How can contracts help an organization measure overall success?
Contracts are a vital tool for any organization. They drive revenue, growth, and increase compliance. Aside from just those tools, however, contracts can help measure a business’ success through their metrics. Contracts provide a large amount of visibility into a company: trends in customers, geography, type of contract, and numerous other characteristics garnered from contracts. Here are just a few of the ways to track the overall success of a business through its contracts.
Recurring Contract Value
Tracking the recurring revenue versus the new revenue from contracts is one way to determine success from a certain time period. These metrics also provide insight into any recurring revenue that is lost from expiring, unrenewed contracts. This is a key indicator for companies, especially as they are scaling. If customers are not renewing, valuable assets, both in partnerships and income, are being lost within a company and inhibiting its success.
According to Aberdeen Research, organizations with a clearly laid out contract compliance process have a savings of 80% more than organizations without any process at all, or even poorly defined processes. Why? Two things factor into the success here: operational efficiency and opportunity identification. Eliminating unnecessary costs while increasing time saved is critical for businesses. Along with that, determining the possibilities for growth provides insights into where improvements can be made and where an organization is already excelling.
Time to Signature
It’s something mentioned almost whenever contracts are brought up, yet the time-to-signature is a critical metric across teams. Sales teams want to sign deals faster to increase the number of deals they can sign, and legal teams want documents signed quickly so they can focus on the other work they have to do, not tracking down people and signatures. Faster time-to-signature means more revenue for a company in a shorter amount of time. Improving this metric can increase the amount of contracts signed overall.
At their core, contracts are a comprehensive list of everyone that has chosen to align themselves with a company. In today’s business world where people have high expectations of customer service, treating a customer relationship as a partnership, not just another source of revenue, is vital for success. Happy customers means better business, referrals, and a high customer happiness score. At the end of the day, the customer is truly what matters.
With each of these metrics trackable through a company’s contracts, it’s important to have contracts managed beyond just a repository. A full contract lifecycle management platform provides all the capabilities necessary to be able to set the compliance, review recurring revenue and upcoming deadlines, and make meaningful customer connections through clear contracts that both sides are able to create. With metrics such a large focus of business today, ensuring a company is tracking the right things comes down to looking at contracts.
To find out how your organization can start measuring their success through contracts, request a demo using the form below.