What are the best ways to manage contracts with recurring revenue streams?

1 Automate contract lifecycle management

One of the key aspects of managing contracts with recurring revenue streams is to automate the contract lifecycle management (CLM) process. CLM refers to the creation, execution, monitoring, and renewal of contracts. Automating CLM can help you save time, reduce errors, ensure compliance, and improve customer satisfaction. For example, you can use software tools to generate contracts based on predefined templates and clauses, send reminders and alerts for key dates and actions, integrate with billing and accounting systems, and track contract performance and metrics.

2 Segment and prioritize your contracts

Another important way to manage contracts with recurring revenue streams is to segment and prioritize them based on their value, risk, and complexity. Not all contracts are equal, and some may require more attention and resources than others. By segmenting and prioritizing your contracts, you can focus on the ones that have the most impact on your business goals and customer retention. For example, you can use criteria such as contract size, duration, renewal rate, profitability, customer satisfaction, and risk level to classify your contracts into different categories and assign them to different teams or managers.

4 Optimize contract performance and value

A fourth way to manage contracts with recurring revenue streams is to optimize their performance and value. This means that you should not only monitor and measure how well your contracts are fulfilling their obligations and expectations, but also look for opportunities to improve and enhance them. For example, you can use data and analytics to track key performance indicators (KPIs), such as revenue, costs, quality, service levels, and customer satisfaction, and identify areas for improvement or innovation. You can also use strategies such as upselling, cross-selling, bundling, or offering incentives to increase the value and longevity of your contracts.

5 Plan and execute contract renewals

A fifth way to manage contracts with recurring revenue streams is to plan and execute contract renewals. Renewals are crucial for maintaining and growing your recurring revenue streams, as they allow you to retain your existing customers and increase their lifetime value. However, renewals are not automatic or guaranteed, and you need to work hard to convince your customers to renew their contracts and avoid churn. For example, you can use best practices such as starting the renewal process early, understanding your customers' needs and preferences, offering competitive pricing and terms, and demonstrating your value proposition and differentiation.

6 Learn and improve from feedback

A sixth and final way to manage contracts with recurring revenue streams is to learn and improve from feedback. Feedback is essential for improving your contract management skills and processes, as it helps you to identify your strengths and weaknesses, and to adapt to changing market conditions and customer expectations. For example, you can collect feedback from your customers, partners, and internal teams, using surveys, interviews, reviews, or testimonials, and use it to evaluate your contract performance, satisfaction, and loyalty. You can also use feedback to identify best practices, lessons learned, and areas for improvement or innovation.