5 Ways to Unlock Dollars Hidden in Your Sales Contracts
Automation had boosted the productivity of workers by an astonishing rate: According to the Bureau of Labor Statistics, the American worker is more than 240 percent more productive today than in 1979.
The metric used to measure productivity—dollars versus hours worked—points out one of the key drivers of that spike: software automation. The great leap in productivity started in 1994, as the Internet became widely available, then spiked again in 2003 and has continued as the cloud gained acceptance.
Sales and marketing were the final frontiers for automation—there was pushback against first-generation tools because sales and marketing were thought to be "creative" roles and somehow immune to the improvements automation could bring.
Today, much of that resistance has collapsed, and as a result most of the sales and marketing process has been effectively automated. But one area where automation has not caught on in a widespread way is in the management of contracts. Whereas customer records, the sales process, and the fulfillment of products are powered by software, contracts are often handled manually.
This introduces a host of pitfalls that can derail otherwise perfect deals. Paper contracts may be lost or get buried on desks, delaying deal closures. If there's a need to work out specific language in a contract, those exchanges can take time if email is used—and the issue of version control becomes important so that both parties are working from the most current contract.
Electronic signatures have helped reduce the time it takes to close on a contract. But there are other contract complications to deal with, and these can be handled through a contract lifecycle management (CLM) system.
CLM provides the foundation for managing and tracking contracts from inception to renewal (or termination). It manages the negotiation process and provides insight into contract obligations, exposures, expirations, changes, and renewals, giving you more control and visibility into your existing contracts and reducing the costs of managing them.
Legal may seem like the main beneficiary of this—and indeed, CLM frees legal from much of the time it spends updating sales with the status of approvals. But CLM helps sales directly—and when it does, it leads directly to increased revenue and sales productivity.
Here are five ways that CLM directly leads to better sales results:
It keeps all negotiations in the cloud. It's estimated that 10 days per sales cycle are lost due to email and version control issues. Even worse is the use of paper hard copies. Losing a document—either a hard copy or an electronic copy—can bring the negotiation and approval processes to a grinding halt, delaying the close of deals and defeating efforts to accelerate sales. Using CLM ensures that all aspects of the contract process are controlled, contained, and available to all who need them. Using a collaborative environment to track changes and make edits dramatically shortens the sales cycle, and this can make the difference between winning and losing a sale. After all, time kills all deals!
It empowers sales to create contracts. Does waiting for legal to draw up a contract enhance the customer experience? Even if customers are conditioned to expect a wait, it's still not pleasant—and the longer it takes for contracts to be written and approved, the longer it takes for the buyer to get what he or she needs. Preloaded contract templates and contract clauses that are preapproved can be used by sales to develop contracts that are within the guidelines of the legal department but can be created without cutting into legal's time. Faster contract creation makes customers happier, and that contributes to closed deals and repeat deals over time.
It allows customers to have contracts their way. Do you have a customer who insists on using his own contract template? No problem. CLM allows sales to collaborate with the customer, then submit changes to managers and legal for approval, along with preapproved clauses within the contract. Allowing customers to have it their way with regards to the small details is a cost-free way to build customer satisfaction, demonstrate flexibility, and help turn a prospect into a likely repeat customer.
It automates and accelerates approvals. When contracts need to be heavily modified, they are likely to exceed the "guardrails" built into your contract management process. These modifications need approvals from the right people. Workflows within CLM make sure the right approver gets the request and provides visibility into where the approval process stands, thus speeding up the sales process and improving the customer experience.
It reminds the sales department about contract terms and compliance. If the sales department receives automated updates on contract terms, it can recognize when existing customers are approaching contractual limits, setting up possible upselling opportunities. If a customer has a routine pattern of exceeding limits, sales can offer an upsell to increase contractual limits. And, of course, CLM helps sales know when contracts are ready to renew, allowing reps to maximize revenue and reduce churn.
By speeding up the sales process, CLM helps you close deals faster. But it also sets you up for future deals by making your company more appealing to work with, more responsive, and more in-control of your own internal processes.
Giles House is the chief marketing officer at CallidusCloud. House is an experienced marketing executive with a proven track record of successfully marketing and selling business software and technology for more than a decade. At CallidusCloud, he is responsible for the company's global marketing activities, communications, and brand and sales enablement programs. As a recognized thought leader, House regularly speaks on sales and marketing automation and alignment.