5 Steps to Successful Key Account Management
The healthcare ecosystem is changing rapidly, and many suppliers in the Life Sciences industry are struggling to keep up. But keep up you must − and that's not going to happen by relying on methods of years past.
Let's face it. Factors including the transition to a value-based model of care, the adoption of healthcare IT and analytics, the increasing rate of mergers and acquisitions and the subsequent shift in decision-makers point to one clear fact: the customer, too, has changed. While this poses challenges to life-sciences suppliers, it also presents tremendous opportunities to approach sales and marketing purposefully, with an emphasis on building better relationships with strategically important customers and collaborating with them towards mutual goals. To succeed, though, requires the adoption of key account management (KAM), a systematic, robust alternative to the traditional buyer/seller model.
Approaching sales from a KAM perspective has myriad advantages for suppliers, from better cost benefits to more efficient business processes to longer-term customer loyalty. However, unlike transaction-based sales (which are primarily the domain of sales teams), KAM relies on company-wide involvement and expertise. Supply chain operations offers a good example of this: If a key account is promised priority access to urgent products or services, fulfillment depends on clear communication with - and effective training of - operations staff to ensure those promises are kept in a timely and efficient manner.
Even with buy-in from all departments, barriers to successful KAM can emerge. Past patterns where short-term concerns trump long-term strategies can rear their ugly head. Tailoring key accounts to unsustainable levels can short-circuit even the best KAM plan. The erosion of departmental redundancies can also lead to confusion and inefficiency.
To overcome these barriers – or to avoid them altogether – suppliers should consider adopting a basic five-step prescription for KAM best practices:
Be selective in choosing key accounts. Not every account is a key account. Thus the selection process should focus on strategically valuable and highly complex customers with the capability (and desire) to actively participate in achieving mutual goals. Hospitals, large medical groups and health systems typically fit this profile, but smaller, loyal customers with longevity should also be considered.
Use data to refine contract basics. Before jumping into customizing a key account, historical data should be analyzed to understand the potential of each account in areas such as pricing, service gaps and growth opportunities. Customer interviews can also be conducted to provide a qualitative analysis of considerations that can enhance the contract. These analyses can then be used to work cooperatively with a key account customer to refine contract basics for mutual benefit.
Find and train the right people for KAM positions. Contrary to popular belief, your top salespeople may not be the best fit for key account manager positions. KAM requires a broad range of skills in areas of finance, consultation and planning. These skills are often found among project managers rather than salespeople.
Align the KAM team. For key account managers to execute the level of customization available through KAM, they need a cross-functional, multidisciplinary team with support at every level, from the C-suite to sales and marketing to operations and distribution.
Measure and build. Traditional sales metrics no longer work in a KAM environment. Instead, measure the performance of your key accounts based upon the lifetime value to your company and the customer's bottom line. To build a KAM program that succeeds in the long-term, review key accounts on a routine basis and make adjustments to meet customers' evolving needs. New and existing accounts should also be continually reevaluated for potential addition to your KAM program.
Sales and marketing will, naturally, play an integral role in driving growth from key accounts, but the paradigm that relegates marketing to a junior partner also requires transformation. Your sales team will be key in the planning, targeting and closing of key account deals, and your marketing team is essential for providing market insight, brand positioning and proof of value. In fact, in a world where online reviews are rampant, marketing has a special opportunity to help key accounts “manage the message” and humanize their brands. By working together, sales and marketing can help key account managers strengthen relationships with key accounts and maximize KAM opportunities.
Chris Lundgren is VP, strategic accounts at Healthcare Data Solutions