What Sales Executives Need to Know About AI Contract Management
Smart sales executives don’t just close sales contracts, they actively manage their contract portfolios to help retain customers and learn how to close future deals faster. Artificial intelligence has made these tasks simpler, more accurate, and more valuable than ever before.
The key difference between old-school and modern contract management is that artificial intelligence now allows software to actually read contracts, not just search them for keywords. That means that AI can act as a translator, turning contracts into the kind of data that regular, everyday software can use. Rather than relying on your sales team to do time-consuming data entry of contract data like renewal dates, payment terms, cancellation terms, etc. into Salesforce or another system, AI can now do that for you.
Using AI To Update Your CRM
Most sales teams drive success through their customer relationship management (CRM) software, turning leads into contacts, contacts into opportunities, and opportunities into closed deals. Proactive sales executives use the information in their CRM systems to both help develop contracts that are easier to close and to stay ahead of contract renewals, so sales representatives can re-win deals that are set to expire.
Artificial intelligence makes both of these jobs easier than ever before.
To use your CRM software to keep tabs on your contracts, you first have to convert your contracts into information that the CRM can use. Traditionally, this has required your sales team to manually update information about each customer and the deal they signed.
While the CRM may be set up to distinguish between deals that automatically renew and renew at the customer’s option, flag the deals that include your old pricing schedules vs. your new ones, or note which customers have a service level agreement (SLA) or not, that data is only useful if it’s accurate. And, to put it gently, you didn’t hire your sales team for their data entry skills.
A lot of CRMs are filled with unreliable or non-existent data — created by distracted or disinterested sales representatives — that can impede your ability to manage your contracts to best effect.
That’s where artificial intelligence comes in.
New AI software can actually read your contracts and extract critical data from them, automatically updating your CRM system without any (unreliable) data entry from your sales team. AI turns unstructured contracts into the structured data your CRM needs to do its job.
With the help of AI, you know that every contract renewal date in your CRM system is accurate, and every call sheet, email campaign, and revenue forecast built off those renewal dates is going to be as effective as possible. And this way, you’ll automatically have the answers at your fingertips when your CEO asks you questions like:
How many new customers are paying by invoice vs. a credit card?
Do we have any customers that have longer payment terms than net 30?
Do we have any questions that have a shorter contract term than one year?
Which customer contracts do/do not automatically renew?
Which customers can terminate for convenience?
This information is incredibly valuable. AI makes your CRM more accurate, which makes your sales campaigns more effective, which makes your sales team more profitable. AI can also help you uncover new revenue opportunities. For example, it’s not uncommon for Terms of Service to include language around annual price increases. You might be leaving money on the table because contracts aren’t being analyzed when they renew. AI can uncover and make reporting easy. Another example is tracking language on usage overages, tying it into your CRM and/or billing software, and invoicing customers appropriately based on their usage. Without AI, this can be a tedious and overlooked task.
AI Can Help You Write Better Sales Contracts
With your CRM now up to date and accurate thanks to artificial intelligence extracting all that rich, structured data from your contracts, you can now go next-level in your contract management: you can write sales contracts that close faster and make more money.
Before AI, you had to use anecdotal evidence that, for example, deals with your old service level agreement took longer to close than your new SLA, or that net-90-day invoice deals were more profitable than net-30-day contracts. Why? Because you didn’t have the resources to add that level of contract data to your CRM or, if you did, you couldn’t be sure it was accurate.
With AI, you can analyze and categorize every contract by every version of every clause in the deal, from governing law (which tells you how and where you can be sued for breach of contract) to force majeure (which tells you when and if a pandemic, hurricane or wildfire can dissolve the deal), to data breach notification (which tells you who can get damages if you don’t notify them the moment you get hacked).
With all that data in your CRM, you can now identify exactly which clauses drag out your time to close, because the client’s lawyer always wants to “redline” that language. You can also figure out which contract clauses are costing you money in the long run, even if they close quickly, because they lead to you handing out service credits for breach SLAs or losing repeat customers because the deals don’t auto-renew. You can also review and monitor trends and easily identify “non-market” deals — these are the deals that fall outside your standard terms and potentially leave you exposed to risks. With AI, you have the power to easily identify how many deals and which deals specifically fall outsides these norms. As buyers are getting more sophisticated, AI is your secret weapon in making a better future and setting your company up for success.
Any kind of advanced analysis you want to do on your contract language — the kind with actual sales-relevant data that will change your own corporate counsel’s mind — you can now do, because AI can quickly and effectively put that data in your CRM system.
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AI Changes Everything About Sales Contracts
Sales is as much a science as it is an art. Thanks to artificial intelligence, you can now turn sales contracts into structured data and have the ability to make sense of a redline you’ve received, to determine if you are in line with your business’ expectations. That data can now automate a big portion of your sales process and expand your ability to analyze your sales performance.
If you aren’t using AI to manage your contract portfolio, you aren’t just doing extra work, you’re leaving money on the table. And no good salesperson would ever stand for that.
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