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As the cost of traditional contracting increases and collides with today’s mandate to reduce costs throughout the business (but especially in Sales), contract simplification becomes an imperative to businesses seeking to improve or recover revenue. Contract simplification can help improve deal acceleration and therefore sales velocity.
Sales velocity is the measurement of how much money your business brings in over a specified period of time. A higher sales velocity means you're bringing in more money over less time. The goal of the most sales and revenue ops teams is always to increase sales velocity.
The formula to calculate sales velocity is:
Each variable is important to the formula, and improving even one variable can improve your sales velocity on a whole. For the purposes of this blog post, we will take a look at the length of the sales cycle as an area that contract simplification can improve, resulting in increased sales velocity.
Most businesses have reduced their Sales (and other teams) spending, and are now in a position where they have to do more with less. So when it comes to the sales process/cycle, that means focusing on closing late stage opportunities rather than creating brand new opportunities and moving them through the pipeline.
Presenting contracts that don’t require a lot of front- or back-end work to potential clients is one way to decrease the length of the sales cycle.
Contract simplification can:
With less time to spend pouring over highly complex terms, you have the opportunity to not only close more business, but win more deals. A traditional CLM will not help you achieve this end-goal.
As stated before, traditional CLM doesn’t and will not do you any favors in a time when you are trying to recoup savings. It also does nothing to save you time between creating and executing contracts since it depends on manual processes.
Eighty-six percent of respondents to a SpringCM study noted that contracting takes anywhere from 2 to 6 weeks. Some companies (outside of that study) noted that it can take 3 months to close new business, even longer when working with a larger, enterprise company. There is nothing in the CLM workflow that will help you address the problems you need to tackle to make your contract processes smoother and shorter.
The linear process that CLM systems require present roadblocks and demands for time through steps that may be unnecessary. If you have to have every agreement reviewed by legal as part of a workflow, and legal is bogged down, now, so is your deal. It doesn't make sense to have a "one size fits all" process for high touch, personalized, high value contracts AND low touch, standard, high volume contracts.
Related: The Economics of Contract Design
A CLM solution also presents the contract as if it’s meant to be negotiated, and that can increase time to sign. It also doesn’t work for signing with people who are on the go and need to be met wherever they are.
Firstly, you need to ditch the CLM solution for one that enables efficient workflows and modern signing.
Cut contracting in half by making acceptance quick, easy, and based on the natural workflow of the signer. Customers constantly on the go will take longer to review and accept the contract sent via PDF over email than one sent over SMS. In fact, according to Viber, the average text message response time is 90 seconds and it is looked at within 3 minutes after being received.
Luckily, as buyer behavior and business moves online and evolves expectations around instant and easy transactions, it influences available solutions. While CLM was the innovative answer a few years back, there are new solutions specifically built to remove the friction from contracting. This allows you to meet your buyer where they are, move faster, and reduce costs. To understand where these solutions are most useful, you first have to understand what types of contracts benefit most from these types of solutions.
Related: Is A Text Message A Legal Document
Also, divide your contracts into standardized (contracts that have little if any changes no matter who is the recipient, like Terms of Service, NDAs, certain SLAs) vs personalized (contracts that are “one off,” and that have provisions specific to a signer) contracts, saving you time on contract creation and negotiation.
Not every contract can become a standardized, low cost transaction, nor should it. The highly personalized, heavily negotiated deals can now occupy the attention and time they deserve, while standardized deals can move faster. It is all about identifying agreements that are unnecessarily turning into cost centers. Clickwrap agreements can help with seamless, enforceable acceptance of both standardized and personalized online contracts, and allow you to meet the customer wherever they are.
Better contracts can help you improve both your top line and your bottom line.
Learn more about the direct impact of contracts on your revenue. Download our eBook, Making Contracts the Key to Unlocking Revenue Recovery.