Salesforce is a Sales Tool, Not a Contract Management Solution

For sales-centric organizations, there is a temptation to have Salesforce software manage more than just your sales cycle, but also your customer support, your project management, and even your contract portfolio. The only problem with this strategy is that Salesforce is a sales tool, not a contact management tool, and trying to force that square peg into a round hole has a number of negative consequences for your organization.

Salesforce is particularly bad at contract management for two reasons:

  1. Salesforce can’t actually read contract language
  2. Salesforce relies on sales representatives to maintain contract data

First, let’s be clear, Salesforce is a great sales tool, which is why Salesforce’s market cap is well north of $100 billion. And because Salesforce is so adaptable, extensible, and customizable, it can be made to look like a contract management tool. But appearances are often deceiving.

Let’s take a very basic contract scenario for which Salesforce would seem to be an ideal tool: contract renewal dates. 

Many companies offer services for a specified length of time — like your own monthly or annual contract with your cell phone carrier — and most contracts clearly spell out what happens when that term expires. Is the contract renewable? If so, at what price and for what length of time? Does one or both parties have to agree, or does it renew automatically? Under what terms, and with what notice, can either party cancel?

You can easily configure some meta-data or custom database fields in Salesforce that spell out all these contract terms and attributes, and even build reports and workflows around them. For example, if contracts only renew manually, and you need to re-sell a customer on your service, Salesforce could automatically build a call sheet for a direct sales team to launch that sales process 90 days before a contract lapses.

Here’s the problem: That renewal date meta-data has to be manually maintained and that task usually falls to your sales team, who inputs the data when they close a Salesforce opportunity as a won deal. Unless you want to tie sales representatives’ commissions or bonuses to the accuracy of their Salesforce contract data entry (good luck with that), that data is going to be less than perfect under the best of circumstances. 

Sales reps are (rightfully) built to care about hitting their number, not maintaining a contract database. They are going to enter as little data as possible, as quickly as possible, so they can move on to their next sale. Making them responsible for entering the data that helps you manage contract risk is a recipe for disappointment, if not disaster.

Now, magnify this issue beyond renewal dates to include pricing options, service-level agreements, penalties, and a whole host of other contractual risk factors.

Compound that risk profile with contracts that are renegotiated outside the sales cycle, such that the team that alters the agreement isn’t the team that usually tags and categorizes contracts in Salesforce. Now the contracts you cared enough to explicit address are the ones least likely to have accurate Salesforce reporting data.

An effective, reliable sales tool doesn’t rely on data outside of the contract itself to quantify the attributes of a contract. A modern contract management tool can parse contract language into quantifiable data. Artificially intelligent natural language processing eliminates the need for manually tagging and categorizing contracts, so you don’t have to rely on Salesforce tags (or sales rep tagging) to keep your contract portfolio properly managed.

LinkSquares is building the AI-empowered contract management tool that works off real contract data, not external data entry. If you’re ready to start handling contract risk with modern tools — and to let your sales team concentrate on sales — contact LinkSquares today.

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