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Standardized and personalized contracts each serve a distinct purpose. Most companies use a mixture of both standardized and personalized contracts throughout their business deals. The problem is that many legal teams treat them equally, using the same type of contract for each agreement.
As you can imagine, an NDA and a long-term partnership each hold vastly different weight financially. By being more strategic in your use of personalized and standardized contracts, you’ll reduce the overhead costs of low-value contracts and free up resources to give high-value personalized agreements the attention they need.
Generally speaking, standardized contracts are used with higher frequency for lower-value agreements that require no negotiation. Terms of service and NDAs are both commonly used standardized contracts - they are sent to multiple signers and the terms remain more or less the same.
Personalized contracts, on the other hand are usually sent to specific signers; they are most often agreements that happen less frequently but carry a higher value. M&As and long-term partnerships are both examples of personalized contracts.
The number of contracts and value of each one both are the biggest determining factors in deciding whether an agreement should be personalized or standardized. However, these aren’t the only factors to consider. There’s also a difference in the time requirement, level of negotiation, and hands-on involvement associated with each.
Not all agreements fall easily within a high-volume/low-value or low-volume/high-value framework. If you’re not sure, consider the trade-off between the time and cost per contract and the stakes involved to decide whether personalized attention is justified.
Grouping standardized and personalized contracts together negatively affects the customer experience, even if they don’t consciously realize it.
Customers expect a quick and painless experience from these transactions. If a competitor offers the same product or service with a smoother buying process, you may start losing business.
The opposite is also true. Clients that need personalized contracts but are given a standardized experience may feel they’re not getting the attention they need. As your first interaction with a new client, you don’t want to give the impression that this is what they can expect from the company as a whole.
What’s more, rushing through delicate contracts opens up the potential for inadequate terms that, in a worst-case scenario, could fail to hold up in court and cost the company enormously.
It’s just as important to make standardized contracts efficient as it is to give personalized contracts attention. If you’re currently using the same type of agreement for every transaction, here’s how to fix the problem.
What do you get back from the money you’re currently spending on each contract? Find out by calculating the amount spent on each contract and the value of each sale.
Once you’ve determined your contract ROI, split them into standardized and personalized agreements. Contracts that require less negotiation and are accepted by a higher volume of signers are your standardized agreements and should be treated as such. In turn, this will allow the legal team to spend more time on those with a higher ROI.
Related Content: How the Cost of Contracts Is Hindering Growth Goals
Clickwrap is the most cost-efficient way to serve extremely high volumes of agreements at scale, cutting costs and improving the customer experience. Consider automation in tangent with clickwrap for an almost entirely hands-free system.
Just because a contract is personalized doesn’t mean it can’t be improved with updated contracting methods. Even high-value contracts can cost less and provide a better experience thanks to technologies like templates and dynamic eSignatures.
Learn how to solve the common problems of sales contracts in our eBook, A Salesperson's Guide to Beating Growth Goals: Contracts that Close Faster.