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A refining process

Key account management is not a revolution but a distillation of the marketing mix that can help sales forces deal with NHS changes

gold ice cubesMany people think of key account management (KAM) as a new sales model, developed as a strategic solution to the changing needs of the NHS. Despite rising concerns that the favoured coverage and frequency model may no longer be working, they question the merit of restructuring their whole organisation around some new grouping of customers that moves completely away from their traditional sales approach.

While the pure academic theory of KAM promises one account plan per key account regardless of therapy area, brand or service, the question remains, is this feasible (or even sensible) within the pharma industry structure?

Instead of a complete break from the coverage and frequency model, KAM should rather be viewed as an evolution towards a more appropriate sales approach, which does not require radical change to be effective. Perhaps, more accurately, KAM can be viewed as a distillation of the various aspects of the promotional mix.

The KAM process
According to Dr Brian Smith, Open University Business School, KAM is a contingency model, which means that there is no single best way of doing it, but rather a number of ways which work best in different circumstances.

Whatever your approach, it is important to accept that KAM is a process and not a simple one-off exercise. In order to implement a KAM strategy, the process must be clearly identified and metrics put in place to monitor progress, success and what remains to be done to achieve defined objectives. 

In simple terms, KAM can be considered in three basic steps, each of which requires further subdivision to suit specific circumstances. 

Account identification
The first stage of the KAM process is account identification, profiling and segmentation. Who or what is our customer and what is a key account? This is a familiar question because, as an industry, pharma has been profiling, segmenting and targeting its customers for 30 years in various ways, often - but not exclusively - at the individual customer level. All that the KAM approach seems to add is the need to break these customers down into account groupings and then designate some of them 'key' to the business.

For some industries, identifying the customer is a straightforward task. However, in pharma, the question of who is the customer always meets with the answer it depends.

For pharma, the first step in the KAM process is to agree to the mission and purpose of the required KAM implementation and accept that different therapy areas will probably require different but philosophically aligned KAM processes.

Once what needs to be achieved has been established, we can move on to defining what constitutes an account or 'core unit'. This can be almost anything depending on the objective, ranging from a Cancer Network and linked primary and secondary care bodies for an oncology sales team, through to a purchasing group of pharmacies for a commercial sales team.

A pharma company that correctly identifies the account or 'core unit' it needs to influence and then segments the most important ones as key accounts will greatly increase its chances of success.

The familiar 'Pareto/ 80:20 rule' is once again an important factor in determining the actual number of accounts that should be considered as key.  

Strategic and tactical planning
The next step in the process is to identify the individuals in the various parts of the key account and assess how they interrelate. Often these individuals will work in different locations within the key account and have specific but related roles, such as financial, advisory and clinical. There is then a need to repeat the profiling and segmentation process at an individual level within the key account, and construct the required processes and plans.

There are many experts who can help with producing meaningful, relevant and actionable key account plans.

An individual customer contact plan will also need to be designed to achieve objectives within the existing financial, legal and operational constraints.

Operational Performance Indicators:

The following are important indicators of performance, ie they show the direction the business is moving in - as opposed to what the business has done. Accurate historical records can be monitored through other systems, such as corporate dashboards and the balanced scorecards.

Activities report - shows the current status of a key account plan or opportunity as compared to plan
Late task report - shows the current status of all tasks as compared to planned completion
Key account relationship index report - tracks the status of the supplier/client relationship over time
Key contact relationship index report - tracks the status of the KAM/client contact relationship over time
Decision making unit report - tracks the status of the DMU status and relationship over time
Key account sales tracker - tracks sales by key account.
Key Performance Indicators
Time allocation analysis - tracks time allocation by category over time
Key account relationship tracker - summary of equivalent OPI
Key contact relationship tracker - summary of equivalent OPI
Decision making unit - summary of equivalent OPI
Key account sales tracker - summary of equivalent OPI.


The ability to successfully implement a KAM approach depends upon the company fully understanding its situation, developing a relevant proposition and  process for achieving its objectives and supporting the implementation with the appropriate business tools. From experience in implementation, it is clear that the analysis of different therapy areas will produce completely different key accounts. For example, when all relevant PCTs were linked to the NHS Provider Trusts who treated patients suffering from a particular condition, the Guy's and St Thomas' NHS Trust was found to have three times more potential than any account in the country. However, when a similar process was conducted in a completely different therapy area, the Guy's and St Thomas' NHS Trust did not even feature in the top 100 accounts.

Correctly identifying the core unit and applying realistic metrics to determine its importance are critical first steps. There is no 'one-size-fits-all' solution in the implementation of KAM.

Another major driver for a successful KAM implementation in the pharma industry is the seniority and maturity of the key account managers responsible for the implementation.

The old sales model of simply selling products to customers no longer applies. In a successful KAM approach developing a 'win-win' proposition for the key account, where the PCT or NHS Trust personnel clearly see the value of working with pharma, will be a critical success factor. However, KAMs are commercially astute people who have the company's objectives at the forefront of their minds and who can interact persuasively and credibly with senior NHS personnel.

It must also be accepted that the KAM approach is a sales process that has logical, time dependent, sequential steps which, if followed correctly, will lead to success. Examples of these processes are the standard operating procedures that many companies have and that the NHS has moved towards with its PASA tendering process.

Following and tracking progress through the process with appropriate KAM business tools is another critical success factor. However, it is evident from practical experience that many of the ETMS/CRM tools pharma companies are familiar with are no longer appropriate as they cannot adequately support the implementation of KAM. 

Measuring KAM effectiveness
Implementation of any KAM process requires the capture and review of a number of performance indicators. These fall into two categories: operational performance indicators (OPIs) and key performance indicators (KPIs). It is important that they are 'indicators' of the direction the business is moving in and not 'measures' of what the business has done. This becomes crucial at the KPI level.

From a performance management perspective, in order to measure effectiveness it is essential that OPIs and KPIs are derived together. KPIs must represent a summary view of OPIs in order to maintain continuity of measurement.

KAMs mainly use OPIs to support their actions when seeking to achieve high performance. They allow the individuals concerned to record the achievement of the various stages in the implementation plan and flag areas that still need to be improved. KPIs pull these OPIs together and are used by the KAM management team to monitor the performance of the business unit as a whole.

KAM is not as revolutionary as some suggest. Yes, it is a departure from the traditional sales model, but it is only evolving away from an approach that is failing. The pharma industry's traditional relationships with its customers are changing and, in response to this, several of the more progressive companies have  adopted and successfully implemented KAM.

If the NHS continues to change as predicted, the companies that are waiting and watching may find that their multiple sales forces are no longer required and that they are no longer able to put a meaningful proposition to their customers.

The Authors
Ralph Boyce, Ken Boyce, Tony O'Connor, Directors of Pharma MI

14th May 2008


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