Sales Contract Chaos - 4 Reasons Why Managing Sales Contracts Is Hard

You are head of sales for a B2B company.  Your marketing team is managing the lead process in salesforce.com or another CRM, your sales team converted a lead to an opportunity, and worked the account plan process just the way you drew it up.   Great news, you’ve been selected!  Now it’s time to turn intent into revenue by creating a contract that the prospect and your company agree on, and get it signed.

Ironically, right when you’re closest to revenue is often the part that can be the most chaotic.  Why?  Here are 4 reasons to consider:

1. Contracts are a Big Part of the Sales Cycle.  In theory, the hard work is done, but according to Aberdeen, sales contracts can be up to 18% of the total effort in a sales cycle, particularly for industries such as high tech, financial services and insurance, and other industries with negotiated agreements.  In industries such as consulting services, business services, travel and entertainment, and media, the contract is really an order form where the scope and nature of the products and services are not standard, but are defined in the agreement. There may be multiple agreements involved —a software license and statement of work for services, or a product sales agreement and installation and services agreement—each of which needs to be created, reviewed, approved and signed, and all of which must work together.  So while contracts are a big part of the process, typical marketing and sales processes—and the CRM systems that support them—don’t reflect this and you run into sales contract process challenges.  
2. More Players.  The sales contract process brings a new cast of players into the process.  Sales operations now may be front and center on getting a completed contract to the prospect.  Legal may also play a role in negotiated agreements.  Engineering, product management or customer service may also need to get involved if non-standard products, services, or terms are involved.  This means bigger challenges in organizing, prioritizing and collaborating to get the right agreements completed, to the prospect and signed.
3. The Prospect.  More prospect stakeholders may be involved, whose incentives, priorities and availability will not coincide with yours, further complicating managing the process.  Most sales executives have experiences where missing a window of time with a procurement manager means a delay of weeks or more.
4. Your CRM Doesn't Understand Documents.  Contracts are documents.  CRM applications like salesforce.com may have some ability to store and share documents, but they're more about transactions, and don’t typically manage documents and document workflows.  Also, many of the players at this stage like the prospect, legal and engineering are likely not users of your CRM.  So while your process and coordination challenges have gone up, your CRM probably doesn’t help you managing the contracts themselves, and doesn’t connect you effectively with all the stakeholders.

You may have other reasons in your organization, but these are some of the main reasons we hear from sales executives why managing the last steps of the sales cycle can be contract chaos, creating issues such as lack of contract visibility, reduced sales productivity and increased compliance issues. For more on this topic, check out It's Quarter-End - Do You Know Where Your Sales Contracts Are?