NLMagazine/Contractmanagement - In this article I will dive into the role of contractmanagement in customer success: It is all about building stronger client relationships - Customer success is not just a department or a buzzword; it is a critical function that ensures clients achieve their desired outcomes while using your products or services. It’s a proactive approach, focusing on delivering value, retaining customers, and fostering long-term partnerships.
However, one element often overlooked in this equation is the role of contracts—arguably the foundation of every client relationship. Let’s delve into the interplay between customer success and contract management, and why integrating these functions is vital for delivering on promises and driving mutual success.
What is Customer success?
At its core, customer success is about ensuring that clients derive maximum value from their investment in your offerings. It’s a shift from reactive support to proactive engagement. Typically, the customer success function is organized into teams or roles dedicated to:
1. Onboarding clients and setting them up for success from day one.
2. Monitoring usage and performance to identify opportunities for improvement.
3. Acting as a trusted advisor to guide clients in achieving their strategic goals.
4. Retaining customers by addressing challenges before they become problems.
Customer success teams are often the bridge between the client and the company, ensuring alignment on objectives and outcomes. Yet, despite their critical role, they can sometimes operate in silos, disconnected from the contractual obligations that underpin the relationship.
Contracts: The foundation of client relationships
Contracts are not just legal documents; they are the blueprint of the client relationship. They define the scope, deliverables, timelines, and financial terms that govern the partnership. A well-structured contract provides clarity, sets expectations, and serves as a reference point for both parties.
Why are contracts so fundamental? Because they translate promises into actionable commitments. Without a clear and comprehensive contract, even the best customer success teams can struggle to deliver value, as their efforts may lack alignment with what was originally agreed upon. As one of our clients aptly put it, “Customer success is probably the best description of a contract manager at our sales side of the organization.”
Involving customer success in contract creation
To truly align customer success with contract management, the customer success function must be involved early in the contract creation process. Here’s why:
1. Understanding Client Needs: Customer success teams have firsthand insights into client goals and challenges. Their input ensures that contracts are tailored to address these needs effectively.
2. Setting Realistic Expectations: By collaborating on the contract, customer success can help define achievable deliverables and timelines, avoiding overpromising.
3. Establishing Clear Metrics: Success metrics should be embedded in the contract, providing a shared understanding of what “success” looks like for both parties.
When customer success professionals contribute to the contract’s development, they are better equipped to manage the relationship and deliver on promises, as they have a deep understanding of the agreed-upon terms.
The art of managing the contract
Managing a contract is not just about maintaining a positive perception with the client—it’s about delivering on the commitments outlined in the agreement. This requires a multifaceted approach, including:
1. Delivery management: Ensure that all deliverables are provided as specified in the contract, on time and to the agreed standard. This requires close collaboration with internal teams to align execution with contractual obligations.
2. Engaging key client stakeholders: Building relationships with decision-makers and influencers within the client organization is essential. These relationships provide insights into the client’s evolving needs and help address potential issues proactively.
3. Financial oversight: Contracts often have financial implications, such as payment schedules, penalties, or bonuses tied to performance. A keen eye on these elements ensures that the financial aspects of the relationship are managed effectively, avoiding disputes and ensuring profitability.
4. Monitoring and reporting: Regularly track progress against the contract’s terms and provide transparent updates to the client. This builds trust and demonstrates accountability.
5. Adaptability: Contracts should not be static. As client needs and market conditions evolve, the ability to renegotiate or amend contracts ensures that the partnership remains relevant and mutually beneficial.
Customer Success: The new face of contract management?
In many ways, customer success professionals are becoming the de facto contract managers on the client-facing side of organizations. They are responsible for ensuring that the promises made during the sales process are fulfilled, and that clients derive the value they were promised. This alignment between customer success and contract management is not just a best practice—it’s a necessity in today’s competitive landscape.
By integrating customer success into the contract lifecycle—from creation to execution—organizations can build stronger, more resilient client relationships. Contracts become living documents, guiding the partnership and ensuring that both parties achieve their goals.
Final thoughts
Contracts are the foundation of customer success, and managing them effectively is key to delivering value and fostering long-term partnerships. By involving customer success teams in the contract creation process and emphasizing proactive contract management, organizations can ensure alignment, accountability, and mutual success.
In the words of one of our clients, “Customer success is probably the best description of a contract manager at our sales side of the organization.” Let’s embrace this perspective and elevate the role of contract management in driving customer success.
