,” he said.


The UK channel team is around 25 staff – account managers and business development bods – which Lenovo said was up 20% on the previous structure.


The enterprise and public sector user sales teams will also develop more leads for UK partners, it added.


“There is no point pretending that life will be perfect starting 1 October, but we are introducing a lot of very important changes and we’ll keep working to improve our overall channel operation,” said Faquenot.


In the second quarter, Lenovo was the seventh highest selling PC vendor in the UK after sales declined 32% year-on-year to 70k units, this also represented a 20% sequential drop, according to Gartner.


Ranjit Atwal, principal analyst at the market watcher, said Lenovo needed to inject some consistency into its channel engagement model.


“Execution is the key, resellers have had a tough 2009 but they are expecting a better 2010 and don’t want any uncertainty with vendors in respect of Ts&Cs, the delivery of products or price competitiveness,” he said.


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