Sales Approval Workflow

What is a Sales Approval Workflow?

A sales approval workflow is a structured process companies use to ensure sales-related actions and decisions are reviewed by the appropriate personnel before they’re finalized. It involves a series of steps, rules, and designated approvers who evaluate and authorize deals, discounts, pricing, terms, and other critical sales elements.

Steps in an approval workflow generally involve:

1. Creating a request
2. Submitting the request for review
3. Reviewing and approving or rejecting the request
4. Implementing the approved changes

A “request” could be any aspect of the sales process that requires approval. Usually, it’s required for high-risk or high-value activities like discounting, special pricing, contract terms, and credit checks.

A lot of the time, steps 1 and 2 happen automatically within your quoting software, based on a trigger of some kind (e.g., “Deals over $50,000 may need approval from the VP of Sales.”).

From there, step 3 entails a set of sequential or parallel stages where designated approvers (e.g., managers, finance teams, legal departments) review and either approve, reject, or request modifications to the sales proposal.

Synonyms

• Sales approval routing
• Order approval
• Quote approval
• Proposal approval

Challenges in the Sales Approval Process

Traditional approvals are done via messaging, email, or spreadsheets, which are time-consuming, error-prone, and easy to miss. And there’s no way to track a request’s progress or ensure it gets attention from everyone who needs to look over it.

This poses tremendous problems for sales teams, who are always under pressure to close deals and generate revenue.

Bottlenecks and delays

The main problem is that complex approval processes don’t follow a linear pattern. So, they take a long time to get through.

• A manager misses the message, email, or @ mention.
• A legal clerk gets swamped with other tasks and holds up a contract approval.
• A VP of Sales is unreachable while traveling or on vacation, and the deal loses momentum without their green light.

These are just a few examples of how bottlenecks and delays can occur in the sales approval process. And since the team is only at their desk for a fraction of the day, even the difference of a few hours can lead to a delay of several days.

Lack of clarity

Without a system to define, manage, and assign approvals, there’s no clarity on who approves what. This can lead to confusion and miscommunications within the team over which types of deals get sent to whom. And reps will frequently send approval requests to the wrong leaders, creating additional delays in the approval process.

Inefficient manual processes

Aside from the inefficiency in the manual sending and tracking processes we’ve described above, there are a few others to consider:

• Multiple back-and-forth emails or messages for a single approval request
• Time-consuming data entry for logging approvals and tracking progress
• Lack of visibility into the entire sales pipeline and where deals are getting held up

And for deals that require multiple layers of approvals, failure to designate which aspects require input from which approvers means errors and delays will happen more often than not.

Cross-departmental communication

For approvals, sales needs to be able to quickly reach the finance, legal, and operations teams. Since each team has its own distinct function, getting them to work seamlessly on the approval of documents is quite the challenge. And with a lack of communication and coordination between departments, they probably won’t notice your request right away.

Sales rep frustration

Of course, delays are bound to make your sales team frustrated, and that’s not good for business. If your quoting process and contract approvals aren’t efficient, your reps will lose deals and have no control over it. Lower sales performance, irritating manual work, and a general feeling that management is too incompetent to provide necessary tools will push your best sellers out.

Importance of Sales Approval Workflows

The main reasons to implement approval workflows across your sales department are that you want to (a) maintain consistency across the board, (b) protect your profit margins, and (c) minimize your company’s financial risk.

Consistency across the sales department

A repeatable sales process streamlines decision-making. In many cases, eliminates the need for it altogether because when you create rules and triggers within the approval routing system, you’re guaranteeing there’s no ambiguity around what constitutes a deal or account that requires approval.

Since approvals have the potential to be so time-consuming, an efficient approval process also speeds up the quote-to-cash process. That means your team can work more deals at the same time, close them faster, and generate cash flow sooner.

Risk management

There are a lot of financial risks associated with poor approval management:

• Profit loss from inaccurate pricing or discounts
• Legal and compliance risks from non-compliant contracts
• Limited short-term cash flow to cover immediate expenses
• Over or underestimating your company’s capabilities with non-standard contract terms

When deals are automatically routed to the appropriate member of your leadership team or deal desk, you’re eliminating the chances of accidentally closing a deal that is unprofitable or impossible to deliver on.

Improved compliance

The whole reason to require approval from a final gatekeeper in the first place is to verify complex deals adhere to corporate pricing, discounting, deliverability, and legal guidelines. With automated approval workflows, every deal gets forwarded to the right person. You don’t need to worry about whether sales reps remember to or not.

Increased sales velocity

How quickly you move deals through the pipeline has a significant impact on your bottom line. Even just improving it by a few days could equal tens of thousands in new revenue added every month, especially if deal values are high and your sales workflow is complex.

Automated approvals cut out all the unnecessary back-and-forth between reps and leadership, which means there are not only significantly smaller gaps between stages of your sales cycle, but your sales team members can process more deals simultaneously.

In fact, according to data from SoftClouds, CPQ gives reps the ability to send 49% more proposals, quotes, RFP responses, and sales contracts to prospects and customers.

Enhanced visibility into sales operations

Software comes with tracking and data collation/visualization features that enable you to monitor sales operations and progress. For instance, by having clearly defined roles and quote tracking within your CPQ software, you have 100% accountability. The software will show on full display who’s responsible for what, and which deals need attention from whom.

And by using advanced CPQ analytics, you can even answer questions about your overarching sales process. As an example, tracking response times for approval requests for each stakeholder and department reveals gaps in your pipeline.

Optimizing Your Sales Approval Workflows

Now, to streamline sales approvals, you have to do more than just implement some sort of quoting and contracting software. You need to have established procedures every sales team member follows, and your tools are simply there to guide them through the process. There are also best practices to follow that guarantee smooth sailing.

Streamlining steps in the process

The first thing you need to do is ask yourself, “What actually requires approval?” A lot of companies fall into the trap of trying to automate something that isn’t necessary in the first place. If this happens, you’re still going to have a bloated sales process that takes too long.

Generally, you should require approvals for the following:

• Deals over $X amount
• Discounts exceeding X% off
• Deals outside of your standard terms and conditions
• Custom or complex configurations

For everything in your product catalog that’s sold at market price, a discount that’s been set by a pricing manager, and under your standard terms and conditions? That should be fast-tracked.

Defining role-based approvals

You have to assign specific individuals or teams responsible for reviewing, approving, or rejecting parts of the workflow. You don’t want sales reps guessing who needs to sign off on a discount or having them go through multiple levels of management before getting an approval.

• Sales managers should approve deals that fall within specified criteria (e.g., discounts up to a certain amount).
• Finance or accounting departments should approve special payment terms or discounts outside of your standard pricing.
• Senior management should approve deals involving highly configurable products.
• Legal teams should approve contract terms and conditions.

It helps to create a deal desk team with representatives from each department who can review and approve deals together.

Creating clear approval guidelines

Beyond the approval criteria, there should be clear guidelines in place for how your sellers request approvals. Within your software, there should be an easy-to-access feature that allows sales reps to submit approval requests for their deals.

Keep in mind that different kinds of approvals require different steps. For instance, a discount approval workflow up to a certain percentage might just require a manager’s signature. But anything over that threshold will also involve the finance team to ensure that discounts don’t negatively impact revenue goals.

In that case, to determine what that threshold is, you’d want to figure out a discount % that yields a margin you’re comfortable with. This could be a standard allowance or a limited-time offer. Anything above that discount % or any deal that offers a discount for a more customizable product would require an assessment from your finance team.

Automating routine approvals

Low-risk approvals that fall below a certain threshold or within certain criteria can be automated to speed up the sales process.

• Discounts within a certain percentage range
• Standard payment terms and conditions
• Pre-approved products or configurations

Automating these saves time for reps and sales managers. It also ensures consistency in decision-making.

Setting up escalation procedures

For complex approvals, it’s important to have a clear escalation procedure in place. This ensures that if an approval is taking too long or getting stuck, there’s a way to escalate the issue and get it resolved quickly.

• Define specific timeframes for each level of approval.
• Identify who has the authority to expedite approvals.
• Establish communication channels for escalating issues.

By having these procedures in place, you can prevent delays and keep deals moving forward. It also helps to have a designated point person or team responsible for tracking approvals and ensuring they’re completed in a timely manner.

Leveraging Technology in Sales Approvals

Tools like Customer Relationship Management (CRM) software (e.g., Salesforce), workflow automation platforms, or custom-built approval systems that streamline the process and ensure transparency.

CPQ software

Modern CPQ (configure, price, quote) software is the most effective tool for reducing sales cycle time. You can use it to automate workflows for sales approvals by configuring pricing rules, discounts, and approval hierarchies into the system. This promotes accuracy and consistency in approvals while also allowing for real-time updates and tracking.

It works like this:

1. Create your baseline product rules in CPQ.
2. Set pricing rules.
3. Define contingencies for both (e.g., “If product X is selected, discount for product Y becomes available”).
4. Configure sales approval requirements based on those rules.
5. Add authorized approvers and their levels of authority for each type of approval requirement.
6. The CPQ’s rules engine will automatically forward the quote to the appropriate approver(s) in the hierarchy.

Once an admin sets this up in your CPQ’s backend, it works across your entire sales org. And if you’ve made changes to your pricing policy or product catalog, all you need to do is update them in the system.

Contract management software

Contract management software (which is sometimes built into CPQ) executes a similar process, but with regards to sales contracts.

1. Create your standard contract terms and conditions.
2. Define which additional terms you allow for. Add thresholds for modifications and customization.
3. Add your pricing/product rules and contingencies.
4. Configure contract approval requirements based on those rules.
5. Add authorized approvers and define which contract elements they have authority over.
6. The system will automatically route the contract to the appropriate approver(s) in the hierarchy.

Approval automation tools

Approval automation is an essential feature of CPQ. The same goes for digital sales rooms and contract management systems. If you can’t set up and automate approval steps within these tools, they’re effectively useless as far as efficiency is concerned.

If your CPQ and contract management tools integrate with a messaging or project management platform, the approver won’t even have to open the app to see and respond to requests—they can do it directly from a notification on their preferred device. For example, DealHub integrates with Slack, so you can approve or reject something in one click from a dedicated Slack channel.

Real-time notifications and reminders

As soon as an approval trigger is met, the system notifies the appropriate member of your team via email or a communication app. After a certain amount of time, if no action has been taken, automated reminders will be sent out to ensure they aren’t overlooked. This keeps the sales process moving forward, without intervention from your sales team.

Integration with your CRM system

CRM is essential for pipeline tracking. You can open your CRM at any time and get an at-a-glance view of each deal in your company’s sales pipeline.

When you integrate your CPQ and CRM, you’ll have the added benefit of seeing which deals are awaiting approval (and what that approval is for). This automatically updates the customer’s account in real time as activities like sending a request take place in your CPQ system.

Any time a leader or manager looks at the deal, they can see what needs to be signed off on. So they can take proactive steps to move everything forward.

Reporting and analytics

Data from your approval process sits within your CPQ system. It can help you pinpoint areas within the sales process that are prone to hold-ups.

Indicators to look at include:

• The average time it takes to approve a quote
• How many approvals are rejected and why
• Which team members have the most (or least) delays in their approval process
• Which products or services are most likely to require additional approvals

Once you have this information, you can remove unnecessary approval layers, add in new ones, and optimize your sales cycle over time.

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Andrew Parker

Andrew is a professional copywriter with expertise in creating content focused on business-to-business (B2B) software. He conducts research and produces articles that provide valuable insights and information to his readers.