Key Account Management – Silver Bullet or KAMikaze?
Marie Crespo asks whether we’ve truly understood, and fully adopted a true key account management (KAM) strategy.
The pharma sales model has suffered from being too tactical for too long; for many, the answer is Key Account Management (KAM). And yet, while we hear much about KAM’s potential, there’s plenty to indicate that we still have a lot to learn about implementing it in practice.
Sometimes, organizations purporting to be introducing or following a KAM strategy aren’t really doing so; while the role is well defined academically, it is less well understood in the field. Let me say straight away, if you have embarked on a KAM strategy to ‘sell more of your stuff’, you may well not have grasped all the ramifications and nuances of this complex role.
One of the key concepts to note is that, just as there are various levels of field sales roles, ranging from Transactional Selling up to Strategic Selling, the same is true of the account management disciplines. The applicability of each sales role depends on the dynamics of the markets in which you operate and the particular sales model you choose to follow.
Last month, we discussed the role of Strategic Selling and Solution Selling in the context of today’s rapidly evolving pharma sector; they both have their account management counterparts – respectively, the Key Account Manager and the Account Manager. It’s worth noting straight away that these are two very different roles: just as Strategic Selling is a big step up from Solution Selling, so the KAM role is a significant progression from that of Account Manager.
Further down the chain, you’ll also find the roles of Sales Account Manager and Internal Account Manager, which we define as corresponding to the field sales roles of Application Selling and Transactional Selling.
Defining the KAM role
So, how do we define a Key Account Manager? A Key Account Manager is one of the most critical roles for any business. It offers long-term potential for delivering substantial revenue gains and maximizing retention of an organization’s most important clients. But this comes with a caveat. We’ve already mentioned that a genuine KAM role is a significant step up from that of Account Manager, but it’s worth repeating: the role can only effectively be filled by high-caliber individuals who are comfortable with routinely operating at C-suite level and capable of delivering a complex mix of sales and business skills.
“Rather than viewing the KAM role as one of selling your ‘stuff’ […] it is perhaps more helpful to consider KAM as selling outcomes.”
For the most part, such individuals are not selling in the traditional sense of the word, though they are capable of seamlessly deploying communications and influencing skills which are the match of any of the more ‘traditional’ business-to-business (B2B) sales specialists. Indeed, a true Key Account Manager is likely to be seen as ‘that pesky consultant’ who always seems to get in the way of a deal when viewed from the perspective of the conventional salesperson.
So rather than viewing the KAM role as one of selling your ‘stuff’, whether this be pharma products or even complex services, it is perhaps more helpful to consider KAM as selling outcomes or the concept of a business change program to the client. Such programs bring clear long-term benefit to clients by fundamentally altering the way they address their market, and they are inevitably not limited to the offerings traditionally supplied by the business employing the KAM strategy.
Conducting the orchestra
Instead, such programs may comprise an ‘ecosystem’ of suppliers drawn from across the Key Account Manager’s own organization as well as a range of strategic alliances and more ad hoc partners. The true Key Account Manager acts rather like the conductor of an orchestra, coordinating suppliers and partners whose focus is to satisfy the client’s longer-term business ambitions and priorities. From the outside, the KAM specialist looks more like a senior business adviser to the client’s board than a salesperson and may, on occasion, even act as a ‘buyer’ on behalf of the client.
This approach represents a profound difference from a traditional sales role in that it clearly depends, not only upon deep sector expertise and business capability, but also on a store of credibility that has been built with the client through thorough understanding of the client’s business, strategies, markets, competitive landscape and operating methods. It involves a fundamental shift from selling products and services to selling value that will ultimately be reflected in the share price of the client or in some other way that effectively measures outcomes.
Thus, the very senior business role that is KAM requires:
- Significant knowledge and understanding of business strategy and goal setting;
- The ability to research and analyze market dynamics;
- Interpretation of results and determination of likely outcomes and associated actions required;
- Creation of business and financial value propositions;
- High-level cross-company and partner engagement skills; and
- A strong sense of purpose, direction, and leadership.
The KAM role involves detailed research and analysis of the dynamics within the key account and of the client’s market, as well as the ability to demonstrate how and by what means the relationships will mutually enhance both organizations over time, particularly relating to growing agreed, significant business metrics, such as Net Present Value (future free cash flow) for both organizations.
“While KAM may be the word of the moment, such an approach is unlikely to prove to be the silver bullet craved by so many pharma businesses.”
Account Manager role
This approach flows down to the level below, that of the Account Manager, who is the account management equivalent of the Solution Selling specialist. The difference between the two roles is significant, however, in that an Account Manager is less strategically focused than the Key Account Manager, albeit that there is still substantial interaction with the client at the most senior level.
Indeed, the KAM may work through and ‘buy from’ a series of Account Managers, who tend to be more project-focused, with all that this means in terms of having to address a different sales cycle for each new project.
Thus, it is worth noting that, while KAM may be the word of the moment, such an approach is unlikely to prove to be the silver bullet craved by so many pharma businesses.
Unfortunately, all too often when organizations say they are moving towards a KAM strategy, they do so without fully understanding all the ramifications; specifically, they may fail to differentiate between the distinctive roles of the Key Account Manager and the Account Manager. If this happens, businesses will be unlikely to recruit the right people to carry an effective KAM strategy forward.
In conclusion, implementing a flawed KAM strategy is likely to prove counter-productive. It pays to understand the potential, scope and requirements of the distinctive account management roles and to put in place the appropriate resources, processes and structures to support them – whichever approach you choose.
Since you're here...
... and value our content, you should sign-up to our newsletter. Sign up here