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Key account management (KAM) is an important business model for pharmaceutical companies as decision-making in large provider and payer systems shifts away from individual doctors to “triple-aim”-focused administrators. Trends pointing toward the increased size and sophistication of this customer segment mean that KAM is not only here to stay but will become increasingly important in the years ahead. Here, Mike Moorman, principal at ZS Associates and co-author of Key Account Management Excellence in Pharma & Medtech, discusses critical aspects of KAM in pharma.
Pharm Exec: How much can a company’s KAM strategies affect overall business?
Moorman: The short answer is that the impact on overall business can be significant. KAM leads to partnerships that can improve formulary access, pathways, protocols, contracts, and even sales representative access to healthcare practitioners (HCPs). Taken together, these are critical business drivers, which—when acted upon—clear a path to superior outcomes for providers, payers, patients, and pharmaceutical companies alike. In one recent case, a major pharma company’s KAM strategy drove incremental growth of 4% compared with a similar group of large accounts not in the company’s KAM program. Given that this company’s key accounts include many of its largest customers, this result is substantial.
Our research also demonstrates a strong positive correlation between Net Promoter Score and the number of advanced solutions a pharma company has implemented with a customer organization. In other words, KAM translates into a superior customer experience for a pharma company’s most important customers. KAM impact is especially pronounced with sophisticated provider and payer organizations with high addressable potential, strong control over HCP practices, and a partnership orientation toward pharma. With the number of institutions that fit this profile expanding, KAM’s importance will only continue to grow.
Pharm Exec: How should a company measure the effectiveness of its KAM strategy?
Moorman: We get this question a lot. KAM is focused on partnerships and tailored solutions that involve longer time horizons and more complex customer interactions than the industry’s traditional reach and frequency sales model focused on individual HCPs.
We believe that a “balanced scorecard” approach is the only one that can provide a clear understanding of performance for KAM. This approach should include a thoughtfully considered mix of leading, lagging, voice-of-customer, and “shared” metrics.
Leading metrics should tie closely to the KAM strategy objectives. This might include metrics related to advancements in formulary access, protocols, or pathways (to name a few).
Lagging metrics such as share and revenue tend to be financial in nature. The key is to find ways to isolate the impact of the KAM strategy from the myriad other internal and external factors influencing these metrics.
Voice-of-customer is a critical metric, particularly since superior customer experience is typically a key KAM objective. We recommend that customer feedback be unblinded, gathered from multiple customer decision makers, and managed as a closed loop so that the account team is informed of specific feedback and thus able to take immediate action.
“Shared” metrics are those which the pharma company and its key accounts agree to track jointly. Clinical trials recruitment and patient adherence are possible examples. The goal is to reinforce the partnership by explicitly aligning the interests and accountability on both sides.
Getting the metrics right is a critical aspect of performance management and continuous improvement. It ensures that both senior executives and the rest of the organization understand the focus, impact, and importance of KAM.
Pharm Exec: Did COVID affect KAM strategies for the long term?
Moorman: Only time will tell, but all indications point to yes. When the pandemic hit, sales rep access to HCPs dropped precipitously, the needs and priorities of large providers and payers shifted rapidly, and system administrator control increased significantly. KAM was a bright spot for many pharma organizations at the height of the pandemic. While rep access dropped to near-zero in many cases, key account managers maintained direct access with important provider and payer organizations because of their mission-critical contributions to pandemic response.
While access to HCPs has bounced back somewhat, the lasting effects of the pandemic have magnified the criticality of KAM. The increased power and control of administrators over HCP behavior is the new norm—and will likely continue to grow. Furthermore, providers’ and payers’ increased interest in partnering with pharma, which spiked during the pandemic, is also likely to continue. These shifts present both challenges and opportunities for pharma companies, and we expect them to fuel the importance and impact of KAM in the years ahead.
Pharm Exec: What are the greatest issues that lie ahead for KAM?
Moorman: The future of KAM in pharma is one of developing advanced solutions that address key customers’ most pressing “triple aim” objectives and reinforcing those efforts with increasingly sophisticated customer engagement processes, talent, and internal cross-functional support. New approaches to B2B strategic and account-based marketing will be an important aspect of this evolution as well.
ZS recently published results from research on the State of KAM in Pharma. When we asked KAM executives to identify investment priorities from our 16-point KAM360TM framework of key drivers of KAM effectiveness, the results were telling. Overall, they singled out value proposition and solutions development as their top investment priority. This was followed by improved customer engagement processes, operating models, role clarity, and talent.
It’s also interesting to note that all 16 drivers of KAM effectiveness were identified by at least one organization as its top investment priority, reinforcing the idea that there are no silver bullets and that each organization is in a different stage of its KAM journey.
Pharm Exec: You recently published a new book. What prompted you to write it, and what do you hope people take away from it?
Moorman: Our mission is to help pharmaceutical companies, providers, payers, and patients flourish in an ever-evolving healthcare ecosystem. The recent rise of organized customers—large, complex, and highly influential provider organizations, group practices, and payers—represents a major evolution in the customer landscape for pharma. KAM is one of the most important strategies that pharma companies can employ to succeed with these customers, and our research indicates that most pharma companies are still relatively early in the journey.
Additionally, based on our KAM work across more than a dozen industries, we know that the pharma industry is unique. While pharma companies can certainly learn from leading practices in B2B industries that have been at KAM for longer, those practices must be adapted or reinvented to meet the dynamics of pharma and healthcare. The motivation behind our book was to help pharma meet the challenge and opportunity presented by the rise of organized customers through KAM approaches tailored specifically to the pharma industry itself.
The big takeaway we hope readers get from the book is that KAM must be approached as an organization-wide business strategy, not as a field role or a siloed sales or market access initiative. In this regard, the book’s target audience includes KAM leaders but also sales, marketing, medical, human resources, training, legal, compliance, operations, and technology executives, directors, and managers who play a critical role in supporting KAM. In fact, the development of this book was made possible through the collaboration of 17 co-authors who collectively brought the deep cross-functional expertise required to address leading practice in all aspects of KAM in pharma. This “village” of collaborating cross-functional experts is a perfect illustration of KAM’s status as an organization-wide business strategy. To learn more about KAM and download a chapter from the book, visit www.zs.com/kambook.