2 min read

Lenovo switches rebates from back to front

InfrastructureLenovo

ORLANDO – Lenovo is moving its back end rebates to front end rebates as part of its New Customer Bonus channel program released at its Accelerate channel conference.

The New Customer Bonus is part of Lenovo’s three pronged approach to channel business for this year and beyond. Sammy Kinlaw, executive director of channel sales U.S., Caribbean and Central America for Lenovo’s channels group, told CDN that enhancing the independent channel is the No. 1 focus for the company followed by improving the channel/customer experience with more Combat Kits and winning over new customers with the channel.

The focus on creating and enhancing the independent channel comes from last year’s Hand-to-Hand Combat initiative that put more investment in training partners. According to Kinlaw, the number of new partners jumping on board Lenovo increased by 22 per cent in one year.

There will also be a server edition of the Combat Kit for 2014 that will focus on IT solutions designers inside solution provider organization.

From last year there have been more than 2,000 partner and customer interactions because of the Combat Kits, Kinlaw said.

Stefan Bockhop, channel director for Lenovo Canada, said that the server version of the Combat Kit will give the channel a chance to configure it, run it through its paces and give them confidence that they can deliver a server solution on a Lenovo platform. Also new to the original Combat Kit will be the Tiny desktop.

Kinlaw said that main reason for offering front end rebates is for resellers to start accruing margins right off the bat. Previously, solution providers earned back end rebates after submitting a form that proves they sold to a new customer. Kinlaw added that back end rebates will not go away and added that he does not see many channel partners taking the front end rebates to the street.

“That is a risk,” Kinlaw said, “however, these are serious business men and women who do not want to cheapen the market. We do not think it will happen with this community.”

But one channel partner believes this New Customer Bonus will push resellers to lower prices to better compete in the marketplace.

Lawrence Reiber, the president of Toronto-based Tanda Technology Inc. told CDN that upfront margin rebates will be taken to the street.

“I think it’s a mistake. The Toronto market, for example, is really competitive. When you look at it why would you want to let the customer know they have more rebates? Customers will now be able to show resellers lower prices from other resellers and then asked them why?”

Reiber, who has a strict no discount policy at Tanda, added that back end rebates are part of his margin strategy. “I do not give up my margins. That is why some resellers make eight per cent or six per cent. When you count up all the margin rebates available you can end up with 20 to 25 per cent. That’s what I make and that’s substantial,” he said.

Bockhop told CDN that the front end rebate improves Lenovo’s operational efficiency with the channel. “Partners have to do some work to claim it and the flow now with the rebates can come from distribution and it cleans up the process. It frees up one body for about an hour a month and that person’s time can be now devoted to the business,” Bockhop said.

Bockhop added that the margin upfront helps partners tactically as they will know faster what their entitlement will be and that will help with deals and with cash flow for the channel.