KAM in the Healthcare industry | In recent years, the prescribing power has shifted from the hands of the individual clinician and is now shared amongst groups, committees, or networks of medical, social, administrative, payer and patient representatives. The pharmaceutical industry’s response to this expansion of decision-making groups is the growing adoption of Key Account Management (KAM) - or Strategic Account Management - as its primary business model.
The core feature of a key account is the existence of a decision-making unit (composed of various healthcare related functions) as opposed to an individual clinician taking on the role to choose what drugs to prescribe. Not every account is a key account, and this distinction is fundamental for an effective strategic planning.
What it takes to be a successful Key Account Manager?
It is paramount to understand from the very beginning that not all Key Account Managers are really KAMs. In many companies, the KAM department consists of Senior Sales Reps, often having worked as standard Sales Reps in the past. Key Account Management is a different approach focusing on building long term relationships and trust with specific accounts, connecting different external and internal key stakeholders.
In addition, it requires various personal profiles focusing on added-value propositions based on a deep understanding of their customers’ objectives and strategy, personal relations, business sensitivity and a good intuition regarding long term perspectives. The Key Account Manager is a marathon runner, not a sprinter. Where the sales reps is a “hunter”, the Key Account Manager would be a “gardener”. This may result in the necessity to re-assess profile requirements for Key Account Management positions and possibly re-build and train sales teams appropriately.
Key Account Managers need an extensive combination of skills and insights over policies, networks and day-to-day functioning of the national and local healthcare services in order to identify opportunities enabling the company to collaborate with the healthcare provider.
The typology of strategic accounts in the pharmaceutical industry
There are basically 2 types of accounts which require different approaches in the pharmaceutical industry.
- On the one hand: the typical pharmaceutical chains and wholesalers
- On the other: hospitals, hospital chains, and payers
Each has slightly different priorities in their business strategy. Typically, pharmacies and wholesalers are driven by turnover goals, margins, discounts, and portfolio/basket penetration or share. Hospitals, payers, patient groups and comities are driven by cost/benefit ratio, level of partnership, turnover/profit, evidence based medicine decisions, forms and other non-financial parameters.
The main goal is to deeply understand accounts’ needs, objectives, and strategy. There are basically 2 axes in this formula:
- Objectives from business to medicinal reasons, as explained earlier.
- Size and network impact of each account.
Usually, you deal with 3 levels of accounts:
- The first level is the basic Account which can be represented in this example by a single hospital or a big pharmacy. This is usually not a “key” account we should focus on in our KAM approach.
- The second level could be represented by a hospital chain or a national wholesaler who is definitely a valuable target for a Key Account Manager.
- The third level (Strategic Account Management level) is represented by key strategic authorities, payers, international wholesalers. It requires a specialized approach focused on joint value creation and common business strategic plan development. Surely, these are “must-win” accounts where not only KAM, but also top managers need to play their support roles.
The 5 key success factors of a KAM strategy
There are 5 critical factors for a successful KAM strategy:
- Ensuring buy-in from senior management and other company functions
- Long-term relationships, trust and customer-centricity
- Mutual value creation
- Ensuring that market access issues are solved
- Direct support from top management and all company structures is a must
How to elaborate your key account's approach
One sentence says it all: “it depends”.
In some cases, you will need to build relationships slowly and wisely. In other cases, it will have to be quickly and assertively, but the main objective is to build trust. Trust is what people rely on. Once a Key Account Manager crosses the first distrust barrier, he will become a gatekeeper for his/her company and will be recognized as a partner, not a simple seller. Still, decisions aren’t usually made by only one person. Indeed, the synchronization of different departments on both sides must be the top priority for every Key Account Manager before signing any deal.
A Key Account Management approach requires a real strategist on the position. Those who can claim having a complete understanding of their account’s strategy, or even better, a direct cooperation on customer strategy development, will be the most successful at this task. In addition, the approach is supported by account management tools including strategic analysis, prioritization, SAM/KAM Business Plan, decision-making tools, and regular follow-up. Still, the main goal is to build long-term relationships, trust and customer-centricity.
In the second part of this article, we will explore the 7 steps to follow in order to elaborate and adjust a successful KAM plan for your company.
The Actando Consulting Team