Key Account Management Excellence in Pharma & Medtech

Mike Moorman

• Publisher: Routledge
• Year: 2022
• eBook ISBN: 9781000573398
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Key Account Management Excellence in Pharma & Medtech is designed to help life sciences practitioners develop and execute innovative and effective key account management (KAM) strategies and capabilities. Pharmaceutical and medtech companies are increasingly pursuing KAM in response to the rapid rise of large, sophisticated and complex healthcare provider and payer systems and groups. Those that invest the time to get KAM right will protect their business and grow with these rising customers.

This book is groundbreaking in both its scope and its tailoring of leading KAM practices specifically for life sciences. The central theme is that "key account management is an organization-wide business strategy, not just a role or a sales-specific initiative." KAM is a strategy focused on providing unique offerings and value through an orchestrated, cross-functional, go-to-market model designed specifically to address the needs and engagement preferences of a unique segment of customers. The insights and practices shared in this book are designed to be a valuable reference at every stage of the KAM journey.

The book has been designed to facilitate a common language and deep understanding of KAM issues and leading practices organization-wide—particularly for life sciences leaders, account managers and cross-functional team members responsible for building, transforming and supporting their organization's KAM strategies and capabilities.

Chapter one KAM is a business strategy, not a role

Mike Moorman and Namita Powers

DOI: 10.4324/9781003226512-1

Key account management (KAM) has become a major priority for most pharmaceutical and medtech companies for a simple reason: Organized customers such as IDNs, IPPNs, national payers, regional payers, large group practices and a host of other account types have become increasingly large, powerful and complex. Furthermore, continued horizontal and vertical integration, growing centralization of decision-making and control, less sales representative access to physicians, and more interest among organized customers in partnering with life sciences will elevate the importance of KAM even further. Life sciences companies that invest the time to get it right will protect their business and grow with these rising customers.

In this chapter, we introduce three fundamental KAM principles that stand out as particularly important considerations for life sciences leaders and that are foundational to this book:

1. KAM is a business strategy, not a role
2. KAM is an organization-wide initiative, not just a “sales” or “managed markets” initiative
3. KAM is a journey, not a one-time project

These core principles are central to the success of every organization that has excelled in KAM. In introducing these principles, we set the stage for the chapters to come.

Principle no. 1: KAM is a business strategy, not a role

KAM (key account management) often is mistakenly viewed as a field role (key account manager), which is a narrow view that fundamentally misses the point. KAM in life sciences is a strategy focused on providing unique offerings and value through an orchestrated, cross-functional, go-to-market model designed specifically to address the needs and engagement preferences of a defined segment of large, complex and strategically important systems and groups. KAM is dramatically different from the brand-centric and doctor-focused one-to-one engagement models that have served life sciences so well for many years and that will continue to be important in segments of the market. KAM is a many-to-many business-to-business (B2B) engagement model and requires life sciences organizations to work in new ways across their customer-facing roles and within internal functions. Creating new internal support functions and reengineering cross-functional operating models and metrics are part of the KAM equation.

To design and implement effective KAM strategies, companies should address the five core areas defined in ZS’s KAM360™ framework: strategy and organization; cross-functional alignment and coordination; hiring, selection and development; metrics and motivation systems; and data and systems (Figure 1.1).

Figure 1.1 ZS’s KAM360™ framework.

Organizations that excel in KAM approach the KAM360™ building blocks as a “recipe” and not as a “pick-and-choose menu.” While not all elements are equal priorities at any one point in time, none can be ignored.

The comprehensive KAM360™ framework underscores the notion that KAM is a business strategy—not simply a role—and is the perfect lead-in to the next principle: approaching KAM as an organization-wide capability.

Principle no. 2: KAM is an organization-wide initiative, not just a “sales” or “managed markets” initiative

KAM requires a degree of cross-functional coordination, collaboration, commitment and agility that is new to most life sciences organizations. In fact, internal silos are identified as one of the biggest barriers to KAM time and again. In other words, the real challenge is often from within.

KAM requires a diverse array of commercial and medical field roles to operate as tightly orchestrated customer-facing teams. These roles may include enterprise KAMs, business unit KAMs, hospital sales reps, HCP sales reps, HEOR liaisons, medical science liaisons, clinical specialists and many others. These field roles touch overlapping decision makers spanning a network of facilities and locations, report to different leaders, have different objectives and metrics, and often have a long history of working in silos.

The degree to which these roles can operate as close-knit teams will ultimately dictate the value and business impact that will be realized. To get there, life sciences companies will require new team-based B2B customer engagement processes, operating models, tools and motivation systems—and strong leadership alignment.

KAM also requires new and different types of internal cross-functional support spanning marketing, sales, medical, analytics, IT, human resources, training, and legal and regulatory. Many life sciences companies will need to revamp their headquarters-based functions to succeed at KAM. Take, for example, the deeply entrenched brand- and product-centric approaches that have been so successful in traditional markets and customers. KAM is about customer centricity, not brand or product centricity. Business approaches for key accounts will need to evolve from “inside out” to “outside in.” KAM often requires implementing account strategy and planning, above-the-brand marketing, account-based marketing, solution support, implementation support, and specific data and tools that currently might not exist. To truly succeed at KAM, life sciences companies need to evolve their people, processes and systems organizationwide. The challenge will be “living in two worlds at once,” characterized by traditional healthcare systems in some situations and rapidly evolving systems in others.

This brings us to our third core principle.

Principle no. 3: KAM is a journey, not a one-time project

KAM has the potential to transform and improve relationships with large organized customers, but there are no shortcuts or silver bullets. Effective KAM requires many people across the organization to work in new ways, and that takes systematic effort and time. A “big bang” approach to KAM nearly always fails. The history of KAM is littered with organizations that sought to go “too big, too fast” or that thought they could excel at KAM through training and compensation alone.

Most organizations go through at least three stages on the journey to improve KAM’s effectiveness, with each stage lasting about 6–18 months (Figure 1.2). In a nutshell, companies on the KAM journey begin by starting small and building a foundational capability before moving to a more advanced model and finally, building to a world-class capability.

Figure 1.2 Stages of the KAM journey.

Staging the journey doesn’t preclude early wins and business impact. In fact, quite the opposite is true. By reducing complexity and focusing talent and resources, staged approaches are typically the best means to accelerate impact while simultaneously reducing risk. The successes and impact achieved at each stage of the journey create the momentum to pursue the next wave of investment and advancement.

Staging requires leaders to be highly adept at assessing where their organization is on the journey—and at defining tailored roadmaps and supporting business cases and expectations. No matter where an organization finds itself along the journey, the key is to meet the organization “where it is” and customize the path forward given the specific context and business impact opportunities.

Ultimately, KAM effectiveness and impact are all about organization-wide execution and agility. Most life sciences companies are now pursuing KAM, with many focused on advancing from KAM 1.0 to KAM 2.0, and a smaller number beginning the journey to KAM 3.0.

Concluding thoughts

While KAM is relatively new in the life sciences industry, many B2B industries have been pursuing KAM since the late 1980s. Life sciences leaders can learn important insights and lessons about KAM—and the KAM journey—from the successes and struggles of other industries, as well as from the substantial KAM experience that has rapidly accrued within the life sciences space itself. At the same time, some cross-industry KAM approaches won’t work for life sciences companies. For example, regulatory and compliance requirements in the pharmaceutical industry demand a unique approach to value proposition and customer engagement strategies. KAM simply can’t be a “plug-and-play” approach from one industry, company or business unit (BU) to the next; each iteration needs to be uniquely designed with the customer and specific company or BU in mind.

In this chapter, we have introduced three core principles for achieving KAM excellence. These principles set the stage for the remainder of this book and are worth repeating:

1. KAM is a business strategy, not a role
2. KAM is an organization-wide initiative, not just a “sales” or “managed markets” initiative
3. KAM is a journey, not a one-time project

In the chapters to come, we provide insights on how leading organizations apply these principles in practice. We explore the rise of the organized customer and KAM in life sciences, discuss in detail the components of the KAM360^™ framework and review the current and future state of KAM in the industry. Our intention is to provide insights that can be leveraged at any stage of the journey, whether that is building a new KAM program or advancing an existing program to world-class status.

Chapter two The rise of the organized customer and KAM in healthcare

Brian Chapman and Pratap Khedkar

DOI: 10.4324/9781003226512-2

For life sciences companies, the clinician—predominantly the physician writing a drug script or the surgeon doing a procedure—was traditionally the most significant decision-maker within the healthcare ecosystem. Given the freedom that clinicians had to make individual choices on behalf of patients as they saw fit, they were consequently the center of pharma and medtech company sales and marketing efforts. In a clinician-centric world, healthcare institutions operated largely in the background, relatively insensitive to price and inclined to treat life sciences as innovation suppliers.

But this model has shifted dramatically. No longer are individual doctors the primary decision-makers when it comes to many life sciences products. Institutions—or large “organized customers”—have assumed a far greater role in actively managing these purchasing decisions to drive greater clinical, financial, patient-experience and healthcare provider work-life outcomes. And this shift has had significant implications for how life sciences companies broadly promote and sell their offerings, as well as for the role key account management (KAM) plays in engaging these entities more specifically.

In this chapter, we discuss the emergence and rise of the organized customer and how life sciences companies can overcome these customers’ heterogeneity to successfully implement KAM strategies and provide value.

What is an organized customer?

To understand the rise of organized customers, it’s helpful to first look at the healthcare ecosystem, which includes an array of players interacting across the value chain to provide healthcare to the patient. In this ecosystem, funding, management, service delivery and product manufacturing are split across entire industry sub-verticals (Figure 2.1).

Figure 2.1 The U.S. healthcare system at a glance.

Each of these groups includes a bewildering variety of players with different focus areas and characteristics. For example, funding comes not only from large government agencies, but also from employers and patients themselves via their co-pays. Health plans moreover may bear risk or simply concentrate on utilization management on behalf of employers. And providers can work independently or as parts of highly complicated integrated delivery networks.

For our purposes, organized customers are any institutional entities in the healthcare ecosystem that make consolidated decisions beyon...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• List of figures and tables
• Foreword—A message from the CEO of SAMA
• Preface—Important information about this book
• Chapter 1 KAM is a business strategy, not a role
• Chapter 2 The rise of the organized customer and KAM in healthcare
• Chapter 3 Where to play: Key account segmentation and selection
• Chapter 4 Value strategy: Evolving from basic offerings to advanced solutions
• Chapter 5 KAM organization design: Form follows function
• Chapter 6 Executive alignment and engagement: It’s make or break for life sciences KAM programs
• Chapter 7 KAM Program Office: Marshalling the internal support required for results
• Chapter 8 The long and short of KAM metrics
• Chapter 9 Customer engagement process: The secret to agile execution
• Chapter 10 Bringing value to account planning and management
• Chapter 11 Context is king: Laying the foundation for a comprehensive KAM talent strategy
• Chapter 12 The unique learning journey required for KAM
• Chapter 13 Key account manager incentive compensation: Aligning to strategic objectives
• Chapter 14 Why technology is critical for breathing life into KAM
• Chapter 15 KAM in the United States versus Europe: Are we headed to the same place?
• Chapter 16 The future of KAM in life sciences
• Acknowledgments
• Index