The Transformation of Pharmaceutical Sales
In our previous blog post, we discussed the changing landscape in the pharmaceutical sales cycle, and how commercial operations needs to transform their approach to one that focuses on a Key Account Management strategy and a larger set of decision-makers than the old one-to-one sales approach. In this post, we will offer some insights on best practices for adopting a modern Key Account Management strategy.
Ways to get Key Account Management Right
If you put 10 business leaders in a room and asked them to define Key Account Management (KAM), you would get at least 10 different answers. Here is our take: A systematic approach to managing and growing a company’s most important customers to enhance that relationship, maximize its value and achieve mutually beneficial goals.
Effective KAM helps foster partnerships with customers because they are treated not as one-off opportunities but as sustained, long-term relationships, focused on creating value to the patient and the organization. And while adoption has been slow—and success stories few so far—commercial pharmaceutical organizations can take heart. We have seen a number of impressive success stories in other comparable industries that feature complex customer segments, varied stakeholder relationships, and complicated sales and distribution channels.
And there is significant value to the organizations that adopt this model with C-level focus – A recent report by the Strategic Account Management Association (SAMA) and ZS Associates points to revenue growth from key accounts a full 2 percentage points higher (10 percent vs 8 percent) than average account growth. So even though there is economic and industry forces driving the change, there is business value in embracing that change for the Life Sciences industry.
We’ve been able to identify the ways in which companies that don’t look too dissimilar to pharmaceuticals have transformed traditional sales relationships—marked by product-centric transactions—into long-term, strategic partnerships where both sides see value. Here are the critical factors we have identified as essentials elements of getting the KAM approach right, and unlocking long-term mutual value:
Customer Intelligence. It is essential to develop a deep understanding of the Health Care Organizations’ landscape, goals, needs and objectives. This insight should guide everything from identifying and prioritizing key customer accounts to developing interaction models and programs that will foster long-term partnerships. In addition, it will help sales organizations better allocate and mobilize the people, resources, and capabilities they need to serve these accounts.
There is no one-size-fits-all. Find ways to identify the HCO’s actual needs and objectives, and determine the pathways where your organization’s unique capabilities can help the HCO achieve them. In addition, leverage a robust affiliations management capability that can identify and track KOLs/stakeholders for each customer, and execute the best strategies and tactics to acquire and grow the relationships you need for success. A robust visualization tool will pay dividends for this part of your program.
Focus on the customer – the patient. This will create value for both the HCO and for you. Even though the challenge around regulatory, marketplace, and payer model changes have put increasing pressure on health care organizations to seek cost efficiencies and better records and control, they still focus on patient outcomes. Many companies spanning a broad range of industries have been able to realize efficiencies and other advantages, including enduring economic benefits, by developing long-term strategic relationships with their business-to-business customers. For a pharmaceutical company, working with the customer to improve patient outcomes while reducing redundancies, minimizing overlap, and decreasing overall treatment costs will bring a clear benefit to that practice while resulting in more efficiencies for you.
Provide that single voice. The KAM is not meant to be the sole point of contact with the customer account. In our view, he or she should orchestrate the entire customer relationship—monitoring developments, planning activities and interactions, supervising joint programs, and managing key relationships— with special emphasis on C-level relationships, so that the customer hears a single “voice.”
Blog Post: KAM Enablement – the New Strategic Necessity