Closing deals can be a slow process—like stuck in gear driving uphill while pulling a heavy trailer.
And it doesn’t help when that heavy trailer is your broken down, ineffective contract management system. A report by SpringCM found that, on average, it takes 3.4 weeks to create and approve a contract. On the other hand, contract approval time drops an average of 82% with the use of a contract management solution — a CLM system — integrated into your quote-to-cash process. CLM isn’t the heavy trailer being dragged along by your main CPQ system; done right, it’s another race car, closing in right behind your CPQ for incredible results.
There are three key parts to any quote-to-cash platform: Revenue management, Configure, Price, Quote (CPQ), and Contract Lifecycle Management (CLM). Many companies we help are reaping the benefits of some of these quote-to-cash tools, but we’ve found that for some reason, contract lifecycle management seems to be a part of the equation that often gets left out. But it shouldn’t be. Here are four reasons CLM needs to be part of your quote-to-cash solution and how it can work seamlessly with CPQ:
They need to say yes
Studies have proven that the longer you wait to get the contract in your clients’ hands, the less likely you are to get their signature. It gives them time to change their minds, or, worse, entertain your competition. Even with a perfect funnel, you need that signature before any of the cash starts flowing. A revenue management tool and a CPQ application are important items in your sales arsenal, but they won’t fully serve their purpose if you are losing contracts due to an inefficient process that takes more time than it should.
You need more than just a fancy document generator
Revenue management and CPQ are all about standardizing the process. This means creating a baseline system to handle the everyday stuff in quote-to-cash. Contracting, however, is often widely customized and unique on a case-to-case basis, making it a drawn-out ordeal—much like making a book on Gutenberg’s printing press. You need to know the state of all of your in-flight contracts at any given moment, be alerted when signatures aren’t coming back, as well as ensure the highest degree of conformity and compliance in the language going out to customers. If you leave out contract management, you’ll quickly see that your accords only get increasingly more frustrating to manage. You need the important legal standards and the best tools for negotiation to take your contracts out of that Gutenberg pace, and CLM can provide those necessities. And speaking of negotiation…
Negotiation: Increase speed and control
The contract is everything. It spells it all out, and it’s what you fall back on when questions arise. It’s the glue that holds a project together and both sides accountable, so you need as much control as you can get. Track redlines easily, be able to report on documents with non-standard language, and take control over sneaky salespeople who may be tempted to slide in their own special terms to close a deal – but put the company at risk. CPQ helps you do all that.
Managing for the long term: The deal’s not done after the ink dries
Renewals are a key part of the contract lifecycle because contracts don’t die once they’re signed. In this increasingly subscription-oriented world, renewals are more prevalent than ever. Using CPQ, you can make sure you don’t miss any opportunities for future revenue by ensuring you’re equipped to handle them in your CLM process. CLM is ready-made to account for renewals and streamline the sales process, so it’s simple and easy to ensure your loyal customers stay repeat customers.
When your sales team is like a truck is moving slowly up the contract approval hill, it might be time to lose the weight of that trailer. Putting CLM and CPQ together decreases the time your sales reps spend doing anything but selling. Best of all, it enables your entire quote-to-cash system to reach its full potential, with CLM racing to close in right behind your CPQ.
Reach out today to learn more about how Simplus can implement and advise on the CPQ and CLM race cars in your organization.