Clark Bugg has a secret, but he’s not going to tell you what it is, so don’t even bother asking. The vice president of North America channel sales at Lexmark was recently promoted, and one doesn’t earn stripes by spilling the beans. Hell, he even swore the press/analyst crew to secrecy via a non-disclosure agreement when they visited Lexmark’s headquarters in Lexington, Kentucky, last June for the Business Solutions Dealer (BSD) Top 50 Summit.
Take our word for it, this announcement—targeted for the spring—will be every bit the “game changer” Bugg terms it. Admittedly, we’re testing the NDA’s good graces by even referencing it, but the buzz it’s generating makes it the best development of 2024 for Lexmark. Suffice to say, dealer orders will be piling up before school lets out later this year. There were numerous revenue-generating technologies on display at the Summit, but the under-wraps gem will undoubtedly reverberate throughout the industry.
Less than a week after the Top 50 Summit, Lexmark found itself snared in a controversy that involved one of its investor companies, China-based Ninestar. Essentially, the U.S. government accused Ninestar of using forced labor in its manufacturing process and banned the company’s imports. Lexmark, which wasn’t named in the government order, strenuously disavowed such practices, but some observers felt the U.S. company had to answer for it. Fortunately, a breakout session during the Summit clearly outlined the National Security Agreement between Lexmark and the U.S. Departments of Defense and Homeland Security. Lexmark also announced in December that it had replaced Ninestar as a supplier moving forward and transitioned to new vendors that have been at full manufacturing capacity since the middle of last November.
Bugg and Lexmark’s executive leadership mobilized and provided granular information to their dealer partners. For the most part, it was unnecessary—Lexmark is as trusted a manufacturer as any in the office technology dealer realm. The storm damage created by Ninestar—which predictably created some sleepless nights for Lexmark’s leadership—has been cleared away. Bugg and his team are ready to dig deep into 2024’s potential, fueled not just by the new SKUs but also the company’s growing cadre of cloud-based solutions. Bugg sat down with ENX Magazine to address the turbulence of 2023 and to share why the company’s confidence is riding high.
Walk us through the highlights of Lexmark’s most recent fiscal year performance. How did it perform in relation to the goals and expectations you set?
Bugg: We’re coming off a fiscal year when Lexmark outperformed the market, which was very pleasing. If you look at our branded business and the subset of that within our BSD channel, we were able to gain a few percentage points. We had some challenges related to supply chain and the situation surrounding Ninestar. As a result, we had to ensure that we were clear with our customers on the fact that we’re an independent company. I can say we were pleased in the way that we performed within the marketplace in terms of our total segment business within our copier dealer space, as our dealers continue to perform well. We tried to navigate and communicate with them the best that we could in terms of the circumstances we were facing. Given those headwinds, I’m really pleased with our year-over-year growth.
What stands out as some of the watershed moments for Lexmark over the past 12 months? What resonated the most with you?
Bugg: I’d say it was the investments we made to be face to face with our partners. It was an ideal way to ensure our BSD partners were clear on our strategy and our long-term investments. Having our Top 50 BSD Summit here in Lexington, in addition to several roadshow events, provided them with a real understanding about where we’re growing long-term, the investments we’re making and how we can work with them on opportunities. This past year, we hosted the most partners, executives and their customers in our Customer Engagement Center since the inception of our BSD program. There’s always a lot of noise going on in the marketplace, so we wanted to bring some clarity as to what we were looking to accomplish.
We also launched several new products in 2023, some of which were refreshes, including two new color and two black-and-white devices. We think these represent a good opportunity for our partners. So despite the challenges we faced, we continued to advance and provide dealers with the opportunity to come grow with us.
What were some of the highlights for you during the 2023 BSD Summit? How was the event received?
Bugg: We’ve received some tremendous feedback. A lot of attendees noted that they liked the pace of the meeting. We brought everyone in for dinner the first night, then had one full dedicated day. Everyone’s time is valuable, and our guests appreciated that it wasn’t too long. Also, we focused on providing our partners access to the key stakeholders inside Lexmark, whether it was CEO Allen Waugerman, Chief Commercial Officer Melanie Hudson or Chief Information and Technology Officer Vishal Gupta. It was important for our partners to hear directly from Lexmark executives to learn more about our strategy for success going forward.
We had the opportunity to share what we see from a product line perspective and the investments we continue to make in cloud services and emerging technologies. And we capped it off with a technology fair that enabled dealers to interact with those key stakeholders for both our product lines as well as our industry teams. Overall, we received good marks from the attendees on the time they spent with us.
One of the solutions that seemed to garner a lot of interest in Lexington was the Lexmark Translation Assistant. It seems like it has a wealth of vertical possibilities beyond education.
Bugg: It’s generated a lot of interest, particularly in the second half of 2023. For your readers who don’t know, Translation Assistant is a very cool software solution that allows users to scan a document into an enabled Lexmark MFP, select from dozens of output languages, and then get their translated document printed nearly instantly. We’ve already conducted a lot of training sessions on it. There are a multitude of possibilities across verticals such as health care and government. It’s opening up many conversations for our partners to further explore workplace communications. It has applications with various workforces in different industries. Our partners continue to be very excited; they’re coming up with creative ways to add it into deals. We see a really bright future with Translation Assistant. It was also one of the highlighted solutions we had on the road shows and at regional meetings. We’ve developed a package of strong dealer marketing collateral to help drive it.
During the Summit, Lexmark laid out comprehensive information as to the clear separation between it and Ninestar. Plus, the news about the DHS action against Ninestar broke shortly after the conclusion of the BSD Summit.
Bugg: Considering the timing of events, it was great that we had a breakout session with Bryan Willett, our chief security officer. That gave partners the opportunity to ask about our ownership and how it’s structured, and they learned about the National Security Agreements we have in place with the Department of Homeland Security and the Department of Defense. That definitely brought more clarity to our partners.
Obviously, the Ninestar situation cast a pall over Lexmark in 2023, even though your company’s business practices are completely independent and unrelated. Can you talk about the support your BSD partners have shown during this difficult period?
Bugg: Our partners have been fantastic. We’re trying our best to communicate with them because there’s a lot of noise in the market. We put out a communication to our customers and partners on June 22 to make them aware of the steps we were taking. We made an effort to stick tight to our partners. Around the time this thing was announced, we actually moved forward with more of those Customer Engagement Center and field meetings to get even closer to partners and have those questions answered. During challenging times, it’s important that you run into the fire and not away from it. The important thing is to communicate the best you can.
There’s some big news on the horizon in terms of a specific product line release. Can you share any details at this point?
Bugg: That’s still under wraps, but you’re going to hear more from us in April. There will be even more information than what we shared with partners in Lexington last summer. In my 25 years, I can’t remember a time when there was more excitement surrounding a product release. We were able to do a deeper disclosure to some of our top partners, and we’ll have more leading up to the early part of summer on the actual announced dates. It’s one of the biggest announcements in the history of our company. We’re focused on looking at the approach to the marketplace from the end-user, installer and service perspectives. We’re putting a lot of work into that right now to be able to have more to share with our partners in the coming months.
Is there anything else from a program or partnership standpoint that we can expect from Lexmark?
Bugg: We’ll continue to make deeper and wider investments in our Cloud Services ecosystem. Translation is a good example of where a pillar can be added. In the beginning, we were extremely focused on the cloud fleet management and the service experience for our partners, then transitioning into Cloud Print Management and now Translation Assistant. Moving forward, you’ll see us getting into more of our predictive capabilities, taking the analytics that come from the sensors built within our devices. We’re empowering our partners with even more data on the analytics side that they can build into their service experience for their customers. That opens up an array of opportunities for partners that want to take on something that’s not just in their backyard. These opportunities are highly distributed, and dealers can do more from their own NOC [network operations center] to be able to deliver upon the service for their customers.
We’ve got experience with over a million devices under a managed services contract worldwide. Lexmark wants to continue to collaborate on larger opportunities with our partners because they’re critical to our growth strategy and have so much potential. We’ve got tools and offers that we’ve built over our own global managed print services process that we’ve done for numerous years. We want to bring those capabilities to our partners and empower them to be able to grow their businesses. At times, we see other providers looking to pull more of those capabilities back in-house. We’re actually taking the opposite approach and have a greater empowerment of our partners.
What will be the keys to Lexmark garnering a greater market share?
Bugg: It’s all about collaboration. Our partners do a fantastic job of being able to maintain and hold a relationship with their customers, provide first-in-class service and invest in best-in-class people who can go out and deliver upon it. We think working closer with our partners in collaborating on new opportunities—first time to revenue, new logo and new business—is going to be critical going forward. We also see there’s a lot our partners have to navigate related to big data and analytics to gain insight into what’s going on within their customers. We want to be that consultant who helps them navigate those waters.
Security continues to be a priority for customers of all sizes. It’s not just what’s built into our product line, but also the resources we make available. We want to apply what we’ve learned as we work alongside our partners while being transparent along the way. If we see opportunity within our hardware and our cloud infrastructure, we want to be able to empower our partners to use those tools. It’s important that we continue to be adaptable, evaluate the market conditions and make sure we’re encouraging our partners to embrace those new technologies and build them into the overall value they bring to their clients. Our dealers are very customer-centric, and that aligns with Lexmark. As a growth partner, we want to do more with collaboration while empowering them.
Talk about the goals you have as you prepare for 2024, and what are the measuring sticks for success?
Bugg: We want to continue to have growth at a time when the market is down. We want to be winning new business with our partners. When I have conversations with top executives in my travels, that’s what they say they’re focused on. They want to add new business and look for ways to continue to be profitable in what they sell today. Through the tools we bring, the resources and the investments we make long term in areas such as our cloud ecosystem, systems and security, we’re empowering partners to make it happen. We’re going to see success from that. When our partners look back on their year, we want to be the provider that yielded them the biggest growth in new business. It’s not about flipping from one manufacturer to another. Our partners want to know how we’re helping them grow organically, grow in new business and have a talk track that’s different from everyone else. That’s really important to us. We’re extremely excited for the future because we’re going to have new product segments that are going to be game changers, and it will help our partners to grow in new ways. I think the best is yet to come.
