The sales landscape is constantly changing and it’s up to companies to keep up with evolving technology that can improve the selling process. Digital transformation is accelerating sales productivity by connecting tools and processes, leveraging mobile technology to allow people to work from anywhere, and providing in-depth analysis into an organization’s selling process, allowing them to learn from it and make improvements.
Contract lifecycle management, or CLM, is a major contributor to digital transformation. Gartner defines CLM as:
“...a solution and process for managing the life cycle of contracts created and/or administered by or impacting the company. These include third-party contracts, such as outsourcing, procurement, sales, nondisclosure, intellectual property, leasing, facilities management and other licensing, and agreements containing contractual obligations now and in the future.”
At SpringCM, we define contract management as the process by which an organization can strengthen and tap into the value of its contract portfolio in order to shorten the sales cycle and reduce costs. The value comes from the time and money saved while managing contracts, and making room for a company to expand its sales.
Businesses (our customers included) apply contract management technology to standardize, streamline and automate contract initiation, creation, negotiation, execution through to expiration.
In fact, the best-in-class companies have 74% more spend than their competitors when leveraging contract management software, according to the Aberdeen Group.
How Does Contract Lifecycle Management Work?
NCR Corporation is the worldwide leader in consumer transaction technologies, making up to 495 million transactions possible every day. Before implementing contract management software, NCR had inefficient, non-standardized way of onboarding global partners. Small partners had to take the same path as large partners, with highly-negotiated contracts. There was no self-service or visibility into the lifecycle of contracts.
With SpringCM’s contract management software, they cut their contract process down from three weeks to three days, all while minimizing stakeholder inquiries into the contract status.
Each stage of the contract process inherently involves repetitive and drawn-out steps - all at the bane of the salesperson, who needs to close the deal, reap commission and reach quota. Manual tools like email, document generators (Word), paper and ink or storing contracts on shared drives or desktops make contracts hard to keep track of.
Contract lifecycle management (CLM) addresses each stage in the contract process, offering visibility and predictability into potential roadblocks, while eliminating repetitive tasks.
Here is how contract management can automate each stage of the contract process:
Agile Contract Generation
Manually, salespeople have to build a contract from the ground up, taking the time to key in each detail. Contract management software can eliminate the repetitive processes involved in building contracts.
The best contract management software empowers salespeople to quickly generate contracts using pre-approved templates, where information can be merged from other locations like a customer relationship manager (CRM). Suddenly, a job that could have taken hours now can just take minutes.
Transparent Contract Negotiations
Contract negotiations are often the culprit of a delayed contract because it involves other players outside of Sales. Legal needs access to the contract, along with the ability to edit the document and share it with other stakeholders. Without the right contract management software, stakeholders can resort to emailing contracts back and forth, opening the window for risks like losing the contract or using an outdated version.
Contract management software can offer two solutions to this problem:
- Provide one accessible contract: Contract changes can easily be shared when the contract is accessed and edited in a central, cloud repository. This ensures all stakeholders are looking at the same document, and eliminates the risks involved in emailing the contract.
- Constant visibility for Sales: Salespeople need to know the status of negotiations in order to understand when the deal will close. The best contract management software would record every action taken on the document, providing Sales a ‘status’ on negotiations, without needing to reach out and potentially disrupt the process.
A common roadblock that can delay a contract from closing is getting the contract signed. Often, salespeople have trouble tracking down the right approver. The individual could be out of the office, on vacation, or no longer at the company, setting Sales on a wild-goose chase.
Contract management software can accelerate this process in three ways:
- Automatically route the contract to the appropriate approver when it’s their turn to sign, eliminating the need to “hunt” for the right person
- The best contract management tools integrate with electronic signature capabilities, eliminating the need to use paper and ink, while allowing the contract to be signed from a mobile device.
Reliable Contract Renewals
The last stage of the contract process can be the most crucial, because it will decide if future revenue will be attained from this deal. However, contract renewals can be overlooked when salespeople have a handful of other contracts in motion.
Contract management can help organize this process, by setting automatic reminders to renew contracts well ahead of their renewal date. Leveraged with a CRM, all the contract terms and customer information can be stored and easily accessed, providing a head-start if the contract has to be reviewed again before renewal.
A Longest Part of the Quote-to-Cash Chain
Contract management is not the only part of the sales cycle, but it is often the longest because it involved so many stages and stakeholders. Half the respondents in a SpringCM survey said their contract process takes at least 4 weeks. Compare this to the average time it takes to deliver a quote to the customer (before the contract process); about 5 hours.
If a company truly wants to shorten the sales cycle, starting with contract management will make the biggest difference in attain revenue faster and make room for more deals.
So now you know what contract management is, now it’s time to learn which software is right for your company. Our eBook, Contracts for Closers, explains everything you need to know, from finding the right tools to implementing your solution. Click here to get the free eBook.