When your sales team lands a new contract, chances are they want to get the contract drafted and executed as quickly as possible. Not only does a fast sale mean that customers are receiving better service, but getting that business on the books means revenue for the company — and commissions from the sale.
However, the concept of a fast sale has also been long associated with increased risk to the business. When contracts are drawn up quickly, the possibility of errors increases, not to mention, they may not go through the same review processes as other contracts, leading to unfavorable or risky terms. It’s possible that contract terms could be based on outdated or incorrect policies or information, leading to increased risk.
Or does it? With a contract management platform, fast sales have significantly reduced risk; in fact, just using a CLM platform can spur faster sales while also reducing risk. In fact, according to Selling Power magazine, not only does poor contract management result in revenue leakage between 5 percent to 9 percent, “the absence of a contract management system opens an organization to contract-related problems at every step of the contracting process. From longer negotiations at the front end to missed renewal opportunities post sale, lack of an automated system lengthens the sales cycle, erodes customer relationships, and leads to that significant revenue leakage.”
A CLM platform can improve your sales contracting process in several ways, making it obvious why most Fortune 500 companies use some type of contract management solution for their sales process.
Consider the typical sales proposal process: The sales team delivers the proposal to the client. The client requests concessions, and sales delivers the revised proposed contract to finance. Finance negotiates additional terms, sends the proposal to the legal department for review. Depending on the business, the proposal could potentially go through four to five departments for approval, meaning that the sales team has to track it down — and make sure that the version they are using is the most recent version.
With a CLM platform, the round-robin approach to contract negotiations and approvals disappears. Instead, the sales team can use a template-based system, adding legal department-approved clauses when necessary. When key terms change or conditions aren’t met, an alert is triggered, prompting a review by the appropriate department. This way, only those contracts that require review are looked at by other departments, reducing bottlenecks and turning the proposal into a sale more quickly.
We’ve all been there: A key service agreement expires — but you don’t realize it until you need the service. If only you had known in advance…
Typically, sales teams are charged with providing customer service in addition to making sales. Customers want to know that they are being cared for, and that they are going to receive the service they need, when they need it. When contracts are “managed” using spreadsheets, or stored in filing cabinets, the information required to provide excellent service is often hidden. Ask yourself: Is your sales team equipped with the tools to know exactly when they need to reach out to customers to discuss renewals? Can they alert customers that their contracts or service plans are about to expire? Do they know how their customers have performed, or whether key milestones and deadlines have been met?
A true CLM platform provides your sales teams with proactive updates about key information in their contacts, so they can be proactive on behalf of their contracts — and prevent costly expirations or missed milestones. Consider that more than half of companies that use CLM software have the majority of their contracts renewed, while companies that do not use a CLM platform have much lower renewal rates. Even when sales are made quickly, CLM ensures that contract details aren’t lost in the shuffle, and that your team has the information they need to ensure follow through.
One of the greatest benefits to CLM is the potential for insight and analysis that it offers your sales team. Armed with information, they can make proposals and negotiate based on precedent — and the actual risk that the contract presents to their employer. With Exari Vision, your sales team can evaluate a proposed contract for risk and generate an overall Risk Score, allowing them to make better decisions. This analysis takes minutes, not days or weeks, speeding up the sales and contracting process, without increasing risk to the company.
There will always be a certain amount of risk inherent in sales contracting. However, there is no need for a speedy and efficient contracting process to create issues for your company. You can protect your bottom line, increase revenues, and provide better service through better contract management, so there’s no reason not to explore your options. To learn more about how Exari can help you speed your sales process, click here to request a demo.