Partnerships for Healthcare Value - the new generation of KAM
In a recent blog post at eyeforpharma, my colleague Torsten Bernewitz asked provokingly if KAM is already the old model.
Is it already "old"? I dont think so. Although many sales and marketing executives are candid in admitting that their account management efforts have not delivered on their promises, I dont think this is due to lack of relevance or lack of enthusiastic support for KAM (what we might sometimes assume when we hear that something is old news).
In fact, a new style of KAM is emerging in pharma that is proving to be highly effective at combating declining prices and shrinking margins.
Granted, as key account management has been introduced in almost all pharma companies, unexpected barriers have cropped up (Torsten has pointed out a number of them is his blog), and the KAM we see today in many instances may be watered down and not living up to its potential.
For example, too often customer engagement levels remain too low or relationships are too narrow (account teams are stuck in the pharmacy niche), and so the full promise of strategic partnerships -- the excitement of what KAM can deliver -- has remained largely unfulfilled. For far too many organizations that have added KAM roles to their ranks in recent years with high hopes of a transformation, not much has really changed on the ground with customers other than titles. But it is far too early to lose hope or declare KAM the old model!
There are clear signs that KAM can be an important part of a shift away from merely driving sales to creating value for customers and that if approached in that way, pharmacos can gain benefits for their business that enhance productivity. However, this requires that we take the concept of KAM a few steps farther than it has been taken up to this point.
KAM has to be about more than improving coordination, stakeholder management, and good planning e.g. doing what you do today, but doing it better and in a more cohesive fashion, with more cross-functional team collaboration.
Given the strong push to reform healthcare in so many markets (not just the US), with customers frustrated over the value-for-money they experience today in exchange for their healthcare investments, can the industry really afford not to address the value question head on? The time for thinking out of the box about KAM and trying something new, something focused on value ..is clearly now.
Key account management (KAM) that enables win-win partnerships focused on healthcare value creation requires an entirely new approach for pharmaceutical manufacturers. It is not the KAM of yesterday. It takes new tools, new training, and a new mindset that is shared by all parts of the company (not just those in sales roles) to implement this style of KAM and to be successful.
Although it is easy to talk about creating value for a customer, while also benefiting your company (a win-win), weve seen that it is hard to actually identify a real opportunity, and even harder to work together to achieve it. Especially given the legal and regulatory constraints we face in the pharma industry!
So, embarking on such a significant transformation can be a daunting task. It introduces risk for the executives who sponsor it and the teams that attempt to execute it, perhaps explaining why it is still so rare. Its much safer to just do what is expected, to do what has been done in the past with KAM, to not rock the boat. As a result, many forward-thinking executives in the industry who see the logic in a vision of value-based KAM model are looking for strategies that will pave the way and reduce the risk. They are looking for the secrets to success.
Luckily these secrets are in fact well known because a value-based approach has been highly effective in several other industries. Increasing price pressure, powerful and sophisticated buyers, intense competition, and margin erosion - the dilemma that the pharmaceutical industry is facing today - is not unique.
Long before the pharma industry faced these challenges, other industries (high tech, transportation and logistics, building materials, to name but a few) dealt with similar problems, and solved them, through implementing a KAM model focused on identifying and implementing win-win value-based collaborations with selected customers.
It is this style of KAM, a value-based KAM.that is anything but old news.