Role of Contract Management in Business Development
The two main activities for business development are marketing and sales. Regardless of whether you are a financial firm trying to build client relationships at conferences or an oil & gas corporation looking to expand the scope of current contracts, all businesses could benefit from taking a closer look at how contract management impacts their business development processes.
This article explores some useful contract management techniques to boost your business development efforts.
Editor’s Note: To learn more, download our whitepaper on the top 10 contract management best practices.
Set a “Client Update” Reminder
Given that 80% of business development budgets are typically spent on recruiting new clients, it’s easy to forget that those same new clients only contribute about 20% of annual revenues.
That’s why it’s critical not to forget your faithful repeat or existing clients and keep them engaged with a regular cadence of touchpoints. Here are a few ideas:
- Articles about the client’s industry
- Company newsletter in digital or print form
- Invitations to internal or industry events
- Information on new legislation affecting client’s industry
- Deliver reports or deliverables in person
Through these periodic updates, you’re creating opportunities for your client to talk to you about additional business opportunities. As Woody Allen famously said, “80% of success is just showing up.” Choose a contract management system that enables you to build several tasks, assign them to specific team members, and send automatic “to-do” email reminders.
Encourage Cross Selling
For some industries, cross selling is essential for survival. For example, in the financial services industry, Wells Fargo stands out from the competition by selling an average of 5.9 products per customer.
In fact, Wells Fargo sets the expectation to sell at least one more product to every customer every year as one of its competitive advantages. Take a cue from this company and work the following strategies when you are providing an existing service to an existing client:
- Look for opportunities to provide a new service to same client.
For example, a marketing agency that has an existing contract for development of print ads could do a presentation of online ad capabilities to create new revenue streams. Bundling has long been used as an effective strategy to entice client to buy not just a single service, but an entire group of services that go together. Offering a price break on package deals will help add additional services to any contract.
- Provide incentives to encourage client referrals for existing service.
The solar panel industry is a great example of this strategy. Several newcomers acquired a large market share over a relatively short amount of time because they offered incentives for existing clients to provide referrals. Beyond just monetary incentives, solar companies may provide perks, such as free installation, help with local government paperwork processing, and credits for future upgrades.
- Invest in partnerships to be ready for new service offerings to new clients.
In other words, have a list of reliable and approved subcontractors that specialize in offerings at a lower profit margin that yours. Your team should attend industry events and network with other companies to build meaningful partnerships.
Establish Contract Templates and Clauses
In order to implement the above cross-selling tactics it’s important to give your team pre-approved contract templates and clauses. Through contract management software, your company can facilitate and accelerate the drafting of contracts for providing new services to existing or new clients. This shouldn’t be a process that starts from scratch every single time. This is just one of the many benefits from investing in a contract management software.
Keep your eyes and ears open for opportunities in business development. Through periodic client updates and cross selling techniques, your company can increase its annual revenues. Both contract management techniques are easier to perform using contract management software.