If you had to name two departments within a business known to do their jobs well, yet quite thanklessly, it would be – sales and HR. These teams face the highest level of expectations with the least amount of empathy.
Yet, we all know how much modern enterprises spend on customer acquisition today. Customer acquisition cost differs from one industry to another, and businesses must be mindful of it if they wish to grow continually.
Payment wallets provider Razorpay did an insightful research on the customer acquisition costs and came up with the following estimates –
|Industry||Organic customer acquisition cost||Inorganic customer acquisition cost|
|Manufacturing and distribution||$662||$905|
Read Also: how the above industries benefit from a contract management software
Even though companies across industry verticals spend a considerable amount on customer acquisition, the sales cycle does get dragged on due to onboarding procedures especially related to contracts. Here’s where automating contract management for sales becomes crucial. The larger the company, the greater the complexity. In fact, Cottrill Research indicated that large companies lost $215,000 each day when the contract process dragged on.
On the other hand, the results can be phenomenal when this process is automated. Goldman Sachs once reported that companies can accelerate negotiation cycles by 50% and reduce erroneous payments by 75 to 90% by automating contract management.
Can sales cycles be shortened though?
A sales cycle is typically the entire process where sales teams follow a specific cycle for onboarding a customer. Generally, a sales cycle involves the following steps:
- Prospect – identifying a potential buyer
- Connect – connecting with the person
- Research – understand his/her/their needs
- Present – pitch the solution
- Close – taking them to the purchase decision
In the above cycle, the last step is about getting the customer to enter a contract that would validate the transaction. Interestingly, this step can be full of bottlenecks if the contract management part is not automated or is delayed for some reason.
So while the steps in the sales cycles may not be skipped, the cycle itself can be shortened at the last or the second last stage. Contract management for sales can be integrated with the sales platform or a CRM like Salesforce, and then the rest of the steps can be sped up, and the customer can be brought to the signing stage.
READ ALSO: Importance of Contract Management for Procurement
How does an AI-based contract management platform help shorten sales cycles?
A sound AI-based contract management software can be easily integrated with existing sales management platforms, thus accelerating several steps in the cycle. This integration allows for easy access to contract templates that can be customized by sales teams within a few clicks. There are other features such as digital signatures and notifications for approvals within the organization that help sales reps to speed up the process. Take a use case for instance. If a customer is at the very first stage of the sales cycle and before investing his time in listening to the pitch, he wishes to understand the pricing of the service or the validity of the arguments put forth by the sales rep. The latter can simply pull up contract templates as proof to put the customer at ease and close the deal at this stage.
# Accelerate approvals
Approvals often happen at the last stage of the sales cycle where a certain term or condition or a benefit is given to the customer by a sales rep and needs to be approved by a higher authority. In addition, most contracts will become valid only after the authorized person’s approval. With a cloud-based contract management platform, sales reps get automated approval workflows and can send notifications and reminders more quickly. Such a platform also brings about more accountability in internal approvals and keeps track of delays at every stage for future references.
# Good customer service
When a CLM is integrated with a CRM, it becomes easier for sales reps to provide a great onboarding experience to the customer. With the availability of online forms, contract templates for reference, and mapping of the contract cycle for visibility, the customer does not feel overwhelmed and is more likely to sign a contract. This is particularly efficient if the customer is already convinced with the service or solution and is in a hurry or needs the service immediately. Sales reps can quickly pull up template libraries and legal clauses to help the customer make a quick decision.
# Compliance challenges
Neither the sales teams nor the customers are experts on legal challenges or relevant compliances of specific industries. A good contract management software allows for building compliance procedures or cycles within the system for anyone to learn and understand. Compliance is also a factor that plays a crucial role in convincing a customer to make a purchase decision. When such challenges are taken care of right from the sale cycle’s early stages, the customer feels assured and confident of his decision.
# Analytics for future sales
An underestimated use of contract lifecycle management software is its ability to generate reports and analytics based on past transactions or contract negotiations. This is an AI feature that should be utilized to learn lessons for the future and eliminate any silos detected in one sales cycle for the next. Sales reps can benefit greatly from such analytics and reporting and devise a strategy to onboard more customers in the future.
READ ALSO: Contract Management Best Practices for Modern Businesses
Is CLM your sales priority?
CLM platforms such as Revnue come with useful features such as tracking a deal’s progress with real-time audit trails and alerts, streamlining the negotiation process, expediting the approval process, or generating analytical reports. If you have a sales team that may have lost deals due to contract management silos, we should talk.