It can be a tough life for pharmaceutical companies sometimes. They have to answer to many different “bosses,” not all of whom really have anything to do with driving their bottom-line sales. While they are trying to generate and develop meaningful relationships with the most important clients while determining how best to handle key account management, they also have to address the demands and whines of regulators, auditors and other forces.
The pharmaceutical company must understand that key account management tactics are very important, while also requiring a dynamic approach, flexible positions and creativity. There are several layers of communication within a pharmaceutical company responsible for dealing with the key account and this must be clearly delineated or confusion will result. If not careful, individual points of contact will assess the key account in a different light, depending on their position within the company and their personal motivation.
Most pharma consulting experts advise us that a sales executive on the front line, if he or she is motivated by revenues, could not ultimately have the best interests of the client or the company in focus. It may not be very obvious and certainly not “cut and dried” but if it is not recognised, the overall relationship between the two companies can be significantly affected.
Key accounts provide a level of cash flow-based stability to a pharmaceutical company that is difficult to replicate. However, the designation of “key account” status should not be given lightly. It should never be decided based on scale alone, and many other factors must be taken into consideration. It is possible that a high-volume could result in a low bottom-line return, due to the cost of servicing the needs of the client and razor thin margins.
Typically in most organisations, 20% of the clients represent 80% of the value and this business metric is well-established. As such, once an account is designated as potentially “key,” it should be segmented and categorised to determine the best approach. A number of different layers of key account management could exist within a typical organisation and all tiers of management, especially those who regularly interact with clients, must receive correct training in the techniques required to handle every level and type of account.
There are several ways to look at whether a client qualifies as a key account or not including total volume of sales, percentage allocation of profits, the rate at which the company is growing compared to average and by comparison to others across the board.
The pharmaceutical consulting firm will be the first to tell the company that no two clients are alike and furthermore that no two key accounts can be treated the same, either. Generally, pharmaceutical consultants know how to deal with various levels of accounts and can be very helpful in imparting this level of knowledge to the company’s various staffing points. A critical “mission” statement should be determined for each and every one of the pharmaceutical company’s clients, detailing the terms of the relationship accurately. The company should never possess a standard description of any kind, fully recognising that the key account is so important to the company’s long-term viability, thereby resulting in all staff members being fully trained to recognise the significant difference between an “orange and an apple,” so to speak.
Alan Gillies is the Managing Director of L2L Consulting, specialising in enabling pharmaceutical companies to achieve new heights of productivity and performance, throughout all levels of management and revenue generating activities.