One of the most dreaded challenges that most sales teams face is closing sales deals by getting the contracts signed on time. Navigating through the complex sales contract management process is tedious for sales professionals considering the time spent on its creation, issue, and signing.
Whether it is a SaaS agreement, a service contract, or any other type of sales agreement, sales contracts can consume a significant amount of time. This often causes delays in closing the deals. In fact, 25% of businesses around the world have lost revenue due to poor contract management practices.
Having a sales contract management process thus becomes the need of the hour. A sales contract management process simplifies the daunting task of managing contracts by helping you address common issues, such as lack of contract visibility, security, compliance, prolonged cycles, and more. It’s a technology-enabled process that allows sales teams to create, store, manage, and track the progress of formal business contracts.
Further, the sales contract management process helps in tracking contracts across various stages of contract lifecycle management and maximizing sales team productivity and overall efficiency.
In this post, we’ll learn how to set up an efficient sales contract management process for your organization.
5 Steps for Managing Sales Contracts
1. Audit Your Existing Sales Contract Management Process
The first step to creating an effective sales contract management process is to start auditing your existing processes to identify the bottlenecks, pain points, and challenges. This will ensure that the new approach you build will be foolproof, efficient, and promise excellent results.
Before we understand how to audit your current processes, ask yourself the following questions.
- Has your sales team ever found difficulty in sharing contracts with your clients?
- Has your sales team ever missed connecting with the clients for plan renewals?
- Did your sales team ever send a different version of a contract?
- Does your sales team encounter hurdles when searching for contracts or any other documents?
These are the sure signs that you need to audit your contract management processes. Follow the below-mentioned steps to get started.
- Identify the key stakeholders who are involved in your existing sales contract management process and learn more about their roles.
- Review the processes of contract creation, its review and approval, negotiation, and how it is sent and its status tracked. This will help you identify the areas that might be inefficient.
- Ask for feedback from your sales team members regarding the existing processes and capture suggestions for making potential improvements.
2. Invest in a Contract Management Tool
Leverage a contract management tool to manage your entire sales contract process online. Eliminate the hassles of spending hours drafting a contract, getting it approved by the key stakeholders, and sending it for signing to the customers.
Contract management software beats manual processes in so many ways. Let us quickly explore how it can improve your work processes.
- Create contracts and share them with your clients in just a few clicks. Track the progress of contract signing across all stages of its lifecycle.
- Store all necessary contract-related data online and ensure it can be easily accessed by team members and key stakeholders at all times.
- Reduce the contract approval time by automating the review process and improving its efficiency.
- Send real-time notifications to the stakeholders about contract reviews, expiration dates, contract negotiations, and more.
- Reduce the friction between the different teams by introducing seamless workflows and closing deals faster.
Improve your company’s operational efficiency using a system that helps you complete more work in less time.
3. Develop Pre-approved Templates
Create ready-to-use sales contract templates in advance that sales representatives can use to draft contracts and compliance agreements in no time. It will save them from the hassles of the complex contract creation processes and generate error-free contracts for the clients. Using contract templates will help in faster contract creation leading to better client experiences and more satisfied clients.
Setting up pre-approved templates will help sales representatives to send precise contracts to the clients with minimal involvement on the legal team. It will reduce unnecessary delays and follow-ups for both teams and boost process productivity.
Here are a few tips you can follow to ensure effective contract templatization.
- Identify the types of contracts that are often sent to most of your clients. These contracts would be the ideal ones to be standardized into templates.
- Start from scratch by looking up publicly available templates and collaborating with the relevant stakeholders. This will ensure you follow a sensible structure and include all the crucial details.
- Utilize simple and understandable language when drafting these templates. Replace complex wordings with easy words to ensure your clients understand the terms without any misunderstandings.
- Do a pilot test on these templates by letting the sales representatives use them. Gather their feedback and continue to refine your templates whenever required.
4. Configure Streamlined Approval Workflows
Every contract is usually reviewed and approved by the key stakeholders before they are sent to the clients for signatures. However, owing to the busy schedules of the various teams involved in this process, there is significant friction that can cause potential delays in sharing the contracts. Hence, introducing approval workflows and automating the said process is the need of the hour.
An approval workflow ensures that the entire process of reviewing and approving contracts is streamlined and accelerated. It eliminates the bottlenecks, reduces time wasted on manual follow-ups, and increases team collaboration.
Before setting up an approval workflow for your contracts, identify the pain points of your existing contract approval process. Next, recognize the key stakeholders and assign them various responsibilities in the approval process. Leverage your contract lifecycle management system (CLM) to create this workflow online and automate the same using conditional logic, allocating role-based permissions, and setting up real-time notifications.
5. Integrate Your CLM with CRM
Instead of letting your sales team use a contract management system for managing contracts and a customer relationship management system for managing the client separately, connect these platforms with the help of system integration and boost your sales team’s productivity.
The CLM-CRM integration will help your sales team in the following ways.
- Accurate contract creation – Integrating CRM with CLM ensures that your sales team has accurate data about the client as well as the right contract. They can create error-free contracts in no time and spend the saved time on closing the deals.
- Accelerated contract drafting – With CLM-CRM integration, sales representatives will be able to generate contracts without much effort. By inserting the client data from the CRM directly into CLM, they can speed up the entire contract creation process. This reduces the amount of time spent on manual tasks, such as data entry, file uploads, and more.
- Increased contract visibility – Every member of your sales team can access client information and important contract details at any point in time. It also helps in tracking the various revisions a contract may go through over its lifetime so that no crucial aspect of a contract gets overlooked.
6. Measure Contract Performance
Monitor and analyze the performance of your sales contract management processes from time to time. This will help you understand what is working for your company and what is not. It will help you identify the bottlenecks in your revamped processes and take measures to resolve them. Measuring contract performance will also help you gain insights into designing better contracts in the future.
Here are some of the crucial metrics that you must track are:
- KPIs for tracking contract efficiency, such as contract processing time.
- KPIs for monitoring contract effectiveness, such as the number of contracts created, contract renewal rates, and more.
- Annualized contract value (ACV) for measuring the value of all recurring contracts.
- KPIs for measuring contract risks, such as the number of expiring agreements, risk-prone signing, vendor fraud, and more.
- Time to Signature to measure the overall time taken from contract initiation to contract signing.
Monitoring these KPIs is crucial as it forms a strong basis for improving your contract management performance. It provides you with valuable information for optimizing your entire sales contract management processes.
Although sales contract management seems like a challenging and time-consuming process, it can be streamlined for better efficiency and performance. You can revamp your existing processes by identifying recurring bottlenecks, automating manual tasks, and introducing seamless workflows to yield outstanding results. We are certain that you will follow the tips we mentioned in this blog to optimize your sales contract management process and boost your sales.