Build a Key Account Management Approach That Works

Brian Chapman and Pete Masloski 

The medtech marketplace has experienced drastic changes in recent years. Economic forces have accelerated on hospitals, forcing them to become more cost conscious. Hospital purchasing has become more professional and structured, with purchasers working with clinicians to select appropriate products and make trade-offs clinical stakeholders had not previously been expected to make.

In an environment with mounting commercial pressures, many medtech organizations are reassessing their sales strategies, developing and increasing their investments in key account management. This is not a program but instead a more advanced way of interacting with complex customers. It requires people who possess an understanding of complex decision-making processes and are capable of managing relationships across widely varied stakeholders. Key account managers need to feel comfortable with senior executives, tailor value propositions, and access resources in different parts of an organization to best serve their larger and more sophisticated customers. Success also requires organizational structures that support empowerment.

Despite its potential to significantly impact company success, a key account mentality is challenging to implement—and often fails to live up to its full potential. Companies struggle to find appropriate talent to fill key roles or fail to put in place the appropriate organizational design to enable empowered decisions or create bespoke solutions.

The Talent Challenge

Companies expect a large percentage of future growth from their key accounts—a sign of the increased importance of key account managers in recent years. According to a cross-industry study by ZS and the Strategic Account Management Association, revenue growth from key account management accounts is expected to outpace overall company growth. Companies have also increased key account managers’ pay, according to the study —a reflection of the low talent supply relative to demand.

Clearly, demand for talent is growing, but supply has been hampered by precisely that which has driven success in the industry in the past. Successful sales strategies—and consequently the available talent created by the industry—have been primarily based on individuals who work alone, emphasizing clinical aspects of the products they represent and providing excellent product training and clinical service. The best sales people are highly clinical, and talent development programs focus on creating clinical competence. Very little emphasis was placed on the pillars fundamental to key account management, such as business acumen, senior stakeholder management, tailored solutions, and team approaches.

Developing the appropriate skills takes time, practice, experience, and apprenticeship. The rate at which a company can build a qualified talent bench limits the number of accounts that may be served in the new manner and slows the ambitions of a transformation. To recruit qualified key account managers, companies must first find the right balance of experience and account management competency. Many members of the current company sales talent pool who might otherwise have the experience have grown up in the old world of traditional clinical-selling and lack a value-based sales mentality.

Younger applicants who may bring new perspectives lack the necessary experience or existing relationships internally or externally to get things done. Key account managers require deep insight into their customers’ businesses to offer more consultative engagement approaches.

How to Find Talent with Confidence

To effectively recruit top key account managers, companies must design an unassailable evaluation process. The candidate pool should ideally include medical device industry outsiders as well as insiders from providers or payers who can understand the hospital value equation. Ideal key account management candidates may also be recruited from companies that have a strong heritage of account management, as seen in industries such as consumer packaged goods or high tech.

In addition, these candidates may also be individuals who sell big capital equipment—either inside or outside healthcare—because they have a history of understanding customers and tailoring solutions appropriately.

Internal candidates are often not suitable but are found organizationally acceptable because they at least speak “our” language. To achieve the scale to which we aspire, the challenge is to bring in outsiders and ensure they succeed. Our advice comes in four areas:

Take, for example, an orthopedic medical device company with a very purposeful approach in creating its key account management approach. It attempted to first prove value by starting small with a select group of six people. The company carefully selected accounts that valued unique services, could drive compliance in response to efforts, and rewarded key account managers when they delivered these unique solutions to customers.

Eventually, the team of six was comprised of two existing hires, two hires from another healthcare company, and two hires from outside the industry. Because of their rigorous evaluation process, the company approached all four new hires with trust and confidence and supported them as they adjusted to the organization. The cohort built a collegial and collaborative team that met twice a year to share ideas and frequently sought opportunities to work at one another’s accounts. As success grew, so did the scale and scope of the key account management movement.

Empowered to Find Value

A great key account approach should have at its core a diverse set of programs designed to meet the specific needs of key accounts. Consider the challenge of assembling and delivering some of the following:

Obviously, many of these approaches are very different from what is typical for a clinically oriented sales representative. Creating an organization capable of delivering such programs requires three key ingredients:

One strategy for key account managers is to align their reporting with how their customers make decisions. For example, if they are meant to work with customers who work across the available portfolio, key account managers should report to country leadership instead of a colleague inside their division. This also includes operational mechanisms for approval processes and their customers’ authorities for decision-making. Medtech organizations empower these key account managers to close important deals.

For example, seasoned key account managers at a diagnostic imaging and patient monitoring company enter serious clinical stakeholder negotiations with clear expectations of the kind of deal they are prepared to offer. These key account managers create or are given price floors for each component to capture as much value as possible and complete the deal right away, rather than needing to discuss and then go back and decide whether they can agree.

In addition, dedicated resources, such as technical, repair or maintenance, and customer service, are explicitly aligned to the major accounts. One in vitro diagnostics company looked at what would be needed to succeed in this new environment. The company created new roles responsible for delivering new capabilities (e.g., supply chain integration, clinical use programs, workflow optimization). They hired and aligned these specific resources to their key account management teams to serve the accounts preferentially and pioneered the capabilities the rest of the organization would eventually need. Each of these steps gave key account managers the confidence to use the organization’s resources to solve any issue their account may encounter.

Pay for Performance—And Keep Top Talent

Building relationships—especially for large accounts—is neither easy nor fast. Thus, a successful key account manager must consider their position as a long-term career role, not just as another stepping stone for promotion. Companies can help communicate that message and retain their top talent for the long term through a structured incentive compensation plan. We propose three philosophies for the design of their compensation:

Embedding Key Account Management as a Philosophy, Not a Program

Medtech companies recognize that robust key account management is a capability required for sales success. It is imperative that they also view it as a long-term strategy to win, not as a transitory program.

Though it may be challenging to hire, empower, and retain the right talent, a strong key account management team remains extremely important to the medtech industry. Qualified, sought-after key account managers deliver value not only to the company, but also to customers over the long term. In the end, companies and their customers truly appreciate key account managers for their understanding of complex decision-making processes, ability to manage relationships, and contributions to the medtech industry.

Brian Chapman is a ZS principal based in Evanston, IL.

Pete Masloski is a ZS principal based in Evanston, IL, and a member of MD+DI’s editorial advisory board.

[image courtesy of ADAMR/FREEDIGITALPHOTOS.NET]