Role of Contract Management in Business Development
For any business, the two main activities for business development are marketing and sales. No matter whether you are a financial firm looking to build relationships with clients at conferences or an oil & gas corporation looking to expand the scope of current contracts, all businesses need to take a closer look at how contract management falls into business development processes.
In this article we will explore some useful contract management techniques to boost your business development.
Set a “Client Update” Reminder
Given that 80% of your business development budget consumption is on new recruiting new clients, it is very easy to forget that those same new clients only contribute to about 20% of your annual revenue generation.
This is why it is critical not to forget your faithful repeat clients and send 2 client updates about every 3 to 6 months. 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 are 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 an enterprise 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 to its customers.
As a matter of 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 rep:
1. Look for opportunities to provide a new service to same client rep. 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 reps 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.
2. Provide incentives to encourage client referrals for existing service. The solar panel industry is a great example of this strategy. Several newcomers are capable of acquiring a large market share over a relatively short amount of time because they offer several 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.
3. Invest in partnerships to be ready for new service offerings to new client reps. In other words, have a list of reliable subcontractors that specialize in offerings at a lower profit margin that yours. This is why is critical that your team attends industry events and networks with other companies to build meaningful partnerships.
Establish Contract Templates and Clauses
From our discussion in cross selling, it become clear the importance of having and making available to your team pre-approved contract templates and clauses. Through a 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 increase its annual revenue generation. Both contract management techniques are easier to perform through the use of contract management software.