Imagine your company is raising a funding round to expand the business and scale the go-to-market strategy. This is a great opportunity to solidify legal’s reputation as the competent problem-solvers they are.
Then, when the CEO asks for data on contract revenue within existing territories over the last 2 fiscal years, or contract value up for renewal this quarter, you aren’t prepared. It’s not that you couldn’t find that information within your contracts — it’s that it would take a few weeks to prepare. Until then, you have to make an educated guess.
When it comes to making crucial business decisions, guesstimating is not a solid strategy for success. That’s why contract analytics are an essential asset for data-driven legal teams. Contract analytics give legal teams insight into their contracts and help them unearth business insight that scaling teams need to make more strategic decisions.
Whether it’s proving legal feedback or identifying at-risk contracts, contract analytics help legal teams make data-driven decisions that drive the business forward. Here are some of the ways contract analytics promote data-driven decision-making:
Prove Legal Value
Without contract analytics, a lot of legal’s value is invisible. In addition to executing contracts as quickly as possible, legal handles every single contract in the business while also managing litigation, compliance, and other legal matters. The lack of legal troubles is proof of legal value, but that value is hard to quantify and can be taken for granted.
Contract analytics enable legal to both measure and prove their impact on the business. Using contract data, legal teams can demonstrate how many contracts they work on in a quarter, how quickly they execute those contracts, and the value of the agreements. Then, they can quickly generate reports that visualize this data and showcase their value to the entire business.
Make Smarter Hiring Decisions
Contract data can also help legal teams advocate for more headcount. Most legal teams operate lean, and while Contract Lifecycle Management (CLM) helps them shoulder some of the more tedious parts of their workload, there’s no replacement for in-house legal talent as a company scales.
Contract analytics will help you make the case for expanding your team. For example, contract analytics provide metrics that indicate how much your contract volume has increased over time and how an increase in headcount will help you execute contracts more quickly. These metrics indicate not only which contracts are most common to your business, but also whether you need generalists or specialists to handle the increase in volume.
Understand Churn and Identify “At-Risk” Contracts
With better visibility into executed contracts, legal teams can collaborate with customer success teams to understand churn and identify at-risk customer contracts. Using the dashboards and reporting functions within your CLM, you can also run reports on contracts that churned and gain insight into potential causes.
Using contract analytics to identify trends in churn — e.g. common process errors, clauses, or contract types — helps you prevent it in the future. Plus, it helps you to report on contracts that are at risk for churn and strategize with CS and sales to improve contract performance and get ahead of renewals.
Takeaways
Contract analytics promote data-driven decision-making and enable legal teams to prove their value to the organization. See how CLM can help your team generate insights from your contract data. Request a demo today.
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