On the basis of our work with medtech companies, we have identified six KAM strategies that, taken together, can transform transactional customer relationships into long-term strategic partnerships rooted in mutual value creation.
Develop customer-specific account plans that are built upon deep customer understanding. Best-in-class account plans reflect a deep understanding of a customer’s business strategy and objectives—and extensive knowledge of the customer’s purchasing process and key decision makers.
The challenge for medtech account teams is determining where the purchasing authority resides in each system’s structure and understanding what factors those decision makers care most about. Good account plans use this understanding, as well as a detailed analysis of the customer’s market position, market share, and growth prospects, to help articulate a clear sales strategy and how that strategy will help the customer achieve its objectives. Periodic reviews, especially after a significant customer event such as a merger, acquisition, or senior-management change, help keep the sales strategy fresh and relevant.
Develop clear economic and clinical value propositions for core products. Medtech suppliers need to demonstrate the value that their products can deliver beyond price and clinical efficacy. Potential proof points are improving outcomes, increasing workflow efficiency, requiring fewer staff, reducing infections, adding new profitable patients, reducing readmissions, and many more. Companies need to invest in developing a comprehensive sales pitch and arming account teams with the strongest possible marketing materials, including “calculators” developed for each large health system that show how the supplier’s products deliver value—and how much value the customer can expect. Medtech companies also need to develop reference accounts that they can use as examples to help other customers see the value of solutions and products.
Adopt a consistent and defensible national pricing and contracting strategy. Smart medtech suppliers put pricing discipline at the forefront of their sales efforts and support it with the right tools. In our experience, the two key enablers are strong pricing governance and a pricing team trained to broaden the conversation beyond a narrow focus on what a customer will pay for a particular device.
Strong governance starts with the establishment of a multidisciplinary pricing committee that includes sales leadership, product managers, and marketing representatives to provide clear pricing oversight. Unambiguous thresholds should trigger reviews of proposed pricing exceptions by the committee. Disciplined companies sidestep pricing predicaments, such as when a small hospital receives better unit pricing than a large health system, by basing pricing on anticipated business volume from a customer and the share of product category spending levels that the customer is prepared to commit to over time. Disciplined companies also ensure consistency in prices offered across large systems (including those that span several states or regions) to avoid selling the same products at different prices to the same customer—a sure road to damaged customer trust.
In addition, successful medtech companies expand pricing negotiations beyond the average selling price and add value to the customer and the relationship. Depending on a key account’s priorities, these may include rebate programs (on specific products or across the portfolio), payment conditions, risk sharing, outcome guarantees, and value-added services.
Following these recommendations will result in a sustainable pricing strategy for key accounts; nonetheless, increasing price transparency leaves most suppliers with some degree of risk associated with legacy pricing. We recommend that all companies conduct a detailed audit of their pricing strategy in order to quantify this risk and develop a concrete set of steps to minimize it over time.
Implement a sales coverage model that defines clear roles for key account managers and sales reps in the field. Many medtech suppliers have KAM teams made up of account managers who are primarily focused on pricing and contract negotiations with a hospital system’s supply chain organization, sales reps who cover physicians and individual facilities, and clinical specialists. Best-in-class KAM requires the account team to work together. To make this model work, the roles and responsibilities of each position must be clearly delineated.
The critical KAM position, of course, is the account manager herself. She is responsible for the overall strategy for the account, for building and maintaining strong customer relationships at the health system’s corporate center, and for directing and supporting selling activities in the field.
The most effective account managers pursue a broad set of relationships with senior clinicians, administrators, and supply chain professionals throughout the health system. A detailed understanding of the customer’s strategy enables the account team to develop an account strategy that brings tailored solutions to best meet customer needs. The account manager then directs the selling activity for the account, relying on robust two-way communications between the manager and local selling teams to ensure consistent sales execution. Regular meetings, feedback mechanisms, and shared account plans help facilitate this process.
The most progressive medtech companies are beginning to vary their sales coverage on the basis of customer characteristics. Examples we have seen include:
Replacing traditional sales reps with a key account manager supported by clinical specialists for highly committed accounts
Varying the “bag configuration” (the selection of products that sales reps carry) according to the vendor’s share in a large account or system
Forming a ten-year committed partnership between the medtech company and a health system
Build a KAM team that possesses a new set of skills. KAM teams today must actively manage the full customer relationship, including strategy development, active coordination across sales teams, product and price negotiation, and maintenance of strong customer relationships at the health system center. In addition, KAM teams are best positioned to develop partnerships with customers on nonproduct services and solutions and risk-sharing arrangements, which for many medtech companies are critical levers for strengthening customer relationships.
Medtech teams today need a very different, and much more comprehensive, set of skills—including expertise in business planning and strategy, negotiating and contracting, and coordinating resources across a large organization. These are skills that few traditional medtech sales teams possess. Most medtech companies will need to add talent outside of traditional clinical selling roles, develop clear competencies that reflect the KAM strategy, and actively monitor KAM performance against those competencies.
Provide the team with management tools that support efficient decision-making and cross-functional sales execution. Medtech suppliers need to augment their KAM teams’ toolkits with the resources that facilitate more complex account management. These tools include dashboards that accurately break down financial performance by health system customer and that highlight activity at the facility level, customer relationship management tools that track key clinical and economic influencers for an account and indicate ownership of each relationship, deal calculators that provide a clear view of the total profitability of any given transaction for the vendor, and up-to-date mapping capabilities that efficiently distribute targeted communications and strategic updates to all internal sales resources deployed to hospitals within a system.