Archive: March, 2015

How Financial Services Maintain Customer Loyalty Through Compliance

All companies – from retailers to hedge funds – know that customers are their number one priority. Client obligations are always the first concern as customer satisfaction is the only reliable road to growth. The 2013 Lloyd’s Risk Index cited “loss of customer” or “abandoned transaction” as the second-most-critical business risk (ahead of cyber risk and behind taxation). First of all, we all know that it is far more expensive (according to some studies up to 10 times more) to acquire new customers than it is to retain existing ones. So businesses spend enormous amounts of time and resources developing initiatives to keep customers coming back.

While companies prioritize customers by striving to drive loyalty, Forrester believes they fail to take into account those associated risks that end up driving customers away. As cited on, a Forrester report says that the “discrepancy” between concern for loss of customer and the priority given to the mitigation of related risks “illustrates the growing gap between strategic business priorities and antiquated risk assessments. Companies with high-value brands may explain in detail their customer satisfaction and brand-loyalty strategies in annual reports, but rarely do they consider the risks that might crush these priorities.”

Where should you start in the battle to reduce the risks associated with customer attrition? The first place is to look at why customers leave. Clients will pull their money out of banks and funds when they do not have complete trust in the institution, and trust depends on maintaining promises and a good reputation.

It should come as no surprise, then, that your contractual obligations to clients are of the utmost importance in earning and preserving trust. A disappointed client is a disloyal client. But more than client attrition, failure to adhere to client obligations can trigger severe penalties such as expensive and distracting legal action, regulatory fines, and crippling brand damage.

Reputation remains a critical element of maintaining client loyalty. Indeed, insurers now offer policies that indemnify against profits lost due to brand damage. Financial services firms and banks risk reputational damage through poor performance, fraud, and, most importantly, compliance failures. In this post-GFC era, as government and industry regulatory bodies impose more and ever-changing regulatory and reporting burdens on firms, the media and regulatory bodies scrutinize compliance more than ever. Failure to comply with regulation send unequivocal messages to clients that the firm may be unreliable or, worse, unable to handle responsibilities.

How can you be in complete control of your regulatory and client obligations? Easy – it’s all in your contracts. Having complete control over and visibility into your contract portfolio means you’ll never miss a commitment. The only way to have a truly uninterrupted view of all of your contractual obligations (and rights) is to utilize a Contract Lifecycle Management (CLM) tool that analyzes contract data, tracks milestones, and sets up triggers so you never miss a commitment.

For more on how CLM helps asset managers and investment managers reduce risk, click here.

To download an illustrative case study on how one asset manager uses Exari CLM for obligation and regulation management, click here.

Why Salesforce Is A Bad Place For Contract Lifecycle Management

Companies make enormous investments in CRM and enterprise systems. So it’s only natural that they would look to stretch their investment by using those systems for as many functions as possible. The more you use it, the higher the ROI.

Let’s take as an example. Salesforce is a wonderful CRM system used by over 100,000 companies and recently named by Fortune as the most admired computer software company – we use it ourselves here at Exari. It can be instrumental for salespeople in managing leads and contacts. It can be essential for administrators and marketing professionals. But Salesforce may not be the best platform to address every need.

One of those things is sophisticated Contract Lifecycle Management (CLM).

Using Salesforce for some contract management capabilities may work for some companies who need only base level contract management to support a straightforward and limited contract portfolio. If, however, you require robust contract lifecycle management functionalities (such as negotiation tools, complex data analysis and reporting, and total integration with existing ERP systems) or if you’re planning to scale your company, you’ll have to look beyond Salesforce, which, according to many companies we’ve spoken with, often proves unable to address a high volume or complex contract needs.

For one, using Salesforce for contract management means that all of your contracts must live in the cloud. Particularly now, with experts saying that maintaining cloud-based data storage means greater exposure to cyber threats, it’s vital that corporations have the ability to choose where to keep their contract portfolio. After all, not all clouds are created equal. Furthermore, while Salesforce may be fine for storing sales contracts, your contract portfolio contains a wide variety of other contracts that contain a wealth of sensitive information, which, more likely than not, you do not want every salesperson be able to access. Using Salesforce as your sales contract database would require you to use another, more secure database for sensitive contracts in order to comply with certain client obligations and best practices regarding delicate material. Dividing your contract database inevitably leads to oversight and complications, not least of which is your inability to holistically track and analyze your contracts.

Another significant issue with using Salesforce as a contract lifecycle management tool is that most attorneys won’t feel as comfortable as salespeople do working within it. Lawyers like working with their preferred programs, whether that be Microsoft Word or some other word processor. Companies using Salesforce for contract management complain of poor adoption by attorneys, who often continue to use their own tools regardless of company policy. Poor adoption leads to lack of consistency, inadequate knowledge sharing and, potentially, rogue contracting, which leaves you exposed to a multitude of unknown risks.

Some CM providers, such as Selectica and Apttus, bring improved CM capabilities to Salesforce. These solutions are built directly into, thus requiring users to pay for users’ Salesforce licenses, which are both expensive and limiting. Being inextricably tied to Salesforce in this way can turn into a major problem down the road when Salesforce’s contract management capabilities prove unable to scale alongside your company. Indeed, Salesforce is far from state-of-the-art when it comes to its contract management capabilities, lacking meaningfully robust workflow, reporting and search functionalities.

Find out how Exari Integrates with SalesforceClick here now

So what should companies who have already invested in Salesforce do?

The best solution for many companies is to keep the salespeople where they want to be (Salesforce) and the lawyers where they want to be (a dedicated, lawyer-centric CLM system). With Exari, salespeople can work in Salesforce while the attorneys can keep using Word (or whatever program they’re comfortable with) to draft and negotiate contracts. Exari allows documents to be stored in the cloud or on-premises and integrates fully with Salesforce without requiring users to subscribe. We offer a more robust permission protection system, so that access to your sensitive documents remains restricted. A solution with advanced contract lifecycle management capabilities is the only option for companies with ever-growing and highly complex contract portfolios, and ours are second to none.

To learn more how Exari Contracts may just be the best solution for your CLM needs, visit our website or contact us today.