Judging by most metrics, Lexmark was playing above the rim relative to the market when COVID-19 paid a visit to the world. However, at a time when its Business Solution Dealer (BSD) partner channel was being inundated with information about what markets and verticals would not be feasible during the pandemic, the Lexington, Kentucky-based manufacturer mobilized to show its reseller partners a path to success under the most difficult of circumstances.
Lexmark rolled out a baker’s dozen of MFPs almost simultaneously with the COVID quarantine. But even in the era of the dwindling page count, the company knew it could leverage its award-winning equipment and extensive knowledge of vertical markets to provide a playbook that would allow the BSD partner to navigate unchartered waters. The Lexmark Connect Partner Program, and its journey into the cloud with a three-tiered platform, opened the door to more opportunities for BSD partners to not only protect their margins, but find avenues to go deeper and wider with end-user business.
We sat down with Sammy Kinlaw, vice president of worldwide channel OEM and sales, and a 2020 CRN “Most Influential Channel Chief,” to find out more about how Lexmark is guiding partners to look at solutions and potential client sets through the scope of COVID-19. Kinlaw also provides insight into how the company’s continued investments in technology and its sterling reputation among third-party technology analysts for quality, security, reliability and sustainability will enable it to thrive, whether times are good or challenging.
Provide some insight into your career path leading up to Lexmark.
Kinlaw: I’m a 27-year veteran who spent 12 years with IBM, 13 with Lenovo and the last two-plus with Lexmark. During the first half of my career with IBM, I was on the enterprise end-user’s side. The last role I had with them was running 13 states—a big job to have at a young age—selling servers, software and PCs. I had various roles with Lenovo, which was a great experience. I ran their distribution, retail and VAR business. At the time I left, I’d been a channel chief for two-plus years, running the North American, Central American and Caribbean channel.
It was a hard decision to leave the Lenovo role; I ran a $4 billion organization with many employees in an established channel. I made the leap simply because of the opportunity with Lexmark. When I double-clicked Lexmark and asked other executives and channel partners about the company, they had a good reputation. The problem I perceived early on, which was the case, was that although they had good products and good people, the brand lacked consideration. It’s been a great journey for me—the company gave me autonomy to make decisions, to build practices, change processes and management, and add staff like Sabrina Hall, who runs strategy for me worldwide and acts as chief of staff. The results have been fantastic.
How would you characterize Lexmark’s business performance in the 12-month lead-up to the coronavirus outbreak? What were some of the key variables driving your results?
Kinlaw: If you look at IDC results, the market declined 4%-6%, depending on which metrics you use. If you look at the metrics we had during that timeframe, we grew it roughly 8%. We were growing at a 12%-14% premium to the market growth rate. We were taking share, absolutely growing. And not just in one area; we were growing VAR business, growing BSD, the distribution business and our e-tail community was growing. All the paths to market were growing at a premium to the market. We scaled by going with the bigger partners, but then our number of buying partners grew at a double-digit rate as well. The partners that were being authorized and joining the Lexmark community were growing at a double-digit rate, so we had healthy business spread equally through the channel; whether it be VAR, BSD, we were busy serving all those markets. That was really an exciting time. Then COVID hit and it stopped everyone in their tracks.
Can you provide some insight into how Lexmark has endured the COVID-19 period, and how did the company pivot to ensure the needs of its reseller clients were being met?
Kinlaw: Any company that is in IT, unless it sold PCs, peripherals, keyboards, mics or monitors, really suffered. The server community has been tough, and for a lot of the IoT devices that are sold in the channel, the last four months have not been great. Some good has come out of that. When COVID first struck, the first thing we did from a global perspective was ensure our people were safe and that the processes that supported our channel provided as touchless an environment as possible. We gave back to the community by building face shields at our Lexington, Kentucky, facility. We did all the right and responsible things a company should. Once that was established, we pivoted to analyze COVID. It meant identifying what industries were becoming suppressed and which ones could grow and thrive in a COVID environment. There is an opportunity within adversity, and that’s the message I’ve been preaching to my team. We looked to our heritage in determining a way to come out of the pandemic. Lexmark spent 20-plus years building products and solutions for industries. Whether it’s for manufacturing, health care, retail or banking, our products can compete in a COVID world.
When COVID first struck, the first thing we did from a global perspective was ensure our people were safe and that the processes that supported our channel provided as touchless an environment as possible.
– Sammy Kinlaw, Lexmark
In looking at the needs of dealing with a COVID environment, we pivoted. For example, we’ve had two major wins in the past 10 days. One client is a convalescent center, which required cleanliness, sanitization and security. Lexmark’s printing devices rose to the occasion. Having a touchscreen that nurses can tap with a gloved hand was paramount. Nurses can keep their glove on, use the touch screen, and the device can be sanitized as often as necessary. That’s one example of how we’ve performed. We’re creating collateral to keep our partner community informed about how our products perform in a COVID world, whether it’s in health care or a classroom. It also illustrates how Lexmark is turning things around in this suppressed economy.
It was an eventful spring for Lexmark, which rolled out 13 new devices for SMB and enterprise clients. What does this latest line bring to the table for users?
Kinlaw: The product line stays true to what we’ve been emphasizing, which is sustainability and security. These products are durable and long-lasting. They are 30% smaller and 30% lighter than their predecessors. They have expanded the aperture, because from entry level all the way to higher-end printing solutions, we offer security feature functions, so they’re protected as much at the entry as they are at the top and to the right. They all boast the same features we had previously—easy setup, easy to use, best-in-class features with economical printing on a cost-per-page metric. For our BSD community, which focuses on contracted pages, this has to be a plus. All of these devices are also part of our cloud suite offerings, which are a changing landscape in a COVID world. Take Microsoft as an example; cloud usage post-COVID has increased by 700%. So, not only do we have updated product with durability, long life, security, a smaller footprint, and are economical, it’s imperative to have devices that translate in a cloud environment. That’s a big pivot for us.
The company unveiled its Lexmark Connect partner program earlier this year. Can you talk about the beauty of the program, especially at a time when resellers are looking for new outlets to profitability?
Kinlaw: Based off future predictions from many organizations, the print market is going to be challenged because of the shrinking, which because of COVID is happening at a faster rate than was predicted at the start of 2020. Companies that own their own technology, that conduct their own R&D, can offer feature functions and value in industries that could grow, are going to make it. If you don’t have a partner program that is easily accessible and provides a very clear business statement, then your print manufacturers, especially the smaller ones, will struggle. One of the things I’m most proud of is we have been able to build out a global program, Lexmark Connect. It allows, across the business statement, a level of partner that can translate in Europe or the Americas, which we did not have before. It’s the first based on revenue; once you’re in the program, there are benefits that tie to level of partner as you scale and grow. That’s by design, because we want partners to become larger with us. The advantages offered could be additional back-end money, or it could be access to training on our products, which all our partners get with Lexmark Connect. It can go even further. Looking at future growth industries like health care, education, hospitality and restaurants, Lexmark Connect provides access to our industry experts through Lexmark Industry Advantage. If you’re a partner who wants to start selling into hospitality, what are the solutions that matter? Why do our products perform in a hospitality-type environment? What are the things you need to know as a partner before you knock on that end-user’s door? That’s what Lexmark Connect can provide.
Earlier this year, Lexmark made its Cloud Print Management (CPM) available to channel partners. How has it been received outside of the enterprise realm?
Kinlaw: If you think about the environment all of our end-users are in, they need to spend less because their CapEx and OpEx are challenged. There’s massive havoc that COVID is creating in the spaces where there hasn’t been commerce. That’s why Microsoft’s cloud is growing 700% since COVID struck. And why? Because the cloud is cheaper. It’s secure and allows access to feature functions and offerings in a consumption-based methodology. Perhaps they knew that they needed it previously, but COVID has forced partners into execution. The timing for us, the fortitude that we had to develop a cloud suite of offerings last year, is very fortunate. It will change consideration for partners when they’re choosing a brand.
There are three elements to our platform: Cloud Print Management, Cloud Fleet Management and Cloud Connect. Cloud Print Management is an offering that partners can sell to the end-user community. It provides the ability to run a print environment without the need of an x86 architecture to manage the infrastructure. You don’t need to have a server to run your print environment. It lessens the management cost and infrastructure of x86 hardware. And because it’s in the cloud, it’s secure. It lowers costs and allows our partners to create a service that our end-users are absolutely going to need in the future. I think this is going to grow exponentially over the course of 2020. Initial interest in it has been strong.
Cloud Fleet Management allows partners to remotely manage Lexmark fleets with the ability to monitor usage at the end-user level. It tracks who’s using the printer and where, and how much toner is left. They can address problems before they happen, remote start a device and update BIOS. Obviously, there are third-party software solutions that do some of the same things, but not all. This is Lexmark-developed technology, and it’s a service a partner can sell to the end-user to help keep their fleet up and running.
My biggest concern now is the enablement piece with partners, and assisting them with pivoting is the new basis. Just based on how the market is contracting, things have to be done a little differently.
– Sammy Kinlaw, Lexmark
Cloud Connect provides end-users access to cloud-based apps, such as Google Cloud and Dropbox, that they can access from the device. In a COVID environment, we have a product and offerings in the cloud that are going to allow our partners to sell to end-users in a new way. It’s more important today than it was four months ago. Partners are going to have to be smart about what they sell and how they’re selling it, because there are fewer dollars for an end-user to consume IT. It’s a way print can continue, but perhaps in a more economical, secure way.
Last summer, Lexmark brought on Kodak veteran Tom Cavanagh to head new business development. Can you provide insight to some of the strategies he’s provided for the company?
Kinlaw: Tom is an industry veteran and a great guy who, coincidentally, lives right around the corner from me. For many years, Lexmark has invested in R&D, with thousands of patents and multiple technologies that we have developed. We really needed an executive like Tom who can spearhead those efforts. Looking at what was in our portfolio of offerings and turning us on to other industries and other manufacturers, it’s a way we can take advantage of those other technologies and really actively sell them. Lexmark has to grow revenue and find new ways of creating profit, and Tom will play an active role in enabling us to do that.
Time and again, Lexmark and its MFPs have been recognized by numerous organizations, including Buyers Lab and Better Buys. What has been the key to consistency for Lexmark?
Kinlaw: We don’t buy our technology, we create it. We manufacture our own devices, we don’t have to outsource it. When you have 20-plus years of investing in those technologies, you have the base of a pyramid that’s pretty deep. The hallmarks of quality, security, reliability and sustainability, combined with leading-edge print technology that’s smaller, faster and lighter, has been our formula. That’s why most major banks, retail chains and major manufacturers choose us. All of those things are going to allow us to continue on in this environment, seek out new industries and leverage those such as hospitality that have been suppressed in the past. If you go to most restaurants now, they are using a freshly printed menu. There are going to be billions of pages printed in hospitality because of COVID. Those types of restaurants within hospitality are going to need a reasonable cost per page and a device that lasts a long time, with strong reliability and security. That’s where we succeed.
How do you see Lexmark evolving technology- and strategy-wise over the next few years? What impact is COVID-19 having on your blueprints
Kinlaw: SMB is the focus for us, where we think we can grow. I think we have to use our Lexmark Industry Advantage offering through our Connect program to continuously train partners on how to sell into new industries. We’ve been having a webinar series for the past eight months, and the participation level is through the roof. During one session last month, we had an unprecedented 900 partners attend. In a declining print world, they’re going to have to fight for their dinner. We’re going to help them do that, but they’re going to have to work for it, just like we will. Partners have really given us favorable reviews on Lexmark Industry Advantage and why it’s important to the partner community.
Clearly, the channel has witnessed its share of changes in recent years. In your opinion, what does the future hold for the office dealership space, and what will it take for them to thrive under this new normal?
Kinlaw: The BSD community needs to drive profit and revenue. In the long run, I do think that they’re going to have to look at other areas. Among those that come to mind, device-as-a-service offers growth potential. This is where we can leverage our distributors, such as Tech Data, Ingram, Synnex or D&H, who are all creating their own device-as-a-service offerings. I think users want the technology, but they’re going to have less to spend, so they may want to consume it in an as-a-service model. I think contracted pages, like BSD focuses on, will become even more important because end-users will need to be smart about how they’re using print. It is also the most economical way to run fleets of printers. If the BSD partner is not involved in cloud, it will need to be. They’ll have to figure out how to sell things like Cloud Print Management and Cloud Fleet Management—two major offerings where we can open the door for them to train on how, where and why to use it. Lastly, they’re going to have to leverage an expanded knowledge of verticals. Perhaps the vertical they’re selling in is contracting, and they’re going to have to find new ways to sell. It might mean they have to learn the health care vertical, or they need to focus on banking or hospitality. Growing DaaS, growing cloud, maintaining those contracted pages and doubling down on verticals is the future of BSD.
What are your goals for the balance of 2020 and what will you look to accomplish heading into 2021?
Kinlaw: We’re looking to enable the partner community. I think my ultimate goal means that our partner community can operate independently of Lexmark touching it. Those have been my priorities in months past, and they still matter for the future. My goals are to grow at a double-digit rate and pace as a premium to the market. So if the market contracts 6%, we need to grow at least 5% to be an 11% premium to the market. We have reasons why we can compete against other manufacturers because of our technology, cloud, verticals, solutions, process and dedication. So we’re not worried about competing. My biggest concern now is the enablement piece with partners, and assisting them with pivoting is the new basis. Just based on how the market is contracting, things have to be done a little differently.
Lexmark is here to help customers pivot. We’ve all had to change and grow in different ways. Everyone is suffering; no one is making the same revenues or profits that they were before. We have to do things faster, better and smarter, and they need to enable cloud quicker. We have to have vertical solutions unlike what we had before. I believe Lexmark is the catalyst for this pivot.
