Do you spend quality time reading your sales contracts? Probably not, unless you’re in legal. In this subscription economy era, that’s dangerous. Those contracts contain the terms of your customer relationships, and failing to meet those terms can be fatal. Contracts also contain the terms your customers agree to live by, and their failure can cost you money.
Contracts provide a roadmap for deepening your customer relationships. They point at areas where you can expand the relationship through upselling and cross-selling, and they contain a useful milestone—the renewal date—for doing just that, allowing you to construct a timeline for sales efforts backward from the date a renewal needs to be obtained.
Leading companies are starting to realize the value of CLM and its ability to help not only with compliance, auditability, and archiving but also by driving sales results by surfacing important customer data. Gartner’s Nigel Montgomery estimated that CLM adoption would be up by 40 percent by the end of 2017. That sounds impressive until you realize that only around 25 percent of enterprises have adopted CLM.
Why has adoption been so slow? First, contract lifecycle management is often seen as a cost center. There’s been little enthusiasm for devoting funds to it, and it’s been limited in its impact to legal departments and small portions of the sales and support processes.
Second, the problems of complexity accrue slowly over time, and by the point at which an organization realizes it needs a solution, the process of adopting CLM seems overwhelming. And third, software solutions for sales or marketing are more attention-grabbing than those thought of as purchases for legal.
These things are understandable, but they aren’t acceptable. CLM can’t be a siloed solution anymore. The data it generates and the activities it triggers have an impact across the entire business. In other words, CLM is not a purchase for the legal department—it will up your game across the entire revenue-generating part of your business.
You’re likely familiar with the money-saving parts of CLM (ease of auditability, compliance, storage) and its ability to identify costs of deals, like analyzing training investments against on-going support costs, for example. And you’re probably aware of the alerts for renewals. But there are five more less-discussed ways a CLM solution pays for itself:
1. Identify opportunities for upselling
Contracts have a host of indicators for potential new offerings—both one-time and ongoing—that your reps should raise during customer conversations. These could be basic, like additional training services as new customers use a product or service, or complex, like suggesting products that complement earlier purchases—especially when those products are new to your catalog. If a sales rep can run reports against existing contracts, he or she can go into customer discussions with an upselling offer in mind.
2. Highlight customers that marketing should watch
The milestones for a successful customer-vendor relationship are charted in the contract. When your marketing team is on top of these, it can engage the customer at a moment of maximum satisfaction and gain a helpful new asset, like a reference or subject for a case study. At the same time, the last thing a customer wants when his or her vendor is missing the mark is to be asked to be a reference. So, CLM can help keep marketing from stepping in it, too.
3. Build better bundles
In conjunction with CPQ, CLM can help indicate when customers buy the same products in a combination. In many cases, these will be bundles that your team has already designed. However, CLM can identify patterns of “self-bundling”—cases where multiple customers are buying similar product combinations that you hadn’t anticipated. CLM is especially useful when customers make these purchases across a period of time and across several quotes; the collected contracts are more revelatory than single quotes within CPQ.
4. Create renewal campaign timelines
Contract expiration dates are front and center in the CLM system. You can create workflows to turn those expiration dates into opportunities, scheduling activities leading up to that date. That not only secures renewal opportunities but also gains additional revenue through new offers at a point when the customer may be looking to deepen his or her relationship with your business.
5. Accelerate the sales cycle
CLM allows contracts to be created faster—even when the customer asks for his or her company’s verbiage or redlines your standard contracts—so deals are far less likely to end up in legal limbo. Thus, sales gets signatures on deals faster and moves to the next customer faster. It also prevents virtually-closed deals from dying in approvers’ inboxes or in an endless cycle of iterations and revisions.
To learn more about how Contract Lifecycle Management can make your company more money, visit the CallidusCloud CLM webpage.