3 Ways to Increase Revenue from Your Contracts
Whether you’re experiencing a slow quarter and looking for a boost, or just looking to go the extra mile, there are several ways you can can incrementally increase revenue from your contracts.
And while some things may be out of your control, here are 3 ways you can grab the reins and boost revenue for your company.
1. Call Your Salespeople Daily
Depending on your role at your company, you may spend a lot of time in the office or away from it in conferences. When you’re responsible for a large team of salespersons, you may be tempted to implement a daily, weekly, or monthly written report from staff. The reality is that salespeople hate paperwork.
While you may have a clear idea of why you need them to input data in Excel sheets (e.g. calculate their lead to opportunity rate or their closing ratio), they may see that Excel spreadsheet as nothing more than a useless chore. A salesperson may decide to put in junk data because she isn’t sure why she is putting in data in the first place.
Your salespeople are your eyes and ears in the field so you need to guide them as to what you want to look and listen for.
Calling your salespeople on a daily basis allows you to learn about any roadblocks or strategies by competitors that are preventing you from closing sales. Having a daily pulse of what’s going on in the field allows you to act in a timely manner.
2. Negotiate During Renewals
Most of us have contract renewals that somehow seem to “pop out of nowhere” every single year. Given that contract renewals are the lowest possible hanging fruit, contract managers tend to pay very little attention to these type of negotiations. By the time you’re locked into a bad deal (again!), it’s too late.
When it’s time to pitch for a new client, we pay careful attention to estimates, timelines, and deadlines. However, when it’s time to renew a contract, we are just happy to accept the same terms. A good practice is to setup time for the team that handles an account to review the profitability of an account and determine whether or not adjustments are necessary.
Make it a practice to implement this process in the contract lifecycle of all clients in your contract management system. By setting an expectation that teams are supposed to evaluate accounts before renewals, you’re able to fine-tune contracts for cost underestimates, changes in the economy, or unforeseen circumstances when the original contract was first signed.
If a contract no longer makes financial sense for your company, and the client doesn’t budge on terms, be ready to walk away.
3. Outsource Contracts
In times of desperation, some contract managers are willing to take on any easy, available contract, even if it pulls your organization out of its sweet spot. Going into contracts that are outside of your niche can be a double whammy.
On the one hand, it may pull your key staff from doing work for valuable customers. This in turn affects the ability of that staff to meet deliverables on time and on budget for those valuable customers, jeopardizing those valuable relationships. On the other hand, going into uncharted territory may require a team to do some prep work that may not necessarily be covered within the retainer of the contract.
Subcontracting work is a good strategy to take on available work that is no longer profitable but that you’d like to accept in order to maintain a business relationship. Five good strategies to hedge yourself against the perils of outsourcing are:
- Investigate thoroughly the competitors in the market before entering into an outsourcing contract;
- Be clear about the objectives for outsourcing;
- Define performance requirements in the contract;
- Foresee contingencies; and
- Monitor and manage contract performance.
Particularly when subcontracting in governments contracts, be on the lookout for any Limitation of Funds clause. Overseeing such a clause created a big legal battle between the Armed Services Board of Contract Appeals (ASBCA) ASBCA and Boeing that lasted close to 10 years!
Three initiatives can help your company increase revenue from its contracts are (1) setting up call times with salespeople on a daily basis to provide necessary context of company initiatives and gather daily intel from the field, (2) setting an expectation that teams are supposed to evaluate accounts before renewals and renegotiate terms when necessary, and (3) subcontracting work that is no longer profitable but that you’d like to accept in order to maintain a business relationship.