The typical Software as a Service (SaaS) Company is fast-paced and driving sales is not just about innovative products and aggressive marketing; it's also about optimizing the legal framework on which business relationships are formed. Contracts are the backbone of commercial transactions, and optimizing them can significantly enhance sales performance, avoid future disputes, and minimize risks or liabilities. One of the key strategies in driving sales is ensuring that potential clients have a smooth experience when closing deals. Streamlining your contract management process can transform these interactions from a hassle into a breeze, paving the way for stronger, more productive business relationships.
Understanding the Contract Process
For Sales-Led Growth Companies
For companies with sales-led growth, the contract process typically begins with negotiation, often extending from initial sales discussions. Once both parties agree on terms, the contract is drafted and shared. The review phase is typically the lengthiest phase, with each side striving to protect their interests and secure favorable terms. After negotiations conclude, the contract must be executed which is a crucial step for ensuring enforceability. Following execution, with ink on paper, the gear shifts to implementation and performance. For reoccurring services, renewal becomes a natural next step to sustain the relationship and adapt to evolving needs. Each phase is crucial, ensuring agreements are not only legally sound but also serve as a conduit for building mutually beneficial and lasting partnerships.
For Product-Led Growth Companies
In contrast, companies employing a product-led growth strategy experience a different contract process. With more automated procedures, the contract process is typically shorter, often involving a simple form or series of questions and a click on the "I agree" button.
So why do leads run cold at the contract stage?
A number of things might be wrong with your contract process. Common problems include the following:
- Your Contracts are too Complicated: If clients struggle to understand your terms, they may assume your service delivery will be just as difficult. Ambiguous terms can lead to friction during service delivery due to varying interpretations and expectations.
- You're Overpromising and Underdelivering: In an effort to close a deal, you may promise the impossible or negotiate terms you can't meet. This raises clients' expectations, leaving them dissatisfied and unlikely to return.
- Your Legal Team Lacks Commercial Awareness: If your legal team doesn't understand your services or can't creatively negotiate or compromise on contractual matters, it will create rigidity that clients find unappealing.
- Your Contracts are not Standardized: Without standardized contracts, you end up with varying obligations to different clients making performance more difficult to track across multiple customers and breach more likely.
Strategies for Optimizing Contracts
Here are some tips you can adopt to optimize your contract process.
- Simplify your contracts: Make your contracts straightforward and easy to understand. Complex terms or language results in confusion and delays.
- Play fair: Self-serving contracts are a major turn-off for clients. Customers feel more comfortable working with companies that play fair and act in good faith. Let your contract show that you understand the customer's concerns and prioritize their interests.
- Provide assurances and remedies in the event of your default: Using industry best practices as a benchmark, set out clearly your support escalation process, service levels, and response timeline. If feasible create and include a credit system so customers have alternatives to termination if you are unable to meet set expectations. An efficient credit system is a win-win for you and your customers as it boosts customer retention and satisfaction.
- Use customized and standardized templates: Develop template contracts with flexible yet comprehensive clauses that cater to your service offerings, preventing the need to draft or review contracts each time you have a new client. Standardized contracts also allow you create standard internal processes, hence optimizing operations and minimizing breaches.
- Define non-negotiable terms clearly: Identify non-negotiable terms and evaluate if any flexibility is possible. Standardize these terms across all contracts and ensure alignment with your sales team to reduce friction. When negotiating, you must be firm on non-negotiable terms redirecting the customer's focus to your compromises or their benefits within your contracts, fostering a mutually beneficial relationship.
- Embrace digitalization and automation: Streamline your contract drafting and review processes by digitizing and automating wherever possible. Utilize smart contracts, allowing clients to customize standard agreements (within specified parameters) to suit their preferences and promptly execute them. This approach provides clients with flexibility and minimizes the time spent on manual document review and negotiation.
- Implement an automated contract monitoring system: Establish a system to monitor contract deliverables efficiently. A system that provides automated notifications and reminders can help track renewals, invoicing, and performance of time-sensitive obligations.
- Engage a commercially savvy legal team: Invest in an innovative legal team that understands your business goals and can creatively proffer solutions to address customer concerns. A proficient legal team goes beyond traditional legal expertise; they understand your business objectives intimately and are adept at tailoring contractual solutions to align with these goals.
- Regularly update contract templates and processes: it is crucial to conduct regular reviews and updates of your template contracts and processes. This ensures they remain in sync with your current operational needs, industry standards, and relevant legal and regulatory requirements. By staying proactive in updating these templates, you can enhance compliance, mitigate risks, and maintain alignment with evolving business practices and laws.
Optimizing contract management is essential for SaaS companies aiming to drive sales and enhance customer satisfaction. Implementing the recommended strategies will not only save valuable time and resources but also foster stronger, long-lasting relationships with clients. Remember, more can be sold in less time!
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.