What’s a frequently overlooked source of inefficiency for many Fortune 500 companies? According to a recent white paper, “Leading Characteristics of Highly Competitive Global Sales Forces,” enterprise sales leaders are taking a second look at their contract management process in an effort to speed up sales cycles and boost productivity among sales reps.
The white paper reveals that “poor management of contracts in the opportunity-to-order cycle results in revenue leakage between 5% and 9%.” That’s because 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.
Automating contract management can provide enterprise companies with a competitive advantage in three key ways:
1) It delivers proactive alerts about upcoming deliverables or forthcoming renewals.
This is the kind of information that is often missed with paper contracts and Excel spreadsheets. When renewals are automated, it not only drives increased revenues, it also strengthens customer relationships. Customers want to know 1) when a solution they purchased needs to be renewed, 2) that it will be upgraded, or 3) that their maintenance plan will soon expire. When vendors manage that process for them, customers know they’ll be covered when it counts.
2) It streamlines the proposal cycle.
Shortening the time to sale automatically frees reps to spend more time selling. IBM Emptoris Contract Management, for example, uses an exception-based approach to approvals through predefined thresholds or conditions that automatically trigger approval requests via email if these thresholds or conditions are crossed.
For instance, if payment terms are entered net 60, rather than the standard net 30, the solution automatically routes the contract to finance for review. This approach not only forces compliance and transparency, it eliminates the problem of reps sending every contract to every department – and then spending even more time tracking it down and figuring out which version is most recent.
3) It improves the collective intelligence of the sales team.
By providing access to data on past negotiations and contract terms, contract management puts precedent at reps’ fingertips. Accordingly, they can see how situations were handled in the past and find answers to client questions on the spot. Collective intelligence is further enriched through a comprehensive knowledge base containing current and accurate product, pricing, and value information. This information can be custom packaged and provided to customers instantly.