Does the life cycle of an organisation determine success of key account management?
The pharmaceutical journals are awash with articles about changing the model of selling in the industry to one which is more customer centric key account focused one.
By on Jul 25, 2009The pharmaceutical journals are awash with articles about changing the model of selling in the industry to one which is more customer centric key account focused one. Chris Brinsmead the ABPI president enforced this recently speaking at the annual PM lecture urging the industry to act more collaboratively and to stop to doing activities which add little value and start trying to understand the problems of our customers.
The discussion and debate in this area led me to consider organisational life cycle and if this is a measure of success in key account management and delivering a high quality of customer service. Does the size of an organisation aid or hinder effective account management?
Organisations progress through four distinct cycles although time frames of these are not distinct and will depend on the organisation and level of success.
The first stage is the entrepreneurial stage, where one or a few people set off with a great idea and have a goal to achieve.
The second stage is a move towards collectivism when more people join the organisation bringing with them skills and creating a greater sense of direction to the company.
The third stage is that of formulisation and control where organisational structure emerges, specialist areas are formed and rules are drawn up.
The fourth stage is that of elaboration of structure where bureaucracy increases, roles become smaller with more people doing them, there are large multiple departments and higher levels of planning.
Because of the nature of smaller companies in their entrepreneurial collectivism stage communication levels are high as are the skills levels of the individuals. Whilst this is borne out of necessity it often leads to a higher level of customer service and satisfaction. When working for a small company which had no barriers between departments customers were always amazed how responsive we were to their needs. With response times for enquires or decisions normally within a matter of hours. I recently heard from one Key Account Manager (KAM) who had to wait 4 weeks for a decision about a key account for the company because it had to pass through so many departments. Needless to say the customer had lost interest by the time the decision was made.
Organisations in the fourth stage of the cycle have to work hard to ensure effective communication between departments and can have too many people performing what in the customers mind maybe much the same role. Recently I was told of a head office person visiting a key customer, the next week the KAM visited the same person. The customer was quite amazed about the nearness of the visits for the same reason and told the KAM about the visit the previous week which the KAM was not aware. The KAM approach the head office person and was informed by the person that he had no responsibility or accountability to discuss with the KAM what he did with the KAMs customers. I will leave you to formulate your own opinion.
In terms of smaller company versus large and success of managing key accounts here is an example of a two product launches recently. An established company launched a product in a market where they were very successful, having relationships with all of the Key Opinion leaders in the area. As a company they had progressed to stage 3 of the cycle and are heading for stage 4. A competitor at stage 2 entered the market with virtually the same product they had no KOL relationships, no product advantage, no cost advantage and no experience in the area. Five months post launch the competitor with lower levels of representatives are leading the way not just in terms of sales but also with the Key Opinion leaders who are changing allegiances. This could be just luck but I doubt it, it may have something to do with the flexibility of the smaller company to respond quicker, the skill of the people on the ground and the lower numbers of people that customers have to deal to get what they need.
Perhaps it is time for larger organisations at stage 4 of their life cycle to look to how they can revitalise themselves and breakdown any departmental barriers that exist to improve communication and speed up the decision making process. This along with up skilling people on the ground to deal with specialist areas and empowering them to make decisions affecting their business may help the key account management process for the future.