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Change Management in Transition from Traditional Sales Force to Key Account Management: Greece Pharmaceutical Companies - Part 5

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2.8 Strategic Account Management Program (SAMP)

The strategic account management program (SAMP) was carefully developed by compiling and evaluating the current knowledge from a literature review coupled with interviews with participants from nine globally active corporations. SAMP is a “relational capability, involving task-dedicated actors, who allocate resources of the firm and its strategically most important customers, through management practices that aim at inter-and intra-organizational alignment, in order to improve account performance (and ultimately shareholder value creation)”  Storbacka, 2012, p. 259).

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The methodology for developing the model was broken into three separate steps. Firstly, the potential design elements were chosen to create a preliminary framework for the model in the “design elements phase” (Storbacka, 2012, p. 260).  Secondly, management practices were evaluated to find the best fit to the design elements, and thirdly, the “interpretation phase” entailed developing the model’s final framework (Storbacka, 2012, p. 260).  The goal of the project was to develop a model that honours both capture and creation values (Storbacka, 2012, p. 261).  Therefore, the roles and goals of SAMP were generated under the two categories of intra-organizational alignment and inter-organizational alignment. (See fig. 2-3)

SAMP was related to Key accounting because the whole strategy revolves around accounts and how they are handled.  The terminology needs to be defined so everyone involved can easily communicate.  The “account-specific value proposition” fits with the previous research that has addressed the value creation of key accounts (Storbacka, 2012, p. 262).  In SAMP the characteristic of account-specific value proposition was part of the inter-organization alignment related to the processes of (a) account performance management by account management processes (also part of the inter-organizational alignment) and (b) the organizational integration which moves the process into the category of intra-organizational alignment (Storbacka, 2012, p. 263).

Figure 2- 5 SAMP (Storbacka, 2012, p. 263)

2.9 Loyalty

Loyalty was the degree of satisfaction that a client manifests towards a product or business process. A loyalty ladder (see fig. 2-4) was a visual help to understand the concepts of loyalty. Loyalty has been greatly important in KAM because one of the goals was to maintain a long-term relationship with the customer. The loyalty ladder represented a marketing tool to lead the customer from the bottom of the ladder (a prospective customer who has not purchased anything) to the top of the ladder where the customer blossomed from prospect to customer to client to advocate. (See fig. 2-4) Good communication and knowledge about the customer and their needs were all critical to successfully developing a customer’s loyalty.

Figure 2- 6 Loyalty Ladder (Source: www.marketingteacher.com)

2.10 Key Account Management (KAM)

KAM was an organizational process applied to business-to-business sales’ operations where the pharmaceuticals sales teams were transformed and took an advisory role for hospitals in a bid to enhance drugs sales. (Kotler & Armstrong, 2004)  This entailed the sales team coordinating with hospital management and entire workforce to develop lists of generic drugs’ prescriptions that will be cost effective for the economically challenged industry. In that respect, sales teams must manage their clients’ accounts with an increased contact and close relationship between the two institutions’ management (Kotler & Armstrong, 2004).

KAM was named ‘key’ because this type of management focuses on the most important customers and their accounts.  The perspective is largely customer oriented, so in turn selling strategies are integral to KAM techniques.  KAM must take into account targeted groups of both “internal and external customers” (Wnek, 1996, p. 41).  The important feature of the customers was not that their accounts are necessarily the largest, but instead the degree of loyalty and importance to the company. (Piercy & Lane, 2006)

KAM has been demonstrated to work well as a management strategy, in fact, an organization, the Strategic Account Management Association (SAMA) offers KAM resources on global and national levels of customer relationships. (Storbacka, 2012)  The organization has 3000 members. (Guesalaga & Johnston, 2008)

Quanxi was a relationship model that has been studied as an extension into key to key management by Y.H. Wong (1998).  Wong (1998) explained the three critical marketing problems, specifically in global marketing processes.  The three problems were viewed as challenging to market success; these can be explained in terms of the pharmaceutical sector. Firstly, the huge diversity medicines, drug applications and pharmaceutical products can generate customer segmentation and the capability of ensuring long-term key customer relationships. (Wong, 1998)  Secondly, the challenges of gaining and maintaining contracts with international companies that have longevity. (Wong, 1998)  Thirdly, the problem of discerning the value (or “quality”) of a company’s key accounts has never been straight-forward (Wong, 1998, p. 215). And in conjunction, how to develop workable measurement units for comparing and contrasting key accounts with vastly different attributes and traits by being adaptable. (Storbacka, 2012)

2.10.1 KAM Myths and Realities

Bhatt (et al., 2011) took a different perspective on using KAM in the pharmaceutical sector than many other consultants.  Bhatt (et al. 2011) explained that a lot of what is ‘known’ about KAM is really myth and a realistic view needs to be held for success.

KAM was not the answer for all accounts. Careful assessments should be done to identify the most suitable accounts. Bhatt (et al. 2011) warned that even accounts that seem to have high potential may not respond well to KAM.  A client engagement research study targeting hospitals in a large European country identified less than twenty making a good match for classic KAM (Bhatt et al. 2011).  Evaluations of other hospitals showed that the pharmaceutical representative assigned needed more training for hospital sales.  The sales model needed adjustment because hospital environments are becoming more complex over time (Bhatt et al. 2011)

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Key account managers for pharmaceutical companies needed special skills and talents. A person who demonstrated excellence as a sales representative does not necessarily make a good key account manager.  The manager must be an entrepreneur with the capacity to deal with internal and external relationships to improve a company’s business (Bhatt et al. 2011).

Another popular myth that Bhatt (et al., 2011) disputed is that the key account manager is the only contact for the key account. Using only the key account manger as a contact for the customers is the traditional way sales were done.  The bowtie communication concept was discussed above and shows a funnelling effect.  The information from all the departments of a pharmaceutical company was funnelled to the salesperson who then shared the information with the buyer.  The buyer can then share (or not) the information with the departments in their hospital or through their network.  Therefore Shipley and Palmer suggested that the diamond represents a better way to carry out seller to buyer communication. (See figure 4-2)  The diamond key account management shows the ideal way to share information across the buyer’s and seller’s companies departments.

Figure 2- 7 Diamond (key account communication (Source: Adapted from Shipley & Palmer, 1997)

2.10.2 Key Account Manager Characteristics

Five characteristics of a good candidate for a key account manager are depicted in figure 2-1.  The number one feature central to making everything else work well was a “Business to Business (B2B) mindset” (Bhatt et al., 2011, p. 6).  Timing was important so the manager needs to understand the business climate to be able to focus on the right stakeholders when the time is right (Bhatt et al., 2011, p. 6).  A key account manager must design techniques based on the traits of the customer and the environment, not on their personal style.  Number two was the ability to communicate well about pharmaceutical products to hospital administrators as well as doctors.  Hospitals have complicated layers of decision-making so the stakeholders need to be identified and a link needs to be created.

KAM is number three; information sharing and making sure the information reached the employees that have “customer facing functions” is paramount to success (Bhatt et al., 2011, p. 6).  Not only that, the internal environment of the pharmaceutical needed to be well understood so resource needs within the company can be used efficiently.  According to Bhatt (et al., 2011, p.6) number 4 is the ability “business acumen.”  Understanding the handling of finances in the health care sector and the relevant marketing forces are necessary for business acumen.  Selling pharmaceuticals required knowledge of the appropriate terminology, the topical health problems and display clinical understanding, number five. (Bhatt et al., 2011, p.6)

‘Clinical understanding’ holds the position of top left hand side in figure 2-1 and that is appropriate.  Without a clinical understanding of the medicines, medical products and the why patients needed them, a key account manager fails.  Pharmaceuticals are targeted towards specific illnesses and symptoms.  The patient age, medical history, allergies and other information referring to medicines is essential knowledge for sales.  Many products are similar but are designed with differences that cannot be ignored in discussions with buying decision-makers.

Figure 2- 8 Optimum characteristics for a pharmaceutical key account manager (Bhatt et al., 2011, p. 6)

2.11 Collaboration

Guessalaga and Johnston (2008) addressed the gaps in key account research that need to be filled.  The authors urged business and academic collaboration on critical issues that have yet to be defined and understood. Collaboration was a cooperative arrangement in which one or more entities or companies work together to achieve a common goal. The four topics that needed more comprehensive research in KAM are payment to key account managers, how much senior management should or should not be involved, the internal method of aligning key account management to the overall business processes and promoting “solutions selling” to the key account.

2.12 Key Performance Indicator (KPI) Strategy

KPI and KAM are similar in the way both techniques result in the business activities to be linked to the company strategy.  Companies adopted KPI to improve company performance. Aberdeen Group (2007) compared Best-in-Class to average companies to point out the advantages of adopting KPI.  The first step was recognizing change as needed to gain an edge in the business sector and then dedicating resources to making the change.  KPI solutions were not prioritized on the goal of company performance but on four or so other characteristics that give improved results.  Four of the “pressures driving KPI solutions” are listed below (Aberdeen, 2007, p. 7).

  • Business activity working in parallel with the company’s mission and strategy
  • Improve the accuracy of decision-making
  • Increase the relevance of decision-making to time and place
  • Authorization and support from stakeholders with a responsibility to report performance to stakeholders

Best-in-Class used the P-A-C-E framework: Pressures, Actions, Capabilities, and Enablers.  P is for the Pressure to improve company performance.  Actions required aligning activities with overall strategy, regular reviews, and reporting to stakeholders.  Capabilities take into account (a) designing corporate culture to integrate KPI, (b) company processes and team projects as integral parts of the KPI culture, (c) transparency, (d) review decision-making results and (e) an established review process. E for enablers included all the company facilities such as Business Intelligence analytics up-to-date reports and training.

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2.13 Summary

The pharmaceutical industry was reported to be one of the most crisis prone industries at least partly due to the fact that a real or perceived crisis by the public are equally damaging.  The global financial crisis impacted Greece in 2009.  The health sector was particularly impacted because the budget was cut. Therefore the Greek pharmaceutical industry was in transition beginning in 2009.  Efficiency was seen as the best way to manage the crisis.  Greek researchers suggested generic medicines and KAM as two viable strategies.  The literature review addressed the variety of change management strategies available and the use of KAM by the Greek pharmaceutical sector.  The largest challenge for instituting crisis management in Greek companies was the culture of taboo around discussions of crisis in Greece.  The traditional sales force does not meet the modern challenges adequately.  Successful change happened with transparency and good communication of goals and objectives.  When all stakeholders were involved, the goals of the CM were reached more efficiently.  KAM strategies incorporated important aspects of traditional management but used them to focus on customers who were valuable to the company in terms of the quality of the account and longevity of the relationship.  Diamond shaped KAM was stated to be the best because information was shared directly between the departments of the buyer’s and seller’s companies.  The optimal characteristics for a pharmaceutical key account manger were found to be someone with a B2B mindset that corresponded to good sales skills, understanding of KAM, business skills and knowledge of current health issues.  Review processes by managers and leadership were found to be important for successful KAM

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