Lexmark Set To Bounce Back, With Partners' Help

With its OEM sales slowing down last year and the company needing a burst of energy and success, Lexmark executives reorganized and refocused. In the process, the company decided to start pushing more of its own branded equipment, and to begin emphasizing its deals with other hardware vendors less.

The result: Lexmark is in the middle of bouncing back from several tough quarters in 2006 and is working to strengthen its incentives for channel partners who have helped strengthen the Lexington, Ky.-based company's brand and standing.

"We're pretty jazzed about 2007," said Sharon Brindley, vice president of U.S. channels at Lexmark. "Really, it kind of boils down to taking last year and listening to what our partners told us and what they liked and didn't like about our programs."

This prompted a significant revamping of the company's channel compensation structure.

Last year, Lexmark's Profit Plus channel program called for solution providers to win rebates of as much as 10 percent, in addition to providing Gold, Silver and Elite tiers depending on sales volume and other criteria. Solution providers who sold into Lexmark's own targeted accounts did not qualify for rebates on those sales.

In 2007, Lexmark is wiping out its tiered structure of partner programs, eliminating the $5,000 minimum sales requirement for spifs, increasing availability of demo hardware and opening up 2,000 direct accounts to solution providers. The vendor also is providing for rebates in its Profit Plus program of up to 12 percent in some situations. And solution providers who sell into Lexmark's previously targeted accounts now will get the same rebates as all other accounts.

"The main thought is, we are investing in you as our partners," Brindley said. "We added a lot of our accounts—our targeted accounts, areas within our direct team—that we'd like to grow with our partners. This is the first time we've done this."

The company also is providing some new incentives under a Profits in Printing umbrella, including additional demonstration units for solution providers and "custom" MDFs for some partners.

Last year was a challenging one for Lexmark. After disappointing Wall Street with several of its quarterly earnings, company executives said they began to see steep declines in the amount of products it sold as an OEM to other vendors. In particular, one of Lexmark's biggest OEM customers has been Dell. The Round Rock, Texas-based direct sales company has seen a precipitous decline in its revenue and profit over the past year.