Healthy Skepticism Library item: 19634

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Publication type: Electronic Source

phil7taylor
Transform reps into KAMs
eyeforpharma.com 2011 Oct 5

Abstract:

Phil Taylor explores how reps can shift their sales strategies from traditional detailing to Key Account Management

Full text:

Key account management has been a buzzword in sales divisions across multiple industrial sectors for many years, and the pharmaceutical industry has also started to embrace the concept, albeit in a piecemeal fashion.

In fact, there are very few examples of good KAM in pharma, according to David Wright, director of customer management consultancy Imonic, although the approach is widely used in other industries.

“Key account management, as its name implies, means the selection of a small number of important customers and applying resources and effort to build strong relationships with them,” he says.

“In other words, being very deep with very few. But pharma is not yet operating at that level.”

The pay-off of KAM, according to Bernard Quancard, president and CEO of the Strategic Account Manager Association (SAMA), is that a company can interact with its customers on a much higher level.

“The benefits of a KAM approach are not only growth and profitability, but also improved customer loyalty, customer-driven innovation and customer-centricity, and that’s a whole new game in pharma,” he says.

While not fully on board with KAM as a concept, pharma has started to shift from traditional detailing to account management, notes Wright.

Partly that is because the wide spread of pharmaceutical customers requires a lot of manpower to cover, while field teams are shrinking as a consequence of cost-cutting drives across the industry.

In recent years, pharma reps have already had to refocus their approach, shifting from dealing directly with prescribers to multiple stakeholders.

The decision-making process has changed as the buying system has become more complicated.

A sales rep now has to understand what can often be disparate and competing objectives of stakeholders, including cost considerations and time-in-hospital measures, for example, and not focus just on clinical parameters as in the past.

“The physician is no longer the major specifier of medicines. That role has shifted to big payer organizations, governments, hospital consortia,” says Quancard.

“These are strategic accounts that demand a strategic-level relationship.”

What makes a good KAM?

Principally, KAM is about deeper knowledge of the customer, which allows sales forces to position products in a way that meets that customer’s needs more precisely.

In some cases, that can mean accompanying those products with other elements—funding, support services or educational materials, for example—which make them more valuable to the customer.

“Traditionally, the sales force was about imparting messages. With KAM the emphasis is more on ‘understanding’ than ‘telling’, with the aim of getting aligned with the customer and understanding their agenda,” says Wright.

Sales reps who want to make the transition to KAM need to have a much deeper set of skills and qualities than their traditional sales force counterparts, according to Quancard.

He separates those required for KAM into two categories: inherent attributes and learnable competencies.

“Attributes are inherent in an individual and cannot be easily taught—ethics, for example—and many of the qualities required of a good KAM are likewise,” he notes.

One of the primary attributes of a KAM is “active listening”; in other words, to listen and capture the key strategic elements of the customer’s requirements rather than simply pushing a sales message. (For more on the role of active listening in compliance, see Improving adherence by listening and learning.)

When dealing with customers, it is important for the KAM to probe deeply into their objectives and try to identify ways to help outside the scope of product selling.

Services, solutions, metrics, and improved supply chain efficiencies can all be important elements of a KAM relationship, among many others.

Quancard describes one scenario in which an NHS manager in the UK tells a KAM he is trying to juggle the government’s cost-minimization programs with clinical objectives in improving patient care, but has no clear way to gauge which therapies are most effective.

“A good KAM would think: ‘How can I help that person get access to metrics, and how can I align what I know from my own company’s experiences to help him make decisions on therapies?’” according to Quancard.

“As you do that, you start to build trust and customer intimacy and become a trusted advisor; this is at the core of KAM.”

Stepping up to KAM

For Wright, sales reps wanting to step up to KAM roles need to undertake a fundamental mindset shift.

KAMs need to think about the account as a business and take a broad commercial view on what can and cannot be done for the customer.

Those commercial decisions, and their implications in terms of investment in time and resources, are markedly different from the day-to-day ‘serial’ thinking required of a traditional sales role.

“Commercial acumen is a big skill requirement that a lot of pharma companies have been struggling with in converting sales reps to KAMs,” he says.

Commercial acumen can be boiled down into three primary components, according to Wright.

The first is an understanding of the financial drivers and metrics; for example, in the UK, how National Health Service payers monitor and measure risk and cost of projects along patient pathways.

The second component of commercial acumen is good critical enquiry technique to understand the needs of customers.

KAMs need to get customers to talk frankly about their requirements and, more importantly, to develop an understanding of those requirements quickly and efficiently.

Thirdly comes the ability to develop so-called ‘value propositions’, designing packages that add value for each customer. (For more on value propositions, see The future of pharma: Do you know what a value proposition is? and Mal’s Musings: Is Your Value Proposition Unique?.)

Part of the challenge for KAMs is the selection of accounts and contacts from which you can get most return on investment for time and effort, as well as more comprehensive planning.

This is a big change for a traditional rep, according to Wright.

In addition to the core attributes, there are a number of other skill sets that must be learned by salespersons aspiring to a KAM role within a company, says Quancard.

Top of the list is developing an understanding of a customer’s organizational priorities through study of stakeholder objectives.

It is clear that in comparison to a traditional sales role, KAMs must expend more effort on specifying the direction and objectives of the account.

Presenting products and capabilities of the company aligned to what customers want clearly requires understanding of the customer at a much deeper level.

Strategic account planning is another important skill; in other words, quantifying the value proposition that as a KAM you bring to your strategic accounts.

The same is true of managing relationships effectively, for example by developing joint solutions with the customer.

Another competency required for effective KAM is the ability to manage multifunctional teams within a company, as the diverse nature of this type of customer relationship means that different functions are represented within the account, such as traditional sales reps, marketing and medical.

Communication and coordination skills to help others in your organization support the KAM program lie at the core of this competency, and the team facilitator role is a new one for the rep.

“Generally, KAMs have to carry out that role without authority, so it is an internal networking approach, trying to get others to work towards an account plan with common objectives,” says Wright.

Finally, KAMs must be able to take a broad view of the overall relationship with a customer and to measure the global outcomes and productivity of the strategic account.

How easy is the transition?

Quancard believes that while the competencies required for KAM can be learned, the attributes required means only a minority of traditional sales reps are able to make the transition.

“I do not believe many of the sales reps in pharma will have the competencies, skills and attributes to be good KAMs,” he says.

“Around 10%-20% of reps may be able to make the step up, but a lot of the others will have to redeploy themselves into a new role.”

Where else can KAMs come from within the organization?

In some companies, plant managers, procurement executives, product and marketing managers and even service engineers have become good KAMs, according to Quancard.

A plant manager must take a fairly holistic view of his role and the services, products and processes required to meet productivity and other targets.

Plus he or she must have the high-level negotiating skills to deal with trade unions, suppliers and senior management, he points out.

“Typically, out of 100 KAMs, 20 or so will comes from sales, perhaps another 20 will come from product management and marketing, and the rest will be a diverse mix of other specialties,” he said.

In pharma, it could make sense for clinical specialists to redeploy into a KAM role as they are very oriented to value proposition evaluation.

For now, though, KAM seems to be more of concept than a reality in pharma, although there are some exceptions, says Wright.

“A fair amount of training of sales reps in KAM is undertaken in the industry,” he says.

“What we find is that the better salespeople are already applying these principles, because they can see the results with the customer of a more intelligent and innovative interaction.”

What is missing is a concerted, coordinated shift to KAM among pharma companies, largely due to the ongoing evolution of the payer environment across Europe, resistance to change, and concern that changing too rapidly could impair near-term sales performance.

The result is that “a lot of companies are still carrying out sales in the same old way with a different label,” Wright notes.