What is CPQ
What is Configure, Price, Quote (CPQ)?
Don’t get caught in the riptide of quote and review processes.
CPQ formalizes rules and pricing, allowing sales to deliver quotes quickly. Too often the sales process is slowed by sales’ ability to deliver accurate quotes. But most organizations don’t want to speed up the process if it means giving incorrect prices, unapproved discounts, or promising customers configurations that are unavailable. Hence, the review process becomes a bottleneck to closing sales.
Most companies struggle getting quotes to customers in a timely manner, but the streamlined quoting process is a result of the customized rules and pricing CPQ automation allows.
A barrier to delivering timely quotes is when sales reps offer the customer options, and configurations, and prices the company doesn’t have available. CPQ can avoid the conflict--with the customer and within the organization--by clearly establishing pre-programmed rules. With a CPQ application, every conceivable configuration, price, discount, and scenario can be specified, making the product configurations and options straightforward based on company capability.
Pricing is another pain point in organizations. Often, in an effort to make the sale, discounts are offered to the customer that end up costing the company revenue and make future negotiations with the customer difficult to obtain a fair price.
Taking into account complex options and configurations, bulk pricing and discount rules, CPQ’s automation allows for quotes that were once complex to be delivered quickly to the customer. A fast quote process makes your company look efficient and knowledgeable and allows the deal to coast through the sales pipeline.
CPQ allows for more collaboration among departments, washing away silos. CPQ’s effects on efficiency are more far-reaching that simply making accurate quotes quickly. One of the biggest advantages of CPQ is that the entire company can be involved. CPQ deployments, done right, allow engineering, IT, and materials teams to be involved. That means you won’t have sales out there selling configurations that aren’t possible. CPQ applications are able to pre-determine configurations. What that means is the Subject Matter Experts in other departments are able to suggest options and configurations that sales may not have realized are desirable. When cross-functional teams work together, everyone wins because your product becomes more solution-oriented and customer-centered than ever before.
CPQ isn’t just for the sales department. IT departments can also optimize CPQ applications to benefit the entire organization. In successful deployments, IT departments can use CPQ analytics to find demand and product trends.
Adding CPQ applications directly to your website is an efficient way to increase customer, IT, and sales collaboration, while giving the customer more tools to make their own study of the possibilities.
Standardization across the company is high tide for the company. Often sales, manufacturing, and development are very separate entities within the company. CPQ has proven to be a link between departments, allowing communication and standards to be firmly set in place.
CPQ can be integrated with ERP systems, and when such integrations are established, entire processes are streamlined. CPQ and ERP integration offers a connects between sales and operations and becomes a major benefit of adopting CPQ. Sales can monitor the status of deliveries, executives can monitor the sales process, operations can monitor trends to plan for new deals. Sales can work with product design. Better decisions can be made to meet customer needs. On-time production is greater because operations and materials and manufacturing departments are in the loop.
Combining CPQ with ERP leads to a reduction in operating costs. That is pretty awesome wave to catch.
CPQ increases sales staff efficiency, leaving for more hang time with customers.
Only 35% of a salesperson’s time is available to selling, according to research by CSO Insights. This grim number leads to two ideas: any time that can be freed up for sales to talk with customers is a plus and, you need to be able to not make just good calls, sales needs to be able to make great calls!
When CPQ is deployed and used correctly, most users report an average of 15% in increased efficiency. That’s 6 hours out of a 40-hour work week!
Making great calls is possible through CRM applications that allow in-depth research and note-taking capabilities for clients. Having access to sales enablement documents and information helps lead the customer through their sales journey while showing your company as a thought leader and trusted advisor in the field.
When it comes time for the sale, CPQ software helps make the seamless transition from sales journey to decision. A CPQ software allows salespeople to accurately configure products, apply pricing and quantity discounts and have approvals already programed into the system. This automation allows you to look like a pro, giving customers confidence in your processes.
CPQ makes a big splash with increased savings and revenue. While software applications like CRM and web conferencing tools have increased the possibility of more efficient sales processes, CPQ applications make broad strokes for efficiency and revenue for the company.
CPQ users report that they are able to grow their profit margins over non-users, year-over-year. Best-in-class users have seen a 4-fold growth in net profits over 5-year span. This increased revenue is a result of time savings, limits on product discounts, and the ability to offer a variety of options when discussing the customer’s needs.
Using CPQ applications allows sales organizations to focus on selling and replicating best sales practices rather than constantly retraining sales staff. CPQ users also report increased sales rep retentions. When delivering quotes and closing sales becomes an effortless process, sales professionals’ success grows--and with it, the bottom line grows as well.