What pharma can learn from the use of KAM in other industries
Dan Goldsmith, general manager of Veeva Europe, and Patrick Hart, CRM partner at Accenture Management Consulting, on why key account managements time has come
Pharmaceutical companies are reluctant to study other industries for business insights.
The pharma business model is so distinctive, the logic goes, that its impossible to learn lessons from unrelated organizations.
The challenges of the current market, however, have forced pharmaceutical companies to seek new commercial approachesapproaches that other industries often have already successfully implemented.
Studying these industries thought processes, setbacks, and successes can therefore provide valuable learnings for pharma.
Life Sciences is an industry that traditionally considers itself too different from others to bring in outside learning, says Dan Goldsmith, general manager of Veeva Europe.
But as pharmaceutical companies enter the early stages of major change and reform, its imperative that the industry look out the side mirror and accelerate its own transformation.
Key account management (KAM) is one initiative that sits atop most pharma companies current commercial strategy agendas.
While KAM may be new and evolving in the pharma industry, its a concept that has been in play for years in others.
Lessons about how to approach an account, how to build account-level relationships, and how to evaluate effectiveness and evolve progress are there for the taking.
Other companies and industries have been down this road before, says Goldsmith, who co-presented on this topic at eyeforpharmas KAM summit in November 2010.
Patrick Hart, a CRM partner at Accenture Management Consulting, presented as well.
By looking at these other industries, you can identify successes and pitfalls in order to accelerate your own path to innovation.
Account level relationships
One challenge pharmaceutical companies face today is to develop expanded networks of customers and to build real value with each of those customers.
Gone are the days when reps could simply focus on the highest prescribers.
You need to look at the entire hospital network and ask who are the nurses, the physicians, the P&T committee members, all these other players that ultimately will influence whether my drug is prescribed or not, says Goldsmith.
And once you identify these other players, you have to build personal relationships with each of them. (For more on other stakeholders, see Nurses and physician assistants: A new pharma marketing channel, The benefits of collaborating with patients and physicians, and The pharma connection: How to foster patient-physician collaboration.)
This challenge is something other industries have dealt with before.
Consider the hospitality industry.
The highest prescribers in a hospital are like individual guests at a hotelvaluable but only one piece of a larger puzzle.
Hotels have learned that conventions, conferences, and other special events actually drive more of their profits.
We all travel and stay at hotels and interact with these companies as individuals, says Goldsmith, but the biggest part of their business is around account relationships. The events they hold at their hotels are the items that really drive revenue and value for these companies.
To capitalize, hotels have used KAM to highlight the value of accounts and to tailor unique approaches.
This goes beyond simply assigning account titles and managers.
Hotels have learned to build organizational intelligence and to wrap that intelligence into future strategies at an account and segment level.
That, in turn, drives long-term change and influence. Pharma needs to do the same.
Rather than focus on basic selling skills with reps, sales forces should be well versed in the art of account management and developing value as well as in collecting the sort of organizational intelligence that will instruct future strategies.
This shift in commercial practices for pharma is one that will not happen overnight, says Goldsmith.
It must be iterative in nature and based on cycles of learning. If companies do not start down the KAM path, they will be left behind the competition. (For more on the changing role of reps, see New sales force models: Get ready for the hybrid reps and The pharma sales rep repair kit.)
Managing international accounts
As pharma companies continue to grow in existing markets and to expand into emerging markets, another challenge is the complexity of managing international accounts.
Identifying strategic accounts on foreign shores is difficult, as is developing appropriate value propositions.
Again, other industries, like energy, can help.
As the BP oil spill illustrated in 2010, energy is a global game.
Accounts on foreign shores are instrumental for the success of any global company.
Energy companies have embraced KAM to identify strategic international accounts, enhance the strength of those relationships, and provide mutual value.
Accenture has worked with clients on this front.
Our clients understand the value of pointing their sales capabilities at their best prospects or customers, says Accenture Management Consultings Hart.
But how can you be sure you are focused on the correct accounts? One proven route to success is landscaping a selection criteria that includes current sales and profitability data, with the complexity of the relationships and delivery points taken into consideration.
For instance, one leading global energy company, which wished to remain anonymous, partnered with Accenture to filter all of its potential accounts into a final short list.
Accenture then formulated a detailed value proposition for each account on the short list and defined a four-stage account development process to secure client buy-in and develop new offers.
We then run some scenarios looking at risk profile and things like future margin, in one case, around new or bundled products, says Hart.
From there, we confirm the final short list, for each of whom a detailed value proposition is formulated.
As pharma expands into BRIC and beyond, embracing KAM for international accounts will be important.
(For more on the BRIC countries and beyond, see Transforming the Turkish pharma market, Getting into the Indian pharma market, The Middle East: A pharma market in the making, Reassessing Russia's pharma market,Breaking into the Brazilian pharma market, and Cracking the Chinese pharma market. For more on the pharmerging markets as a whole, see How to get ahead in 'pharmerging' markets.)
Reps need to be informed of key accounts and messages so that physicians, no matter what country theyre in, receive the same information and messaging.
Headquarters will also need to expand its view of how strategies and tactics are delivered in the field, which will improve brand speed and flexibility in delivering customer-centric programs.
After any segmentation, we spend a great deal of time with our clients defining the account development processes to ensure we embed the organizational change, refine the proposition, secure buy-in, and develop new offers, says Hart.
The organizational aspects and ensuring adoption are critical to success.
Dynamic markets
As the market for selling pharmaceuticals continues to stiffenevery month, it seems, market access gets tougher, regulatory hurdles higher, generic alternatives more popularits important for pharma companies to stay abreast of market challenges and opportunities.
In place of straightforward transactional relationships, sales teams need to build stronger, more robust relationships that respond to whats happening in the marketplace and capitalize on it.
This transition is something other industries have already executed.
Here, the high tech sector proves particularly helpful.
Many high tech companies were founded aroundsurprise, surprisetheir technologies.
But as the marketplace became more saturated with similar high tech solutions, companies realized that services surrounding their technologies could drive more business than the technologies themselves.
Companies like IBM in the late 1990s, for instance, transitioned from a mainframe mindset to a services model that came to represent 70 percent of its business.
Then, through studying market dynamics, IBM realized that by bundling its services and technologies together, it could achieve greater revenue potential.
The company adopted KAM to allow its reps to identify key opportunities and approach them with tailored packages that no other company could present.
Goldsmith believes that pharma companies need to realize that products, like IBMs services and technologies, are part of a larger package that can increase the attractiveness and value of offerings, if presented properly.
An oncology clinic, for instance, needs a range of products and services to treat its patientshealth coaching for depression and staying on therapy, exercise and rehab, dialysis, managing longitudinal data around different therapies and treatments, pharmaceuticals and biologics.
If pharma reps simply give primary oncologists a product pitch, its a transactional relationship that oncologists can easily turn down.
If the reps present their product in conjunction with a health coaching service, a compliance service, and an educational website, its far more alluring. (For more on coaching, see Coaching for sales effectiveness.)
This value proposition is much stronger to both that individual oncologist and the account, says Goldsmith.
This is important because diseases are more complex than popping a pill. The industry is driving to more of a holistic view of patient health. In turn, pharma must play a broader role in the healthcare ecosystem.
Moving ahead into 2011, pharma companies will continue to experiment with new models to address current market challenges.
While these challenges may be unique to the industry, the solutions to overcome them are not.
Lessons from other industries can expedite the transition and make companies models more robust and effective.
Five years ago, certain industry groups would state that differing business models limited the applicability of cross-sector learnings, says Hart.
This has changed drastically as companies now understand there are thought processes and innovative lessons to be learned from other industries.
For more from Dan Goldsmith, listen to Podcast: Making KAM commercially effective.
For more on KAM, see Pharma sales: Clearing up KAM confusion, Getting to grips with KAM, and What's next for SFE 2011.
For more KAM insights, join the industrys key players at Key Account Management USA on September 13-14 in Philadelphia.