Often these programs, commonly called SAM or KAM (key account management) programs, are focused on bringing a more complex product and service offering to IDNs, GPOs and other centralized buyers such as government organizations. The goal typically is to find ways to create more value for both the seller and the buyer so that medtech companies can improve their margins while offering better solutions for providers. Unfortunately, if they aren’t designed and implemented based on the right strategies, they can simply lead to price erosion.
Some of the most common causes of strategic account management programs’ failure include:
- Focusing too much on winning contracts at all costs, and not enough on developing customized solutions that better meet key customer needs
- Segmenting customers based on market or company sales volume while ignoring their underlying needs and willingness to partner
- Meeting with the wrong people (with commercial customers and not with strategic decision makers)
- Treating strategic account management as simply a “role” rather than as a robust business strategy in which companies are looking for creative ways (often including many medtech stakeholders) to meet customers’ needs with a mutually beneficial offering
Based on my experience and learnings from a recent ZS research study on KAM and SAM programs in medtech, I’d like to share some insights on the key elements to focus on to bring more strategic thinking into your SAM programs.
As mentioned above, SAM programs’ success depends on a much broader strategic process than simply having a SAM role in place, but that isn’t to say that the role isn’t important. The SAM role actually is a critical element of success, and often has significant room for improvement in terms of profile, role and responsibility definitions, sales process design, training and coaching.
In many companies, the SAM role is just another step on the ladder to the national sales manager position, and not a lot of thought is put into the profile nor into role-specific, ongoing training. In fact, in our research study, for which we surveyed 19 U.S.-based medtech companies, only 26% of those companies believed that they had appropriate competency models, training programs and coaching programs to support their KAM or SAM programs. Just like a superstar sales rep isn’t always a great fit for sales management, superstar sales managers aren’t usually the right fit for the SAM role.
Admittedly, it’s a difficult role to fill. The appropriate competencies and capabilities for the role are broad and typically include business savvy, consultative skills, problem solving, meeting facilitation and more. Companies with more successful KAM or SAM programs often have to pursue experienced candidates from other industries where SAM selling is more mature, or pursue internal candidates with long tenures and multi-functional experience who are on track for senior management positions. After hiring, companies also need to invest significantly in apprenticeship-like models to provide adequate training and coaching for the strategic role to have a chance to succeed.
Once we have the strategic role hired and trained, we need to make sure that this scarce resource is strategically deployed where it can have the greatest impact.
SAM program offerings often involve strategic consultative solutions, which require the identification of segments that commonly includes a customer’s willingness to partner and ability to implement the medtech company’s solutions. Customers high on both metrics often are less cost-sensitive, as they appreciate the ROI that you can bring to the table through elements such as better clinical outcomes and organizational cost savings. I must admit that customer segmentation for SAM programs may require even more complexity than this example, and needs to be customized to each medtech company and the market in which they play. Also, keep in mind that these attributes aren’t typically included in your customer profile data, as they require an understanding of attitudes and not visible behaviors (like sales volume). Instead, your company might have to conduct additional data collection through market research or field surveys in order to develop appropriate segments for your SAM strategies.
Once defined and supported by data, the most critical part is to understand the relevant needs of each market segment, as well as which ones are appropriate for a SAM strategy and what strategic offering is more likely to succeed with those segments.
Although not a medtech company, Capital One provides a simplified example of a successful segmentation and SAM strategy. As with most credit card companies, income and credit risk are key factors for segmentation and targeting. Many Capital One competitors use this segmentation to determine whom to approve or decline for a credit card that they offer. Capital One, though, takes it a step further by segmenting the total market but offering very different products and services depending upon each consumer’s segment. Low-risk, high-income customers will get a SAM-like “white-glove” service strategy that includes better phone service, lower interest rates, etc., while the high-risk and low-income customers are funneled through an online process, offered only a secured credit card and receive very limited service support. This segmentation strategy has increased Capital One’s market share and also improved economics by better matching costs to revenue.
Even though medtech companies may not find it possible to cover all segments profitably, a sales strategy that matches the SAM program with strategic, high-value customers, while covering other segments solely with sales reps, clinical reps or inside sales, can gain both in market share and profitability.
SAM programs are most relevant and impactful for the segment(s) in which customers are interested in partnership opportunities and strong at implementing strategies across their provider network. To meet this often demanding segment’s needs, medtech companies have to be able to develop value propositions that resonate and are supported by credible clinical and economic data.
To develop the right strategic solution offerings, companies’ sales process should be consultative and collaborative. Companies that do this well often have a stage in the sales process when they facilitate a workshop with the customer’s key stakeholders to uncover critical issues and brainstorm solutions. They also try to leverage the customer’s own data to prove the medtech offering’s value in the customer’s environment. This leads to much more impactful solutions, with more stakeholders buying into the offering, and more credible proof of the positive clinical or economic benefits that it will enable.
In other cases where it’s not possible to prove the value in advance, companies have another option: It might take some serious brainstorming, potentially with a customer or two, but medtech companies can design a mutually beneficial risk-sharing offer. This can require quite an intellectual investment but can yield a high ROI.
Hyundai’s warrantee program is a great example of a successful risk-sharing strategy. Historically, Hyundai had a hard time convincing Americans that its cars are reliable. Instead of spending even more money on advertising, the automaker came out with a warrantee program that covers its cars for 10 years and 100,000 miles—more than doubling the competitors’ offers. Overnight, Hyundai put to rest customers’ concerns about its cars’ reliability. If you’re confident in your product’s value, why not find a way to guarantee at least part of that value to your customer?
Admittedly, it may not be enough to simply bring the right offering to the right customer. Some customers may exaggerate their ability to implement your solution, or they may require training and support to extract the full value from your programs. In these cases, it might be necessary to develop a holistic offering that supports, measures and monitors your program. If so, be sure to offer the whole solution, and to incorporate it into your value proposition and pricing.
If you find yourself thinking that this all sounds so hard, you’re on the right track—and you’re not alone. Our recent KAM/SAM study found that most medtech KAM and SAM programs still focus more on contracting and not on strategic solutions and value propositions. Respondents also expressed a need for stronger value propositions for their sales strategies to succeed.
You have a choice: Stay the course with your modestly performing SAM program, or make the effort to course-correct. If you’re willing to make the investment in SAM strategy, there is tremendous opportunity for improving performance with your strategic customers.