A recent Aberdeen Group survey conducted with CRMToday highlights the strong feeling that many respondants have about the need to streamline and manage the sell-side contract management process to maximise revenue opportunities.
Aberdeen Group suggests that around 18% of a typical sales cycle is spent in contract creation, internal approval processes and external negotiation.
The Aberdeen study shows that on average respondants to the survey estimate that 9% of sales revenue is lost due to regulatory penalties, missed deadlines and obligations, lost sales orders, ‘maverick’ pricing and transactional errors.
According to the research, a one day reduction in the sales cycle of company is worth $80,000 on average (this increases to $215,000 for larger organisations). Best-in-class organisations have sales cycle times that are 10-15 days shorter than other companies. So you can begin to see how an investment in streamlining the contract management process can have a major impact on the bottom line.
Aberdeen recommends that companies take the following actions to improve the ‘quote-to-cash’ cycle time:
- Migrate all current active contracts in to a contract management system and make use of functions like contract clause libraries to streamline contract negotiation
- Streamline the quote-to-cash process by integrating your Contract Lifecycle Management system with your CRM and Finance systems.
- Use contract management software to track contract milestones and obligations
- Utilise reporting and analytical tools to measure contract performance regularly
Contract Lifecycle Management solutions, like Dolphin Contract Manager, provide comprehensive contract management functionality across each stage of the contract lifecycle, allowing sales teams to:
- streamline the contract creation process
- automate internal reviews and approvals
- provide a central repository for all contracts and related documents
- provide secure external workspaces to speed up external contract negotiation
- allow key stakeholders to proactively manage contract commitments and obligations through alerts and management reports
- integrate contract data with back-end systems like CRM and ERP solutions.
In the business world we have become accustomed to identifying manual and inefficient processes and automating them with technology solutions. However, in many organisations, critical business processes like the Contract process and Quote-to-cash process remain largely paper based, slow and wasteful. Contract Management software solutions, as the research from Aberdeen Group has shown, have the potential to create a significant and immediate positive impact to the bottom line of a company.
As companies continue to struggle and compete in a challenging economic climate, now is the time that you should start to think more strategically about how you are managing your contract process.