When it comes to business, managing customer relationships and contracts is essential for success. Customer Relationship Management (CRM) and Contract Lifecycle Management (CLM) are two key systems that may assist with this. While both are necessary, they have distinct functions, features, and advantages.
Understanding CLM and CRM
CLM stands for Contract Lifecycle Management. It refers to the management of contracts from creation to expiration. CLM ensures that businesses handle contracts efficiently, avoiding mistakes and missed deadlines. Around 60% of companies are planning to update their contract management software soon.
The stand of CLM in terms of business is all about managing the process of contracts. The meaning of the CLM system is that it allows companies to streamline contract creation, approval, execution, and renewal, helping to stay compliant and organized.
Key Features of CLM
- It helps businesses create contracts with templates and easy-to-follow workflows.
- It allows multiple stakeholders to review, edit, and approve contracts.
- Once signed, contracts are stored digitally for easy access and tracking.
- It ensures contracts meet legal requirements and deadlines.
- Remind you when it’s time to renew contracts.
CRM, on the other hand, stands for “Customer Relationship Management.” It’s a system that companies utilize to manage client interactions. CRM tools help track interactions with customers, from sales to support, ensuring that businesses build and maintain strong relationships.
Key Features of CRM
- Centralizes all client data, making it easy for teams to access.
- It helps track sales progress and customer interactions.
- Help with managing consumer inquiries and support tickets.
- Automate marketing efforts to target and engage customers.
- Offers data on customer behavior and sales patterns, allowing organizations to make more educated decisions.
CLM vs CRM: What’s the Difference?
While CLM and CRM might sound similar, they focus on different business needs. Below is a simple comparison of both systems:
1. Focus Area
CLM focuses on contracts. It’s about managing the entire lifecycle of contracts—from creation to renewal. CRM focuses on customers. It is about managing your client relationships while also enhancing your sales, service, and marketing initiatives.
2. Main Goal
CLM aims to ensure that contracts are efficiently managed, legally compliant, and executed on time. CRM seeks to boost customer satisfaction, increase revenue, and improve retention.
3. Who Uses Them?
CLM is used by legal, procurement, and compliance teams who handle contracts. CRM is used by sales, marketing, and customer service teams who interact with customers regularly.
4. Processes Managed
CLM manages the contract processes like creation, approval, and compliance. CRM handles customer contacts, sales funnels, and marketing campaigns.
5. Automation
CLM automates contract processes, such as sending renewal reminders and approving contracts. CRM automates customer interactions, such as sending follow-up emails and segmenting leads.
6. Metrics and Reporting
CLM provides reports on contract status, renewal timelines, and compliance. CRM provides reports on customer behavior, sales activities, and campaign performance.
When Should You Use CLM and CRM?
CLM
If your business deals with contracts frequently, a CLM system can help you stay organized and compliant. CLM is best for businesses that:
- Handle complex contracts regularly.
- Need to ensure contracts are legally sound and follow all terms
- Struggle with tracking contract renewals or deadlines.
- Improve cross-departmental collaboration on contracts.
CRM
If your goal is to manage customer relationships and improve sales, a CRM system is the right choice. CRM is ideal for businesses that:
- Streamline customer communication.
- Aim to improve the sales process and close deals faster.
- Need to track customer interactions and respond to support requests efficiently.
- Focused on customer retention and marketing automation.
How CLM and CRM Can Work Together
While CLM and CRM serve different functions, they can complement each other when used together. For example, after closing a deal through a CRM system, the CLM system can manage the contract that follows. Integrating both ensures smooth processes across departments and provides a unified approach to managing both customer interactions and contractual agreements.
Integrating CLM and CRM for Maximum Impact
CLM and CRM each play an important role in business but focus on different areas. CLM handles contracts, ensuring they are managed efficiently and compliantly, while CRM focuses on building strong customer relationships. By using both systems together, businesses can streamline processes, improve customer satisfaction, and set themselves up for long-term success.