6 Ways to Optimize Contracts for Higher Sales Efficiency

In sales in particular, contracts are a central component for closing deals. If contracts are the lifeblood of a company, then it is essential to let them circulate quickly and regularly: higher circulation means higher vitality for the company. So what can you do to optimize contracts so that sales efficiency rises across the board?

To enable a higher turnover rate of contracts, you first have to clear the blockages that stand in the way of a higher flow rate. Four key factors stand out immediately:

1. Contracts are read by people.
2. Contracts are usually written by lawyers for lawyers.
3. Unnecessary complexity makes them hard to read.
4. Readers usually have to work through the whole document to find the points that matter to them.

As a rule, these factors do not occur alone but in various combinations. That is how an inconvenient hurdle — one you might still overcome with a little extra effort — becomes a bottleneck that can bring the entire process to a standstill. The company stalls.

If what was written were an article in a specialist journal, the reader would simply turn the page or set the magazine aside; the consequences would be manageable. With contracts, the stakes are higher: when reviewing a contract for negotiation, skipping ahead is not advisable, because individual words can have a significant economic impact on a company. In many cases, all that remains is the assistance of a lawyer — which extends the time to signature and drives up costs considerably.

So how do you fix this? Here are six concrete steps you can take to optimize your contracts for better sales efficiency.

1. Structure and simplify your contracts

“Mind at ease puts a smile on the face” — the title of a study by Winkielman and Cacioppo, which shows that information that is easy to process triggers positive emotions.

Assume that the product offered in the contract solves a real problem for a clearly defined target group (in other words, there is a product-market fit) and that there are enough buyers for it. Then it makes sense to keep the existing closing process as simple as possible.

Although this principle comes from neuroscience, it does not take a mental marathon to conclude that simpler messages are processed faster.

The principle of processing fluency goes one step further. Processing fluency describes the degree of ease with which the brain processes information — and it has a significant influence on how we form judgments. Perceptual fluency makes a stimulus feel familiar and makes easy-to-read statements more likely to be judged true.

For contract drafting, this principle is worth its weight in gold as soon as you want to close several contracts more quickly. If a contract is perceived as easy and understandable, the statements it contains are more likely to be perceived as correct — and contracting parties are more willing to sign.

Our recommendation, therefore, is to structure contracts so that they make sense to the reader. Where possible, use explanations directly in the contract and avoid unnecessarily complex terms that first have to be explained in a lengthy appendix. Supplementary headings for paragraphs and inserts help readers place information.

2. Use playbook solutions

Experience shows that companies relying on playbook solutions reach agreement with their customers faster. A playbook captures the experience gained from previous contract negotiations as alternative clauses or text blocks. This lets negotiators outside the legal department fall back on coordinated and approved clauses more quickly, without going through another lengthy coordination process each time.

The prerequisite is that the clauses are agreed with the legal department and that the specialist department can apply them unambiguously. Here it pays to use advanced software that goes beyond a conventional word processor. In addition, the legal and specialist departments should jointly develop a catalogue of alternative clauses and update it regularly with the experience gained from negotiations.

3. Surface key parameters via software

If you work with contracts regularly, you will notice that a lot of information important to the user is buried in the body text — often right in the middle of the document.

For the user, that means repeatedly having to hunt for key details in the contract. For simple contracts of a few pages, that is still feasible. As contracts grow more complex, it becomes a challenge that often requires the concentrated reading of many passages.

Companies often spend hundreds of hours on this task — one that software can readily handle today. Contract tools extract essential details automatically in seconds and present them clearly.

In negotiations with the other party, a tabular overview of the agreed key parameters becomes even more valuable. In line with the principle of processing fluency above, prepared key information makes the contract text appear far simpler — so the people responsible on the other side grasp it more easily.

In the real world, there are countless examples of frustrated decision-makers who, despite a thorough review, cannot find the positions they want in the contract and therefore refuse, for now, to sign.

4. Write your contracts for non-lawyers

Contracts are usually written by lawyers for lawyers. This is an anachronistic practice dating back to before the internet age, when legal texts, commentaries, interpretations, and templates were not freely accessible to everyone but were reserved for a caste of selected scholars — lawyers. Using them often required expensive, extensive libraries to encrypt and decrypt what was written. These resources were usually not available to a layperson.

So contracts were passed to those who could decipher them, and as a result lawyers held key positions in companies. That picture has eroded sharply in recent years: lawyers are still found in the control centers of companies, but their presence at the top has diminished.

The language has also improved. Even so, wording still appears in contracts that suggests lawyers often forget what contracts are actually written for. Lawyers should bear in mind that legal documents feel intimidating to many people — though they need not be. Laypeople often will not even look at a long, complicated contract and shy away from the work. That is precisely why complicated contracts take longer to be accepted and concluded.

5. Don't automate inefficient processes

There is no such thing as a free lunch. If you cannot simplify your contracts, you will only partially succeed in automating the contract process — and in many cases you will make the problem worse.

Before you start automating, we recommend benchmarking: compare your contracts with others and familiarize yourself with the basics of clear language and readability. By introducing playbooks, you can even evaluate the comprehensibility and negotiation time of individual clauses through A/B testing. Make simple, clearly understandable clauses the standard and, where necessary, add explanations so that even complicated clauses are accepted easily.

When you then scale contract drafting, you can be sure the efficiency gains you uncovered will scale with it. Automating sales processes should not only reduce costs but also improve the quality of contracts — and, with it, the customer experience.

6. Ask for more from your legal department

An effective and, unfortunately, rarely used lever for speeding up contract sign-off is to take the matter directly to your legal department. Legal design is on everyone's lips, and many lawyers are familiar with it today. Redrafting contracts is also an intellectual challenge that good lawyers should be happy to take on. Ongoing engagement with contract preparation removes many obstacles to contract circulation and has a positive economic impact on the entire sales process.