Effective management of contracts and sales processes is becoming a key success factor in today’s increasingly competitive business world.
Specialized tools such as CPQ and CLM are often used to achieve efficiency and optimize these processes. While each of them is focused on improving the quality of a company’s performance, they have very significant differences. Let’s look at what they are and how they affect the overall management strategy in an organization.
What does CLM Mean?
CLM stands for contract lifecycle management. It is a technology that focuses on the effective creation, management, execution and analysis of contracts. It encompasses all stages: from the creation of a written contract to its completion or renewal. CLM helps organizations conduct contract management in a more systematic and transparent way, minimizing risk and improving compliance with legal and business requirements.
Here are a few key aspects of CLM that are not only its benefits, but also explain why it is so essential for modern businesses:
- Data centralisation – CLM allows you to store all contracts and related documentation in a centralized system, ensuring information is easily accessible and up-to-date for all stakeholders.
- Process automation – you can automate tasks such as deadline reminders, approval processes and contract updates to reduce the time and cost of contract management;
- Monitoring compliance – enables organizations to monitor contract compliance and respond to any deviations in a timely manner, so you can minimize risks and potential penalties.
Contract management — solution that is worth introducing into your business also because it demonstrates the transparency of the transaction. This software will help each party find the important elements of an agreement in one place. It will become an integral part of the contract management strategy for organizations of all sizes, as it will ensure effective risk management and increase transparency in business processes.
Basic Information about CPQ
CPQ (configure, price, quote) is a software whose main purpose is to efficiently configure products, generate quotes and other proposals. It helps businesses provide accurate and comprehensive costing of a service or product according to each customer’s unique requirements. It will also assist in speeding up the decision-making process and increase the sales conversion rate.
Speaking about the advantages of this software, the following can be highlighted:
- speed – it allows to make the process of proposal generation as fast as possible, as well as to automatically perform cost calculations based on the selected options;
- accuracy – it eliminates the possibility of human error when generating proposals, and ensures consistency of data between different departments of the company, minimizing the risk of inconsistent information;
- Efficiency – CPQ automates and optimizes the configuration, pricing and quotation processes, increasing productivity and efficiency of employees.
Don’t forget that this software allows you to create personalized offers for each customer based on their unique needs and preferences. It will become an integral part of the sales strategy for companies that sell complex or customisable products and services. CPQ is designed to improve customer service, increase sales efficiency and boost corporate revenues.
CPQ and CLM: What Is the Difference?
CLM and CPQ represent two different approaches to optimizing and managing business processes. Although both systems aim to improve the efficiency and quality of the company’s operations, their functionality, objectives and scope of application differ significantly. Here are the main differences that can be highlighted between them:
- Focus – CPQ is oriented towards analyzing the sales process and includes not only the assessment of customer needs, but also important processes such as pricing and proposal generation. Contract management system becomes necessary only after the created plans are accepted by the other party.
- Scope of application – the differences here are quite dramatic. While CPQ is used in sales and works directly with the client, CLM is applied in the field of legal and contract management.
- Functionality – CPQ includes the functions of automatic price calculation and creation of proposals based on client requirements. CLM, on the other hand, provides capabilities to create, store, manage and analyze contracts, including monitoring compliance with terms and conditions.
- Purpose of use – the former helps increase sales velocity, improve pricing accuracy and enhance customer experience, while the latter is designed to mitigate risk and ensure compliance with legal requirements.
CPQ and CLM, although designed for different purposes, can complement each other in business processes, creating a unified and effective mechanism for managing both sales and contracts.
Integrating CPQ and CLM: Key Benefits
The integration of these two systems is a strategically important step for companies looking to optimize their operations and improve the efficiency of sales and contract management. Together, the two systems provide a comprehensive approach to managing the entire lifecycle of a product or service – from initial enquiry through to contract and service. Here are the key benefits of integrating CPQ and CLM:
- data on products, services, prices and contract terms are synchronized between the two departments of the company;
- the opportunity to create more accurate and transparent offers for customers;
- thanks to the fast preparation of offers and transparent contract management, customers receive a higher level of service and satisfaction.
Of course, you can use these two tools separately. However, together they allow you to make the sales process easier, faster and more efficient. Most importantly, this applies not only to buyers, but also to sellers. Do you want to learn even more information about CPQ and CLM? PandaDoc will help you with that – a platform that ranks first among all the platforms that allow you to create different contracts. You can contact the project managers to learn more about these systems and understand how PandaDoc can help you with them.
In conclusion, it is worth saying that the differences between CPQ and CLM are defined by their main objectives and areas of application. The former tool focuses on optimizing sales processes, while the latter is related to managing the contract lifecycle – from creation to completion. Understanding these differences will allow companies to not only choose the best solution for them, but also to integrate CPQ and CLM correctly. All for effective management of both sales and contracts.
