Lenovo to cough up rebates from first dollar sold

Move to ditch target-based rebates designed to simplify life for its Premier partners and improve predictability

Lenovo has axed target-based rebates for its UK Premier partners in favour of a linear system that will pay out from the first unit sold.

The change, which was introduced this quarter, is designed to make life less complex for the 55 UK and Ireland partners that sit in this tier, as well as improve predictability and transparency.

Top-level Gold partners, of which there are 20 in the UK and Ireland, are not affected by the change.

Premier partners previously only earned a rebate if they hit at least 60 per cent of quarterly targets set by the vendor for its server, workstation, laptop and desktop products.

As those targets were based on previous performances, partners often got nothing if they had won one or two big deals in the previous quarter or equivalent quarter last year. Under the new system, they will earn a flat rebate on every unit sold, although the amount will vary depending on the product line, with SME and consumer lines earning more.

Rival HP scrapped a target-based system for a linear one in early 2009 in the depths of the financial crisis to help partners who were struggling to earn rebates. It currently operates a mixed model.

Darren Phelps, UK & Ireland channel director at Lenovo, said Lenovo's motivations were different. "We didn't do this because partners weren't hitting their targets. The feedback we got from partners was to keep it simple and increase predictability," he

said.

Paul Barlow, managing director of Lenovo Premier partner Servium (pictured), branded it a "cleaner, easier and simpler" system for partners.

"The old system worked for mature businesses but, for businesses that are still growing, there would be inconsistencies in the amount paid out," he said. "Often rebates are used to fund marketing activities and, if you can't judge what you're going to get each quarter, you can't plan ahead."

Barry Dodhia, marketing manager at Lenovo Premier partner Hemini, also welcomed the change.

"Unless you hold stock, it is very difficult to guage what business you are going to do," he said. "As a company we don't carry stock but wait for business to appear, whereas the bigger boys can stock up and are in a position to ensure targets are achieved. I think this is fairer for the smaller guys."

Top level Gold partners are paid from the first dollar on Lenovo's enterprise products but must still pass a revenue gate on its TopSeller SMB products.