Data-Driven Sales: Why Contracts Are Key
The best decisions are based on data. In the modern business world, technology constantly evolves to inform best practices and smart decision-making. Smart companies are evolving to learn to use digitization to help their teams work better together.
Sales and legal may be on different sides of the spectrum, but they have one major thing in common: contracts. Sales has long been a field based on strong instincts and good communication skills, but even if some of the old style of shooting-from-the-hip sales tactics still work, they’re falling short of their potential.
If your sales practices aren’t informed by strong research and backed by data, they aren’t as strategic as they could be. Data-driven sales means using contractual data and analytics to make strategic decisions that promote business growth.
Contractual data and process metrics have become the central aspects of data-driven sales. Contractual analytics helps businesses understand their teams better. Using sales contract data, you can strategically optimize team performance. Moreover, these contract metrics also provide an insight into a company’s customer base. You can determine your customers’ preferences using sales contract data. This, in turn, will make your sales process more personalized to suit customers’ unique needs.
Types of sales data derived from contracts
Many different types of sales metrics can be derived from contracts, so it’s important to optimize contracts and your process for tracking their lifecycle to gather access to these metrics. Paying close attention to a few key types of sales data can help you strategize sales goals and processes.
Representative metrics, or rep metrics for short, are helpful when tracking the performance of individual sales representatives. Looking closely at sticking points in your sales contracts can identify stages where reps would benefit from additional coaching.
Rep metrics are further divided into BDR capacity, stage conversion rates, and lead yields. These types work together to offer insight into how well teams manage their workload and what new strategies might drive your sales process.
Deal metrics help you focus on the deals that your company is closing. They consist of win rate, average deal size, and the average sales cycle. Deal metrics determine the quality of your contractual deals, which deals to prioritize, and the effectiveness of the sales process.
Lastly, business metrics can demonstrate the overall performance of the company. They are further categorized into monthly recurring revenue (MRR), the sales formula, and customer acquisition cost.
All of these sales metrics are based on contractual sales data acquired by your organization. Tracking this data will reveal both what’s working well and opportunities for improvement.
Effectively using contract data for your sales process
Using contract data smartly will boost your sales processes exponentially. For this, legal teams and sales reps must work together.
Contracts are essential to sales velocity. Companies should be aware of which metrics to track within their contractual sales data. Tracking sales metrics, such as the time it takes to complete contract workflows, gives you valuable insight into the sticking points and hurdles associated with it. Smart planning can help you overcome these and optimize your sales process.
The sales process is all about building lasting relationships with your customers. Therefore, companies should put customer relationship management (CRM) systems into place across all organizations. With CRM systems in action, it is also necessary for sales managers to track their reps’ performance. Companies need to choose the right key performance indicators (KPIs) or sales metrics to track.
All businesses are unique and the process of selling different products or services can be as different as the products themselves. Therefore, legal teams should collaborate with sales and marketing teams to decide what sales metrics to track and optimize.
Tracking the total revenue that the company is generating is a great measure of its overall health and performance. You can also determine which products and services are generating the most revenue, which can help sales teams determine what types of contracts to prioritize.
An essential contract data metric is the annual recurring revenue (ARR). Companies that use subscription-based pricing models depend on ARR to determine the valuation of the company. ARR can highlight the performance of sales and retention teams. You can judge the efficiency at which expansion revenue is produced, and you can decrease income lost to churn.
ARR can also improve the revenue forecasting process. Sales teams can plan the duration and pricing of their subscriptions to bring in more customers and increase revenue.
From your sales contracts, you can also measure pipeline sales metrics. These include total closed opportunities, the total value of sales, and annual contract value (ACV). These numbers can illustrate which strategies are working in the individual stages of your sales process. You can draw up improvement plans for the weaker areas to focus on reaching the expected sales quota.
An example of a pipeline sales metric is the average length of a sales cycle. It measures the time it takes for a deal to go through the sales pipeline process before closing. The shorter this time is, the more efficient and faster your data-driven sales process will be, and vice versa.
Activity sales metrics allow you to dig into all the calls made, emails sent, meetings scheduled, and much more. Focus on the activities that directly affect the sales pipeline. If these activities are not up to the mark, you can guide the sales teams on performing better.
The only way to keep up with the continuous inflow of tracking contract data and metrics is to optimize them repeatedly. This enables teams to meet their goals and exceed them. The company can regularly adjust its sales approach and contract data management to generate more revenue. Thus, measuring sales metrics or key performance indicators helps you judge whether you are on track to meet your revenue goals. You can predict this before the sales deals are closed, which means you won’t have to wait until the end of the sales cycle to know whether or not you will succeed.
Contract data management for data-driven sales
All the contract data metrics you measure will become mere numbers on the screen if you do not manage them properly. Whether you decide to collect this metric-based data on spreadsheets or modern software, you need to manage it carefully. As with any contractual data, storing and managing it is a challenge. This is where digital contract management comes into play.
Contracts are a great source of decision-enabling data. Thus, when measuring sales data metrics, try to identify all the underlying trends within the numbers. These insights will help you strategize your sales pipeline and make improvements at each stage. But these insights are possible only when you have enough contract sales data to turn into actionable strategies.
Alongside knowing which contract data you should track for the sales process, you need to know how to store it and update it properly. Companies are already using contract data to drive their sales. But the data is often stored across multiple platforms that can be difficult for multiple teams to access. This isolation and lack of transparency means that the organization’s key metrics are not being utilized strategically. Thus, having a platform to store all your contract sales data will give your company an edge over others.
Generally, creating automated contract workflows ensures that your sales deals are completed efficiently and in a shorter timeframe. This will improve your average sales cycle time. The sticking points that hold up your sales process can be eliminated through strategic planning. It helps mitigate the risks involved in contracts and sales. Consequently, you can avoid losses and make more efforts to generate higher overall revenue.
As more and more businesses shift to online platforms, the whole contract sales process also needs to be digitized to meet the customers’ needs. Data-driven sales in this era are possible only with the help of efficient contract management software.
Boost sales with good contract data
Sales contract data, utilized well, helps boost business sales. But all that data for sales is just gathering dust unless you’re actively tracking sales metrics to recognize the areas that require improvement. When sales and marketing are tied to contract data, a world of possibilities opens up for business growth. The continuous review of contract data metrics enables you to explore all the possible angles to improve your sales pipeline.
Contract data management is equally as crucial for the sales pipeline, too. Automated tools allow you to track your sales metrics easily. It also allows you to close your deals in a faster and more efficient manner. One aspect is not possible without the other. Data-driven sales are directly proportional to how well your organization can manage its contract data.