5 Pitfalls to Eliminate from Your Sales Contracting Process
"Signed on the bottom line"—these words are music to the ears of sales managers and reps. Yet much is happening behind the scenes before and even after this phrase is uttered that can determine—and undermine—the ultimate value of any deal.
Unless a company is able to optimize its sales contracting process, it is at risk of encountering the five common pitfalls that litter the last mile of the sales funnel:
Penalties. Penalties can hurt, and it is all too easy to incur them when entering into contractual agreements that breach terms contained in other contracts.
Lost revenue. Inefficient internal processes, poor contract monitoring (especially around renewals), and the inability to adequately manage contract details all contribute to lost revenue.
Diminished brand value. Inefficient contract life-cycle management processes erode compliance and diminish customer satisfaction.
Lost savings. When the costs of executing contracts are greater than they should be, savings that a company may be realizing from optimizing other sales-related processes, such as CRM and quote-to-cash, can be negated.
Lost opportunities. This is the biggie. All four of the pitfalls listed above have the cumulative effect of causing missed opportunities as a company copes with lengthy and costly contracting times, poor brand image, and lack of resources and capacity to pursue lucrative new sales and contract renewals.
While these pitfalls pose serious risks for businesses, the good news is that they are easily avoided. To maintain a strong position in today's marketplace, companies are increasingly adopting new technologies to gain a competitive advantage—what Gartner calls a "digital business advantage. For sales, it started with automating and gaining visibility into CRM processes and taking them to the cloud, a la Salesforce CRM. This paradigm has since been extended to automating additional processes that help ensure optimal sales and business performance, such as quote automation, proposal generation, and guided selling.
Today, regardless of their size, companies have the opportunity to bring the same level of digital business advantage to the sales contracting process through the use of next-generation contract life-cycle management (CLM) technologies.
Bringing automation and visibility to the end-to-end sales process
Think for a moment about what it takes to protect the value of a sales deal—as well as that of your company's brand—from being eroded by insufficient contract management. First and foremost is streamlining the contract process to increase revenue velocity, reduce overhead costs, and add agility to address new opportunities. This requires an automated rules-based solution that defines and manages milestones, assigns responsibilities, ensures everyone involved is up to date, supports and eases compliance, and propels new deals and renewals perpetually forward.
It also takes visibility into every aspect of the contract process to identify and eliminate process bottlenecks and ensure proper contract monitoring (especially so that renewals are locked in at the appropriate time) and that all contract changes are tracked and saved. This requires the ability to manage myriad contract details in real time to avoid contracts that result in lost revenue or breaches of existing contracts, as well as the ability for everyone to see exactly where any deal stands in the closing process and what steps are still required.
Integrating and sharing across the smarter sales continuum
State-of-the-art contract management also takes integration with other elements of the end-to-end sales and revenue management process. This requires a solution that integrates and shares data seamlessly with not just Salesforce but also all other sales-related solutions and application modules. Ideally, the CLM solution is part of an integrated platform that also delivers other modules (e.g., pricing management, guided selling, quote generation, proposal automation, and workflow management).
Finally, it takes a solution that helps drive sales and business performance by providing comprehensive and accurate right-time data for analysis and to help fuel operations—data that will simplify and improve the effectiveness of sales proposals, power quarterly and year-end forecasting, etc.
Transform your revenue management
Perhaps all this sounds like a tall order, and not so long ago, it was. But that is not the case today.
New-generation CLM solutions bestow a digital business advantage, and clear the last mile of the sales funnel of pitfalls and risk, delivering value right now. They are working seamlessly with the continuum of smarter selling solutions to change the face of revenue management at a growing number of companies.
The question is, how will you leverage a digital advantage to transform the last mile at your company from obstacle course to victory lap?
Dave Batt is the CEO of FPX, which created the first configure-price-quote software in 1983, and is provider of a suite of sales process applications.
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