CRM contract management enables business teams to create, negotiate, and execute contracts within the familiar interface of their Customer Relationship Management (CRM) platform. While this is beneficial for basic contract management processes, it becomes counterproductive when companies begin to onboard complex contracts at scale.
This is because CRMs offer generic functionalities and lack the robustness, flexibility, and scalability that are required for more intricate contracts like government agreements, international business partnerships, and mergers.
These advanced contracts are characterized by complex terms and constantly evolving compliance requirements. Thus, organizations managing these with a CRM often struggle to track and enforce contractual obligations, resulting in increased risks, compliance failures, and potential legal disputes.
In this guide, we will explore the concept of CRM contract management, its cons, and how to boost a CRM’s contract management capabilities with CLM integration.
What is CRM contract management?
CRM contract management is the process of utilizing the contract management features of a CRM to streamline the creation, storage, tracking, and maintenance of contracts throughout their lifecycle.
A CRM offers a suite of tools that collectively enhance customer acquisition and retention processes for businesses. Because contracts are core to every business transaction, many CRMs incorporate basic contract management features to help business teams generate, sign, store, and maintain contracts within their ecosystem.
While a CRM lets you create contracts, its contract management functionalities exist more as an afterthought, with more focus shifting toward core aspects like marketing automation, sales pipeline management, and customer engagement.
What’s wrong with using a CRM for contract management?
CRM contract management is only applicable to simple contracts. However, when your organization starts to scale its contract volumes, introducing complex deals to the pipeline, you'll begin to face a number of challenges.
This section discusses some of the problems you could face when using a CRM for contract management.
#1 Lack of specialized contract management features
The core functionalities of a CRM are structured for managing customer relationships, sales, and marketing processes. Thus, its contract-related functionalities are generally basic and limited.
They may not offer the specialized features required for comprehensive contract management, such as advanced workflow automation, clause libraries, contract templates, and version control.
#2 Inadequate contract tracking and milestone management
CRMs usually offer tracking capabilities you can utilize for basic task management processes. However, contracts often have intricate timelines and milestones with various dependencies and deadlines.
The generic tools offered by CRMs cannot manage these complexities. For example, they generally don’t support the creation of conditional milestones or dependencies between different contract stages, making it difficult to accurately track and manage progress.
Also, CRMs allow you to set alerts and reminders for assigned tasks. But if you want to set automated alerts for contract renewal dates, termination notice periods, or critical events that require attention, you’ll have to involve several workarounds and manual processes to get it done in a CRM.
#3 Challenges in contract creation and negotiation
CRM systems typically do not offer advanced contract authoring and negotiation capabilities. They often lack features such as clause libraries, contract templates, and document editors, which are essential for efficiently creating contracts.
Additionally, collaborating and negotiating contracts using a CLM is inefficient as it generally lacks tools for redlining, version control, and approval.
Without these tools, you’ll be forced to rely on external software or manual processes, leading to delays, inefficiencies, and an increased risk of errors.
#4 Limited document management capabilities
Contract management involves handling a large volume of documents, including contracts, amendments, exhibits, and related files. To manage these effectively, robust functionalities like version control, centralized storage, and access controls are paramount.
CRMs do offer basic storage and retrieval capabilities, but they generally don’t provide the level of control and sophistication necessary for managing contracts and associated documents efficiently.
#5 Compliance and risk management gaps
Contracts often contain critical clauses that outline the legal obligations, rights, and responsibilities of the parties involved. CRMs often lack dedicated features for monitoring and tracking these clauses, making it challenging to ensure compliance with legal and performance requirements.
Additionally, CRMs don’t offer sufficient functionalities that aid risk identification, evaluation, and mitigation processes. This limits your ability to proactively manage and address potential risks, resulting in increased vulnerability and decreased effectiveness in risk management strategies.
#6 Insufficient contract reporting and analytics
A CRM’s reporting tools aren’t tailored to suit contract management requirements. They’re not populated with contract-related metrics and insights you can explore to optimize contract processes for better results.
For example, a typical CRM can't help you determine which contract terms are most frequently negotiated or identify patterns to help you negotiate more favorable terms.
Additionally, a CRM's ability to generate customizable contract reports and visualizations is often limited. This can hinder your ability to effectively present contract-related information to stakeholders.
Using generic reporting tools limits your ability to identify trends, highlight risks, spot your most valuable contracts, and maximize opportunities.
How does integrating your CRM with a CLM make contract management more efficient?
A Contract Lifecycle Management (CLM) system is a comprehensive collection of tools designed to optimize the entire spectrum of the contracting process, from initiation and negotiation to execution, monitoring, and renewal.
Unlike CRMs, a CLM—e.g., SpotDraft—is built explicitly for contracts and is, thus, fortified with all the tools and automated workflows you need to streamline your contract lifecycle and close deals twice as fast.
On the other hand, a CRM is designed to help businesses acquire, retain, and engage customers. These core processes align with the goals of a CLM, and as a result, integrating both systems come with several benefits, some of which we've discussed below.
#1 Streamlined end-to-end processes
Integrating a CRM into a CLM's ecosystem effectively merges the core processes of both systems. The CRM first streamlines the customer conversion journey, starting from the initial interaction to the point of closing.
At this point, the CLM leverages accumulated data from the CRM to facilitate the creation, negotiation, and execution of contracts tailored to suit the goals of the business transaction.
SpotDraft, for instance, streamlines every aspect of the contract lifecycle in several ways. It gives you access to templates fortified with legal guardrails and automations to help you expedite the contract creation process.
It also allows you to automate workflows like approvals, reminders, and more using simple and complex triggers. That way, you eliminate time-consuming manual processes and manage contracts more productively.
Throughout the contract lifecycle, the integrated system will enable you to manage customer relationships, monitor compliance, and track renewals.
#2 Comprehensive customer view
The CRM's rich customer data, coupled with a CLM's robust contract insights, allow you to get a 360-degree view of your customers' contractual relationship with your organization.
You can analyze the historical interactions, sales data, and customer preferences stored in the CRM system to identify patterns, trends, and opportunities for personalization. Armed with this knowledge, you can create more relevant and targeted contracts that align with the customers' objectives, enhancing their overall satisfaction.
SpotDraft’s reporting and analytics tools can combine insights from a CRM to help you get a deeper understanding of your customers and how you can make your contracts with them more productive. It gives you access to data from historical, ongoing, and pending agreements, helping you discover optimization and risk mitigation opportunities.
#3 Enhanced contract visibility and tracking
Integrating CRM with CLM enhances contract visibility and tracking by providing real-time access to contract-related information within the CRM interface. This means that sales teams, account managers, and other stakeholders can easily view the status of contracts, key terms, renewal dates, and associated documents directly from the CRM.
With this integration, you no longer need to switch between multiple systems to gather contract information, as all the relevant details are available within the familiar CRM environment.
SpotDraft offers functionalities for enhancing visibility and tracking throughout the contract lifecycle. Its central repository allows you to securely house all contract-related data in one location, enabling relevant stakeholders to get a clear overview of contract status, key terms, and important dates. Its contract editor also provides a transparent environment that allows stakeholders to collaborate on contracts, with access to progress levels, modification records, and more.
SpotDraft also comes with automated tracking functionalities you can utilize to monitor performance and regulatory compliance.
#4 Efficient contract management workflows
Automation is a core component of CRMs and CLMs. Thus, fusing their capabilities results in more streamlined and efficient contract management workflows.
For instance, the CLM can automatically pull CRM data like customer details, product information, and pricing into its ecosystem to generate contracts populated with the right clauses and negotiable terms. The CLM's robust workflow automation capabilities can then be leveraged for streamlining processes like approvals, task assignments, and reminders.
SpotDraft offers some of the most comprehensive automated workflows in the industry, allowing you to streamline manual processes using simple and complex triggers. For instance, you can set triggers for a contract to be automatically approved if its value falls below $50,000.
With SpotDraft, a sales team can instantly generate a sales contract with all the required approvals without ever leaving Salesforce.
#5 Improved collaboration and communication
Integrating a CRM and CLM allows relevant stakeholders, such as sales, legal, and finance teams, to access contract-related information and contribute their inputs within the CRM environment.
This integration promotes cross-functional collaboration, enables efficient decision-making, and minimizes the risk of miscommunication or siloed information.
SpotDraft’s collaborative editor allows multiple stakeholders to create and negotiate contracts from a unified interface. With this tool, you can redline, comment, and monitor modifications throughout the contracting process.
SpotDraft also fosters collaboration and communication through its robust reporting and analytics functionalities. These tools allow contract managers to dive into contract data, generate reports and share with stakeholders seamlessly. That way, they can demonstrate the impact of strategies on contracting processes and foster better decision-making.
“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth.”
~ Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos
Also read: 8 Top Contract Management Software Platforms
Best practices for implementing the CRM-CLM integration
Integrating your CRM with a CLM comes with many benefits. However, if implemented inadequately, your CRM-CLM integration can be counterproductive.
A successful CRM-CLM integration is ensured through proper planning and strategic implementation. In this section, we dive into the various steps you must take to guarantee a productive implementation of a CRM-CLM integration.
#1 Clearly define your requirements and goals for the integration
Before starting the integration process, it's crucial to clearly define what you want to achieve with the CRM-CLM integration. Identify the specific business objectives you want to achieve. This could be creating contracts faster, generating more robust reports, or improving compliance.
By clearly understanding your requirements and goals, you can design a more effective integration strategy.
#2 Identify compatible CLMs for your CRM
There are several CLMs in the industry, with many offering integrations to external platforms like CRMs. However, you'll need to ensure that your chosen CLM can seamlessly integrate with your CRM, provide functionalities that match your business goals, and align with your budget and future scalability requirements.
Consider factors like data synchronization, user interface, reporting capabilities, and automation features.
#3 Evaluate integration tools and technologies
Assess the integration tools and technologies available for connecting your CRM and CLM systems. Look for options that offer robust functionality, ease of use, and good support.
CLMs like SpotDraft offer integrations for popular CRMs like HubSpot, Salesforce, and Zoho. This simplifies the integration process and reduces development efforts.
You can also consider the use of APIs or third-party integration platforms. However, ensure you consult with your CRM and CLM vendors or integration experts to identify how each integration method aligns with your business needs and growth plans.
#4 Create a plan for mapping data fields and ensuring consistency
Develop a clear plan for mapping data fields between your CRM and CLM systems. Identify the essential data elements that need to be synchronized, such as customer name, contact information, contract start/end dates, pricing details, and any other specific data elements that are important for your contracting processes.
Determine if there are any variations in field names, data types, or field lengths that need to be addressed during the mapping process and establish rules to ensure that data is accurately synchronized between the systems.
#5 Test and validate the integrated processes
Thoroughly test and validate the integrated processes before deploying them in your actual business environment.
You should create test scenarios that cover different use cases and workflows for your contract processes. Also, verify the accuracy of data synchronization, data flow, and functionality across the CRM and CLM systems.
Furthermore, ensure you involve the relevant stakeholders in your testing process to confirm that the integration meets their requirements and expectations. Address any issues or discrepancies discovered during this process and reconfigure the integration accordingly.
It is also important to constantly review the performance of this integration and identify areas that require improvement.
“If you think that you're doing everything perfectly, you're not going to grow. There's always an opportunity for self-improvement.”
~ Doug Luftman, ex-DGC, DocuSign
The Key to Success as an In-House Legal Counsel & Leader
Supercharge your CRM’s capabilities with a robust CLM
“I have seen a demo of SpotDraft’s CLM technology and they should be on your short list of vendors to talk to about a contract management system.”
~ Sterling Miller, CEO and Senior Counsel at Hilgers Grabens PLLC
Ten Things: “Cool Tech” For In-House Counsel (2022 Edition)
A CLM's generic contract management functionalities are often insufficient for the constantly evolving requirements of the modern business world.
However, by incorporating the broad, customer-facing capabilities of a CRM into the robust and specialized functionalities of a CLM, contract managers can maximize productivity and reap the benefits of both worlds.
SpotDraft is a leading CLM with some of the most reliable functionalities in the industry. It comes packed with tools you can leverage to get the best results with contract management.
Moreover, its platform-agnostic characteristics allow you to seamlessly integrate your CRM into its ecosystem, enabling you to manage contracts more productively without leaving the comfort of your CRM.
Want to see how this actually works? Request a demo.