My prior blog posts discussed CPQ for manufacturing and manufacturing CPQ best practices. I'm going to continue this industrial sales automation thread further with the benefits of Contract Lifecycle Management.
Configure Price Quote (CPQ) software can save sales people time and improve accuracy when creating highly configurable or complex quotes. But that's not where the complexity ends.
Once the customer agrees to the quote the proposal or contracting process begins. Proposals for highly configured products often include or accompany Master Service Agreements (MSA), Statements of Work (SOW), specification documents, warranty documents and other terms and conditions that stand in the way of a completed sale.
Contract Lifecycle Management (CLM) software can bring the same automation, repeatability and speed to the contracting process as CPQ software brings to the quoting process. In fact, when CPQ software is integrated with CLM software it's a smooth and continuous process.
The capabilities and benefits of Contract Lifecycle Management software include the following.
- Document Generation. When CPQ software and CLM software are integrated, the quote automatically inserts into the right section(s) of the right contract(s). When quotes automatically feed the designated contracts, you eliminate the age old problem of sales people using non-current proposal or contracting documents. Quote and proposal document revisions are linked so that changes to any figures or shared language among documents stay in sync.
- Document Customization. Individual customer and quote variables can designate which agreement templates should be used and pull just the right verbiage from libraries of content blocks. Using the right standardized language, which may vary based on the customer or product, lowers legal, financial and regulatory risk.
Some applications also integrate with rich media such as catalogues of images and libraries of charts. This is an area where integration between CRM software and CLM software can add a lot of value.
Flags or data values on the CRM customer record (such as customer type, location, industry or other attribute), opportunity or quote record (products, warranties, prices, discounts, dates, margins, etc.) or possibly the salesperson or reseller record can trigger certain content blocks and clauses to appear or not appear in legal documents.
- Approval Automation. After the sales person creates the agreements, those documents typically begin the review and approval process. This may include credit approval, management approval, legal approval and more. CLM software facilitates this with serial, conditional or parallel workflow-based routings, next-in-line review notifications, change management, revision or version controls, red lining controls/editing visibility, approval processing and electronic signatures.
This streamlining is a significant benefit for sales managers who are often the first line of review, and who incur an extremely time consuming process in order to mitigate inherit risk to the company. Managers don't want to be the bottlenecks in reviewing proposals. More importantly, they don't want an inaccurate or incomplete proposal that introduces post-sale risk or downstream consequences to the company.
- Negotiation Transparency. Contracts tend to get creative in sometimes unusual ways during the negotiation process. In fact, this is the time when many businesses unknowingly inherit risk which then becomes exposed further down the road because certain terms or language that were added or removed slid under the radar.
This type of application improves negotiation transparency with revision controls, often by either highlighting all edits from standard language or prior versions, or by displaying multiple versions in side by side comparisons. Workflow rules can be applied so that new changes to documents automatically alert designated recipients.
- Lifecycle Management. Contract management software can help stay compliant with contractual obligations, help mitigate legal exposures, and monitor milestones, extensions, renewals, expirations and terminations.
Common post-sale features include defining general and long-tail notification parameters based on renewal dates, expiration dates and other renegotiation opportunities. Events like renewals also offer an opportunity to review agreement history in order to negotiate more favorable terms or terminate an unprofitable agreement.
- Document Management. This type of technology brings visibility, traceability, audit history and management reporting to the entire quote to termination process. With a centralized document management system, you reduce document clutter, missing documents and multiple versions of documents residing in multiple places. This keeps the team in sync, communication with the customer accurate and gives the company document control assurance.
The benefits of Contract Lifecycle Management software are all about automating an otherwise largely manual and labor intensive paper process. With supporting technology, contracting documents are assembled in dramatically less time and approval processes are streamlined thereby decreasing sales cycle durations. This automation also enables repeatable processes which improve document accuracy and internal compliance measures to reduce risk and liability to the company.
The Point is This
CLM software benefits such as increased salesforce productivity and sales cycle acceleration are powerful capabilities for sure. But the two most strategic benefits are clearly the reduction of risk and the proven increase in revenue production.
In an Aberdeen research titled, Configure-Price-Quote: Best in Class Deployments that Speed the Sale, the research found that sales pros using manufacturing CRM software with contract management automation out-performed those without this technology in terms of team attainment of sales quota (64% compared to 46%), percentage of sales reps achieving annual quota (62% compared to 46%), lead conversion rate (36% compared to 30%), proposal volume (18.2 compared to 16.6 proposals per rep per month) and sales cycle duration (3.46 compared to 4.56 months).