Is KAM already the old model?
Most pharmaceutical companies embrace the concept of key account management (KAM), and have taken steps to ensure the role builds loyalty with important customers.
In private, however, sales executives often question whether KAM positions have actually created more value. Some readily admit that not much has really changed, other than titles. So, is KAM just the latest fad to join CRM, disease management and reengineering on the scrap heap of managements miracle cures?
Depending on the country and the company (and probably the definition of account), 5-20% of pharma reps are officially in account management roles. I.e. they got the title and the T-shirt. And up to half of traditional pharma reps deal at least with some account management activities as part of their job: interacting with group practices, physician networks, helping with spill-over management etc.
There is much consensus that account management is important, and that it will grow further. Perhaps, in the future, the detail rep will disappear and account management will be all there is, like in many other industries.
In a networked world with multiple stakeholders and influencers of treatment decisions and product choice, account management is the tool that helps us learn more about the customer, identify opportunities to create value, direct our resources to the best prospects, and coordinate strategy and tactics across multiple selling roles.
That sounds very good. However, we also hear more and more that account management initiatives can turn out to be less than the promise.
Pharma companies experiencing disappointing results from their KAM initiatives typically hit one or more of these barriers:
Going KAM but neglecting "key: Some pharma companies have fallen in love with the concept of KAM to the extent that they want to use it with all customers. If it is the better approach we should use it everywhere is an unfortunate misunderstanding. When each account is a key account and every account manager a KAM, none is. Lack of differentiation spreads valuable resources too thin and causes confusion in the field. Ultimately, it leads us straight back to one size fits all.
Going KAM but overemphasizing management: You know you have hit this wall when account plans start to look more and more similar. Account reps may copy and paste whole sections from other plans. Or from last years plan. When account planning is perceived to be a template filling exercise, creativity is already out the door. Building big account planning systems is the first step towards this fallacy - and towards throwing millions out of the window. An account plan should fit on a piece of paper or a flipchart. And perhaps thats where it should stay.
Mistaking bundling and free stuff for value: Faced with a powerful and demanding buyer, our first response may be to offer favorable terms and conditions, aka rebates. Having exhausted that option, our gut reaction is to throw in something else to cut the deal. But first of all, in pharma we have next to no flexibility as to what we can offer legally, making our dance around how to express the value of a customer relationship awkward, to say the least. Secondly, this is not even the main problem even in industries where the regulatory framework is more permissive, the asymmetry between the value suppliers attribute to added value services and other goodies vs. what the customers think is striking. How often do we hear a purchaser ask us for free stuff? Not much mileage here.
Focus on positioning & message instead of customer value: Sometimes we confuse customer value with customer valuation. Some account management initiatives focus on estimating the business potential of individual accounts and departments, and on identifying who in the account is influential, what their interests and motivations are etc. We do this to improve resource allocation and to find more effective ways to articulate our value proposition. Granted, understanding the stakeholders at a customer is very important. But it is critical not to stop here. Otherwise, account management is really not much different from a targeting exercise (in particular, if the account profiling results in some sort of call plan). Customers are perceptive. If we use their time just to find out how valuable they are and then present them with our messages - instead of trying to understand what is valuable for them and then work with them to help achieve it - this just reinforces the adversarial view: nothing is really changing, pharma is just going about its old ways in a new cloak, albeit perhaps in a more subtle and clever manner.
Underestimating effort & time to develop skills & behaviors: Introducing account management is not a quick initiative that yields prompt results. Many pharma companies have found out the hard way that a KAM training program alone, especially if borrowed off-the-shelf from other B2B industries without much adaptation to pharma, does not do it. Lets not forget that most pharma reps where hired with very different expectations, and different profiles and skills. For years, they have been asked to execute strategy and tactics (e.g. a detailing plan), but they are not necessarily well equipped to develop them in the first place. So this takes time and a lot of change management. And it is not clear that alternatively we can simply bring in enough account managers from other industries to breach the gap.
Selling customer-based but marketing product-based: Most pharma companies have organized their marketing functions around products or franchises. Even in companies that have begun to create customer marketing functions, these are usually in addition to product marketing, not a replacement. Successful account selling, however, must look at the whole relationship between a pharma company and a customer, and therefore immediately requires a portfolio view of everything a pharma company has to offer (and it should be mentioned that many large customers want a single point of contact as well). Without changing KPI, reward systems etc. the conflict between the sales and marketing perspectives remains structurally built-in. This is tripping up a number of pharma companies in their KAM efforts, significantly limiting their ability to create customer value through leveraging assets across their portfolio.
Thus, in spite of all the logic that speaks for KAM, and the enthusiasm to implement it, at a closer look the picture isnt so reassuring, showing little indication that KAM holds the key to the pharmaceutical industrys future.
Unless, perhaps, if we go about it in a different way.
Well be discussing these issues and more at the Selling Pharmaceuticals in 2015 Executive Forum on 9th February in Philadelphia. To find out more, click here.