What’s next for KAM?
In the run up to Key Account Management Europe on Nov 22-23 in London, eyeforpharma asked some of our key speakers for their insights on the future of Key Account Management
Does pharma haveclarity of vision on how to best work with key accounts?
Hajo Rapp,VP and Head Account Management, Siemens: To the pharma industry,key accounts were not relevant in history compared to many other industries. This is changing and the pharma industry is adapting to that on a broad base. The clarity of vision might differfrom company to company.
JoAnne Allen, Associate Director of Sales, Shire: No, I think many companies are still utilizing old models to define and work with their key accounts and their vision is still to “milk” these accounts as much as they can. The vision is very much short-term sales orientated and not long-term collaboration.
Bernard Quancard, CEO, SAMA: Unfortunately, no. The business model in pharma changes very, very fast. It’s going from selling $20 pills to tens of thousands of customers toward selling a $20,000 therapy to a few hundred customers. The offering, business model and go-to market are changing. Instead of influencing thousands of doctors, you now have very few big stakeholders. This is why KAM/SAM is so critical as a key go-to-market strategy.
Allan Mackintosh, Performance Manager, Grunenthal: I don’t think there is any consistency across companies as regards how they work with their key accounts. Each company will take the approach they feel is best and fits with their level of resourcing. There is probably a fair degree of experimentation going on with the more progressive companies, but my feeling is that there will be companies keeping to what they know best and trying to apply traditional models to the new environment.
Dirk Roosen, project consultant, Bayer: Each pharmaceutical company has people in management positions to find out how to best work with key accounts.
Is there consistency of language in KAM circles?
Hajo Rapp: Partly. People comefrom the background of language used inside the companies theyare working for. And as every organization has its history, setup and
language,it happens frequently that people usethe same word but are talking about different topics. However,I do not see a general lack of understanding amongthe leading institutions and people caused by inconsistencyof language.
JoAnne Allen: Again, no. I think for many KAM has become a buzzword and is seen as the panacea to cure all of the problems the industry is faced with. Personally, I do not think there is a comprehensive understanding of what an effective, profitable KAM model is and, for many, the adoption of KAM has been a re-naming of the old sales model.
Bernard Quancard: No, but that’s not the problem. The real issue is determining what Key Account Management really is, and integrating that definition into their strategy and action plans. SAM/KAM is a corporate-wide initiative involving a limited number of strategic customers, in a strategic and collaborative partnership that produces sustained business and economic value.
Allan Mackintosh: Does there need to be? I think we get too bogged down in fancy terminology when plain talking should suffice. We need everyone to understand (both our own employees and our customers) what we are trying to achieve and how we are going to achieve it. Using specific KAM terminology (whatever that is) can cause confusion and a lack of understanding of what KAM is. Companies should be looking to create their own ‘brand’ of working based on sound business and customer focused principles.
Dirk Roosen: Even inside companies different groups speak different languages on KAM.
Do you work with account plans? What is the value?
Hajo Rapp: Sure,we work with account plans. They help our key account managers develop a structured approach. They align the global account teams and they give us transparency on our investments in KAM. That helps ustake strategic business decisions, in contrast to the short- and mid-term planning of the sales and engineering forces.
JoAnne Allen: Yes and these are CRM-based. Their value is transparency. Everyone who deals with the account knows what their individual responsibility and accountability is within the account and how their contribution is significant to the success of the account.
Allan Mackintosh: We put a lot of emphasis on robust account plans. The value of the plans are that they provide focus through targeted activity and produce accountability and responsibility for all those involved in the account. The plans are also essential in that they form the framework for the company to produce results for both the company and for our customers.
Dirk Roosen: We do work with account plans, and they are still open for further improvement.
What are the main reasons for project failure? Does a KAM approach help mitigate them?
Hajo Rapp: The main reasons for project failures are miscommunication, differences in expectationson customer and supplier side, and project management failures,including lack of documentation. A KAM approach can helprecognize problems atan early stage. Due to theirnetworksinto the customer organization,KAMsshould receive feedback about the project status from the customer’s perspective. With a strong foothold in theirown organizations, KAMscan then bypassrather slow standard escalation paths.
JoAnne Allen: Lack of individual accountability and understanding of what the aim of the project is. A KAM approach could help this. However, success is largely due to effective project management skills and the ability of the co-ordinator of the project to hold everyone to account for their individual role in the success of the project. Cross-functional KAMs whose key role is to coordinate activities could help mitigate project failure, however, the industry has been slow to adopt a cross-functional model of KAM.
Bernard Quancard: Project failure often comes when customer expectations are poorly understood or poorly explained/explicated right at the start of the sales process. A SAM/KAM initiative should vastly help because upstream customer needs and expectations have to be identified and quantified early in the SAM/KAM process.
Allan Mackintosh: There are many reasons for project failure but, in this context, if you do not have a robust plan, with the right composition of capable people delivering that plan, together with senior management support, then the project will toil. If you do not a get full understanding across functions and a ‘silo’ mentality prevails then this is also a key reason for project failure.
Dirk Roosen: The main reason for project failure is the lack of a customer value team (CVT). A CVT is the construction where different stakeholders meet to find the best solutions for customer needs.
How do you define the value of your accounts?
Hajo Rapp: Working closely with key accounts is very important for us. It helps usmake the right business decisions and strategies from a product requirement and resource planning perspective.
JoAnne Allen: While past, present and future sales will always figure in the industry’s definition of value, additional relationship factors should also be within the definition. An account where the relationship is strong and collaborative working occurs is more valuable to a company than one where no relationship exists.
Bernard Quancard: There are two ways, the quantitative value and the relationship value. For the quantitative value, you can use well-known metrics: growth, profitability, etc. For the relationship value, you are measuring things like loyalty, whether or not they want to become a strategic partner to you, and is your customer pushing you to innovate and improve your solutions? The relationship value is very important and all too often underestimated.
Allan Mackintosh: At present, we look at the present sales, the future sales potential, the patient populations, the level of market access and the level of key relationships we have within the account. This is an area we do need to deeper into especially as regards ‘long term relationship’ accounts.
Dirk Roosen: The value of our accounts is defined by turnover and profitability, account image, competencies of the account, organizational complexity, and influence on other accounts.
What is your group’s ability to sell its brands as a cross-functional team?
Hajo Rapp: We established key accounts organized for specific vertical markets (customer industries like pharmaceuticals). KAMs andtechnology consultants in combination with a local organization focused on the customer are the key components for working as a cross-functional team and selling our brand as such. As we started roughly 20 years ago with the implementation of that approach, our ability to executeis quite good.
JoAnne Allen: Our team focus is a collaborative approach to our key accounts internally so all functions are involved in the sales process. Additionally, our strategy externally is to target a wide range of stakeholders and match our internal resources to them. So it is not the KAM that sees everyone, however, they are central to the process.
Bernard Quancard: The value of selling as a team is immense. It should bring profitability and growth. When you have to design and deliver a complex value proposition that will involve a lot of different functional teams within your company, and even in your customer’s company, the SAM’s ability to assemble and manage a cross-functional team, without direct authority, is critical to success. Very few companies today have the ability to do it well.
Allan Mackintosh: Improving. We have moved from an individual ‘sales’ approach to a key account management ‘cross-functional specialist team’ approach. It is still very much ‘work in progress’, although there is ample evidence that this approach is starting to work in terms of both improvement in market access, sales and customer feedback. There are times though (when the pressure for short term results is on) that we slip back into the old ways and our cross-functional approach can be compromised.
What are the 5 core competencies all KAMs should have?
Hajo Rapp: Our job profile talks about eightcompetencies. To highlight a subset,let me start with the ability to listen and to understand the customer’s business. Secondly, it is about understandinghow tosupport the customer to achieve his targets. Next is the ability to buildrelationships of trust. Fourth is creativity to develop new opportunities. All thisneeds to be based on excellent intercultural understanding and communication skills.
JoAnne Allen: Effective communication, flexibility of approach, ability to effectively work within and co-ordinate the activities of a team, project management skills.
Bernard Quancard: Strategic customer knowledge: 1) Do you know the customer’s industry? Do you understand how they make and lose money? Do you know your customer’s growth areas? 2) Aligning your solutions to customer pain points; collaboration is key. Pushed further, this can become co-creating solutions jointly between the customer and the supplier. 3) Quantifying value, also known as financial acumen. You have got to show in hard money terms the value you bring to your customer and in the medium term. 4) The ability to efficiently manage cross-functional teams. 5) Managing a global relationship with your customer. Can you deliver/have you delivered what you promised? Can you globally evaluate, quantify in productivity and monitor the relationship?
Allan Mackintosh: At present our KAM competencies include commercial acumen, account planning, influencing and partnership working, NHS knowledge and market access, selling skills and clinical knowledge. We are always looking to review these and perhaps adapt and add to them as we embed our new way of working.
Dirk Roosen: Analytical and result-oriented to develop business cases for each key account, negotiation skills to discuss strategic alliances, communication skills to share information on the KAM experience with all BUs involved, coordination skills to implement the project plans, and being a team player to support colleagues of cross functions.
For more on KAM, attend Key Account Management Europe on Nov 22-23 in London.
For more of eyeforpharma’s coverage of KAM, check out our Key account management: A special report.
For exclusive business insights, download eyeforpharma's Pharma Emerging Markets Report 2011-12and Pharma Key Account Management Report 2011-12.
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