Is it time to include the sales team in the contract management procedure? The groundwork for closing deals is sales contracts. Every component of the contract lifecycle must be efficient and effective for the company to hit its sales targets. The sales department has an easier time getting clients on board when they are generating, negotiating, and implementing sales agreements at breakneck speed.
On the other hand, inefficient and lagging contracting processes mean vexed customers who are less likely to sign or renew contracts. Moreover, they would have to deal with costly errors, missed deadlines, and lost opportunities. Organizations can include salespeople in sales contract management to address these issues. As a result, they have more influence over sales agreement creation and execution. A customer-centric contracting process headed by the sales department also improves the chances of renewals and upsells.
Sales contract management involves the processes and activities associated with the creation, execution, monitoring, and managing of contracts between a company and its customers or clients. These contracts may include a variety of agreements, such as subscription agreements, service agreements, and sales contracts. An efficient sales contract management process is essential to successfully negotiate, record, and uphold sales agreements, successful sales transactions, and ongoing customer relationships. It typically entails the following stages:
Contract Request: The sales team identifies the need for a sales agreement and requests one from the legal team.
Contract Creation: It involves drafting and creating the initial contract, defining terms, conditions, pricing, deliverables, and other relevant details.
Contract Negotiation: This stage involves negotiating contract terms and conditions with clients or customers to reach mutually agreeable terms that benefit both parties while protecting the company’s interests.
Contract Review & Approval: The legal, financial, and even sales team can review and approve the sales agreement to ensure its compliance, accuracy, and profitability.
Contract Execution: The customers sign the dotted line to execute the sales agreement and close the deal.
Obligation management: Both parties fulfill the terms, conditions, and obligations stated in the sales agreement.
Renewals & Amendments: The business works with the clients to assess the need for contract renewals, amendments, and extensions.
All these stages in sales contract management require a collaborative effort from sales professionals, contract managers, legal experts, and various other departments. The legal team is responsible for contract language, reviewing sales agreements for legal compliance, and assisting with negotiations. While salespeople are better at understanding a customer’s needs, wants, and demands. Incorporating them into the sales contract management process allows businesses to utilize these insights to improve at every level.
Businesses rely heavily on sales contracts as a source of income. That is why it is detrimental for every company to ensure that sales agreement passes through the pipeline without any roadblocks. Moreover, inefficient sales contract management can lead to far more pressing consequences for the business. Such as:
Lost Revenue: An inefficient sales contracting process can lead to missed renewal dates, overlooked contract terms, or errors in billing. It can result in lost revenue as contracts expire or customers dispute charges.
Customer Dissatisfaction: Sales contracts specify how a company and its customers will interact. Any drawback in the contract lifecycle can result in inaccurate contract terms or delays in addressing customer issues or requests.
Legal and Compliance Risks: Inefficient contract management can lead to non-compliance with contractual obligations or legal requirements. It exposes the business to legal risks, potential fines, and damage to its reputation.
Higher Costs: When organizations don’t have a structured system to manage the sales contract lifecycle, it results in higher operational costs. There’s a need for additional resources to address errors, disputes, and compliance issues.
Missed Opportunities: Organizations must stay on top of contract milestones and deadlines throughout the sales contract lifecycle. Failing to do so results in missed opportunities to upsell or cross-sell products or services during the renewal process, impacting the overall profitability of contracts.
Data inaccuracy: Ineffective management may lead to inaccuracies in contract data, making it challenging to access historical data or analyze contract performance efficiently.
Reputation Damage: Customers may view a company with a lagging sales contract management process as unreliable or unprofessional. It can damage the company's reputation and make it less attractive to potential customers.
Churn and Customer Loss: Since billing errors, delayed communications, and contractual disputes can irritate customers, they demand quick results at every stage, from creation to execution. Thus, unnecessary delays and bottlenecks can contribute to higher customer churn rates.
Missed Deadlines: Failure to meet significant deadlines, such as those for contract extensions or delivery dates, can damage customer relationships and result in the termination of contracts.
Loss of competitive edge: Lack of adequate sales contract management causes businesses to lose their competitive edge as they struggle to keep up with more agile and efficient rivals. Also, they can hinder the company's ability to respond quickly to market changes or customer demands.
Difficulty Scaling: Businesses conclude deals through the contracting process. Inefficient processes become more burdensome as the number of contracts and customers grows.
In most organizations, the current system for sales contract management is disjointed and doesn’t include input from the sales team. As a result, deals often take months to finalize, and salespeople have zero insight into the sales contract lifecycle. Here are some strategies for improving your sales contract management process for better results.
Automating and centralizing tasks are the keys to efficient and accelerated sales contract management. Back-and-forth paper contracts or email chains can prove tiresome for customers looking to purchase goods or services. They want immediate results without unnecessary delays or headaches. Automated workflows for contract request, review, and approval are critical to a smooth contracting process. It ensures the sales agreement stays on track throughout the contract lifecycle.
For instance, automated contract generation and negotiation enable multiple team members to collaborate on reviewing and editing in real time. They can also track and manage contract versions to avoid confusion and ensure access to the most recent sales agreement. Organizations can also set up automated notifications and alerts for critical sales contract management events, such as expirations, renewals, or compliance milestones.
Customer-centric contracts or sales agreements prioritizing the customer's needs, preferences, and interests are far more likely to be signed. It starts with using clear, plain language that is easily understandable by the average person. Businesses must avoid excessive legal jargon and complexity, ensuring customers can readily comprehend the terms and conditions.
Furthermore, customer-centric contracts must be adaptable to clients' changing needs. They may include provisions for scaling services up or down, modifying terms, or customizing packages to meet specific requirements. The best way to ensure the relevancy of sales agreements is to empower salespeople to self-serve contracts. The sales department has the necessary insight to draft legal agreements that align with customer requirements.
At every stage, sales contract management requires real-time inputs from the sales department to improve processes. It’s hard to achieve that with the sales and legal teams functioning on different platforms with disjointed workflows. Organizations can overcome these information silos by integrating contract management software with customer relationship management solutions. CRM systems like Salesforce and Dynamics are where the salespeople carry out tasks. Enabling them to access the contract lifecycle from within the CRM platforms paves the way for shared data and insights.
Thus, the legal team can pull data from CRM systems, populating contract templates with customer-specific information, reducing manual data entry, and human error. It also allows the salespeople to oversee the sales contract lifecycle from within the CRM platform. They can constantly track significant deadlines and milestones for sending out contracts or getting them signed. The sales team will also receive prior warning to better prepare for renewals, amendments, or expiry.
Quicker contract execution is essential to closing deals faster and accelerating sales contract management. Organizations can implement electronic signature solutions to eliminate the need for physical signatures and postal delivery. E-signature tools allow parties to sign contracts digitally, streamlining the signing process.
Customers can use these secure and legally binding digital signatures to execute sales contracts without hassle. Many e-signature solutions like DocuSign or Adobe Sign offer mobile apps that allow users to sign and send documents from smartphones and tablets.
As we know, inefficient sales contract management can have far-reaching consequences on a business. They adversely affect revenue, customer relationships, compliance, operational efficiency, and overall competitiveness. Businesses must take necessary steps to optimize sales contract management processes and systems to mitigate these risks and optimize business performance.
Dock contract management software can do just that by centralizing and automating your contract lifecycle. Moreover, it offers integration with electronic signature solutions, Microsoft Dynamics CRM, Business Central, Salesforce CRM, and NetSuite to fast-track your sales contract management process.
Schedule a live demo of Dock 365's Contract Management Software instantly.