Why sales departments need to be in the loop in contract management
When the topic is contract management, many people immediately think of managing the vendor side of the business.
After all, vendor contracts are about the expenses and costs your company incurs doing business, so managing these closely makes a lot of sense to insure there’s a minimum of “leakage.” But even among those companies in the contract management solution business, there’s not a lot of talk about managing sales contracts.
That’s a mistake, because every contract that’s generated in-house, including sales contracts, should be reviewed and managed properly. But there’s another good reason: Sales managers and staff can benefit from the insights gleaned from contract management too, and this can improve the overall financial performance of your organization.
Why put sales in the loop?
Let’s face it; sales employees are not naturally interested in contract management. They are paid to get and capture clients and business and to keep the revenue pipeline flowing. Sales can be a remarkably time and effort intensive effort. That leaves little time for interest in either database upkeep or even database analysis.
However, contract management staff and administrators should make an effort to include sales in the results of contract management because it can actually help boost their client knowledge. This, in turn, can result in new or more sales.
An organization with a contract management solution such as Contract Assistant will very likely be scheduling periodic review on each contract. Reviewing the performance on a sales contract may sound like a bookkeeping job, but there is a lot that goes into what makes up the net profit on a sales contract. That includes the ongoing cost of servicing a client or customer, or operational costs.
Those operational costs can bleed the net profit from a sales contract if they aren’t managed. Periodic reviews of sales contract performance in terms of operational cost may uncover some good – or bad – news that sales staff should be made aware of.
For instance, if periodic reviews show a trend to increasing service costs on a sales contract. Can the source of these increased service costs be managed internally — or are client/customer demands forcing costs up? If the costs can’t be contained, then sales needs to be notified because when it comes time to re-up the client, that extra cost needs to be built in to the new proposal.
On the flip side, what if contract reviews show a trend of decreasing operational costs? Sales managers are going to want to know this because it may offer insight into the between “good” customers – and “great” ones (that end up costing your company little to service or sell to compared to others).
Encouraging good habits
Finally, don’t forget there is real value in encouraging good database habits as well. If sales department employees are the key stakeholders doing periodic reviews, be sure (as a contract administrator) they communicate back to you any relevant information to keep contract database information accurate and up to date.
Sales people and managers actually love any additional insight into their customer or client base, so contract managers should let them know that these contract records may be mined for future use and insights. After all, any additional insight your sales staff can use may result in more sales and more profit for everyone.
[About the author: Todd Hyten is a former business journalist who now writes about B2B topics and consults on content marketing. You can find him on Twitter and Google+.]