How to Forecast Sales Using Contracts
You can take important data from your existing contracts to help predict future sales. With many deals in the works at any moment, you need key data at the right time to help you forecast what might happen next. The sales team can use digital contracting to extract the information you need and provide you a front-row seat to how to forecast future sales.
With paper contracts, you’re constantly waiting to hear back from legal with questions like is the contract signed? Or, what are all these redlines? By contrast, contract management software can help your legal team and other departments streamline their processes and enhance the efficiency of the contract lifecycle. These enhancements don’t just make the sales process more efficient. They also provide useful data you can use to forecast future sales volume. Ironclad digital contracting can provide you with the insightful data you need.
Contracts and the legal team
Most businesses think of contracts as the legal department’s problem. In fact, without software to handle contracts, you may see delays and challenges that make it hard to predict the future of your sales. Holdups and delays take up more of your time and that of your team. When problems constantly occur getting a sales contract finalized, the sales team pays the price. The time wasted going back and forth can make it difficult or even impossible to accurately forecast future sales.
When the legal team has the software it needs to streamline the process, this can have a positive impact on the sales team. Your business can make significant improvements to its contract lifecycle to benefit every team—including the sales department. Sales reps want to make sure that a contract is ready once the sale has been made. Your team can use comprehensive contract management software to improve your processes and provide you with useful data for the future.
Make data-driven decisions with Ironclad software
Contracts are living documents. They can provide you with usable data and metrics to improve the entire contract management process—including information useful to the sales team. Information within existing business contracts will help you anticipate future needs and better understand the capacity of your sales team. With this data in hand, you are empowered to improve relationships with other departments, employees, and clients.
When you treat contracts as data, a new world of possibilities opens to you. Contract management software makes it possible to track deals through every stage of the process. This includes:
- The initial sale
- The negotiation stage
- Legal redlining of contracts
- Approval processes and signing
- Finalization and fulfillment.
A sales team needs access to data from each of these stages to make data-driven decisions. Data is compiled centrally and in one platform for easy-to-understand viewing. It provides insights into the “big picture” of how future sales will occur. For example, if you have 40 deals to close in a quarter, you can analyze this information to make tweaks or changes to your systems. You can even analyze the changes and requests commonly made by customers to predict future issues.
Benefits of contract management for the sales team
An innovative company wants to improve its processes to increase sales and better its forecasting. A digital contracting platform is a necessary tool to keep up with a modern business. It’s the only true way to ensure contract processes keep up with your desired pace, which you can set well into the future.
Benefits of contract management software include:
- Shorter turnaround times: Contract management software reduces turnaround times from weeks to days for all kinds of contracts, including sales.
- Creation of workflows: Businesses can create workflows to enable the processing of deals more efficiently.
- Scaling of contract volume: You can scale and automate much of your contract processes. This leads to a reduced time in which individual sales contracts are created, reviewed, and approved.
- Encouragement of collaboration: CLM software makes it possible to manage a sales contract in a single, unified platform. Edits and redlines are done where everyone can see them, without the need for constant back and forth.
- Increase of revenue: With streamlined processes and automation, a sales team can increase the number of deals they perform and save on employee hours.
These tools empower a sales team to enhance their sales pipeline and begin to forecast the future. The data the software provides will further enhance the efficiency of your system and give you insights into how these improvements will affect your forecast.
How digital contracting powers sales forecasting
“Time kills deals.” This common saying in the sales world shows how any delay can reduce your team’s efficiency and make predictions more difficult. Closing a deal efficiently and without necessary holdups empowers your team to get their job done. Contract management software helps provide consistency in the sales process. This consistency gives you confidence in making accurate predictions for the future.
Handling contract negotiations and deal closings manually leave the process open to too many variables. The complexity of six-figure and higher deals under this old method means the sales team must wade through:
- Emailing word documents back and forth
- Leaving voicemails and playing phone tag
- Waiting hours or days for replies
- Constant redlines of contracts
- Unclear deadlines and acceptance dates
This confusion creates delays that may push deals into the next fiscal quarter. Many sales teams are left asking, “When is this deal going to get done?” Ironclad provides real-time data about current and past contracts to reduce delays and get your sales through the legal process. After a successful sale, you do not want to see legal red tape hold up a successful business venture.
Successful business predictions rely on consistency of contracting. Contract management software provides the details needed to enhance the contracting process throughout its lifecycle. The sales team is then prepared to make accurate predictions for the next fiscal year and well into the future.
Contract negotiation efficiency
In the old days, simple data points like a contract renewal date would require legal’s time-consuming analysis. You’d have to wait for a response before moving forward with a client. Or, you have all the important details taken care of and a deal in hand—but legal needed to redline and analyze the contract for days. This meant waiting an indefinite period for your deal to get done and approved.
With Ironclad, the sales team can search for the client name and the contract questions you need to be answered. This data streamlines their process and helps keep it out of Legal for an extended period. It also gives you and the customer one place to collaborate and make changes. The key terms of the deal are available to everyone as is the ability to redline so everyone can negotiate in real-time.
Predicting pipeline and forecast into the fiscal year
A sales forecast is a useful tool. It measures performance, informs your decisions, and helps to drive your sales forward. It lets you forecast your future needs and the ability of your team to close. With accurate metrics on your past contracts, you can predict your sales pipeline for the next quarter and through the fiscal year.
Step 1: Capture the sales pipeline
You need to track your sales pipeline to forecast the future. Many sales teams use spreadsheets to accomplish this goal. It requires manual input of data into the sheets and significant employee hours. Instead, your team can opt for a CRM system like Salesforce—which is integrated directly into Ironclad’s software.
This system automatically captures sales data at all meaningful stages of the sales and contract lifecycle. It then compiles that data, analyzes it, and creates an easy-to-understand presentation of that data. With a successful capture, you are on your way to an accurate forecast.
Step 2: Accounting revenue vs. sales bookings
Sales bookings are a list of your opportunities and deals you hope to see by a particular date. This represents your raw sales pipeline. Understanding what falls into this category helps you forecast the future.
Accounting revenue is how the bookings are recognized as income through time and represent a different yet important set of information. Capturing this information will help you with probability weightings.
Step 3: Calculate probability weightings
An accurate CRM will provide you with information from historic sales data. You can understand the conversion rate at every stage of the contract lifecycle. This information will help you see where deals move quickly and where they slow down. Contract management software metrics can help you accurately make these weightings to predict your pipeline into the fiscal year.
Metrics useful in this process may include, but are not limited to:
- Number of contracts in a particular period
- Average time to close contracts
- Size of deal and complexities
- Win rate
- Average deal length
Accurate probability weightings are nearly impossible to make without properly distilled data. CRM and digital contracting software can streamline your process and give you accurate metrics.
Step 4: Create the forecast and make predictions
With the appropriate data in hand, you can make a sales forecast to accurately predict what is coming. Historical contract data is presented in an easy-to-use format that will let you know what is coming. You can predict the velocity of your sales team as well as the hurdles your deal faces outside of the sales team.
Use data to forecast sales contracts
Analyzing contracts and extrapolating their data will help you improve your sales process. Contracts are a necessary part of finalizing the sales you made. When they are accomplished without unnecessary delays and with improved automation, you can improve your sales and better understand your future forecast.
Try Ironclad and use contracts to start forecasting future sales.