What is CPQ
What Is CPQ, or Configure, Price, Quote?
Sales reps spend just 34% of their time actually selling, and research shows that part of a sales team’s non-selling time is spent generating quotes, proposals, and gaining approvals. When CPQ is deployed and used correctly, users have reported:
10 times faster quote generation
95% reduction in approval time
Two times faster moving from quote to cash
30% quicker ramp for new reps
With its functionality and potential for excellent return on investment (ROI), CPQ software is on the horizon for many companies. CPQ adoption will continue to grow as companies see the real benefits of using it in conjunction with their CRM and ERP systems.
CPQ software eliminates a number of sales hurdles
Even when you see the benefits of a CPQ program, you may think your current process still fits the bill. But even if your current sales quote generation seems to be enough, be on the lookout for these six signs that you need CPQ:
You’re using legacy quote configurators.
Revenue growth is outpacing your ability to operate.
You’re building a recurring revenue stream.
You need practical ways to implement more advanced business solutions, such as software with artificial intelligence built in.
You’re sending inaccurate sales quotes to prospects.
Someone manually reviews all your sales quotes.
Most companies that don’t use CPQ software have a sales process that’s slowed by the time it takes sales to deliver accurate quotes. However, these organizations rightfully don’t want to speed up the process if it means giving incorrect prices or unapproved discounts, or promising customers configurations that are unavailable. Thanks to a slew of variables that can change rapidly, the sales quote review process can become a bottleneck to closing sales. This means many companies struggle to get quotes to customers in a timely manner.
Pricing can be a major pain point for sales teams. For example, in an effort to make the sale, a salesperson may offer too large of a discount to a customer, and that reduced price ends up costing the company more than it was worth. It could also make future negotiations with the customer difficult as the salesperson tries to secure a fair price for both the customer and the company.
What is CPQ’s main advantage?
Giving reps the power to build a price quote that they know is preapproved and won’t be delayed waiting for reviews empowers them to drive their own deals.
CPQ software allows sales to deliver quotes quickly thanks to a streamlined quoting process — the result of the customized rules and pricing CPQ automation allows. This is true for companies with one-off sales, subscription pricing, recurring billing, and other revenue models.
With CPQ software, companies can reap the benefits of a standardized process:
Consistent pricing and discounting control
Contract pricing, subscription pricing (also known as recurring billing or usage-based pricing), and channel and partner pricing
Advanced discounting and approval workflows
CPQ software also manages the tasks associated with repeat orders and subscriptions, automatically generating renewal quotes and applying existing contracted terms and conditions to add-ons.
Taking into account complex options and configurations, bulk pricing and discount rules, CPQ’s automation allows for personalized quotes that were once complex to build and deliver quickly to the customer. A fast sales quote process makes your company more efficient and knowledgeable and allows the deal to coast through the sales pipeline. This helps customers view your company as a partner that’s interested in helping them succeed.
CPQ helps departments collaborate and make sales quotes accurate.
While this solution certainly helps salespeople create accurate quotes quickly, CPQ’s effects on efficiency are more far-reaching. One of the biggest advantages of CPQ software is that the entire company can be involved. CPQ deployments, done right, allow sales, renewals, finance, and legal to each seamlessly have a hand in the different configurations. That means you won’t have salespeople selling configurations that aren’t possible financially or legally.
With CPQ, you're also able to create configurations and bundles that make sense. Instead of salespeople determining configurations independently, you can have the subject matter expert (SME) on the product determine the best options and configurations for your customers. These are entered into the CPQ system as rules so salespeople can offer the best possible options for your customers. When cross-functional teams work together, everyone wins. Your product becomes more solution-oriented and customer-centric than ever before.
The sales department may be the primary user, but CPQ software isn’t just for them to use. You can also optimize CPQ applications to benefit the entire organization. In successful deployments, your teams can use CPQ analytics to find demand and product trends.
Integrate CPQ with other business tech to standardize processes
Often sales, finance, legal, manufacturing, and development are very separate entities and are siloed within an organization. CPQ software has proven to be a link between departments, allowing communication and standards to be firmly set in place.
A signed quote is the start of a series of events that brings the entire company into play. In fact, “every detail required by downstream teams resides within the quote.” That’s a tall order, which is why a CPQ solution needs to be used. It reduces errors and makes sure the subsequent steps can take place. Once a quote has been signed by the customer:
An order is generated.
An invoice is sent.
Payment is received.
Revenue is recognized.
Audit trails are analyzed.
Orders are fulfilled.
The accuracy of your quote affects every department. CPQ software integrates with your existing business technology to make the entire process smoother.
CPQ increases sales staff efficiency, leaving them more time for customers
According to Salesforce Research’s “State of Sales” report, only 34% of a salesperson’s time is actually spent selling: meeting customers in person, connecting with customers virtually, and prospecting. This number leads to three important concepts:
The more your processes can be streamlined, the more time salespeople have to meet with customers and make sales.
Any time that can be freed up for sales to talk with customers is a plus.
Your salespeople need to be able to make effective, informed sales calls.
Making great calls is possible through CRM applications that allow in-depth research and note-taking capabilities for users. Furthermore, when you have access to sales enablement documents and information, you can help lead the customer through their sales journey while showcasing your company as a thought leader and trusted advisor in the field.
When it comes time to complete the transaction and close the sale, CPQ software helps make the seamless transition from sales journey to decision. Your CPQ program lets you accurately configure products, apply pricing and quantity discounts, and have approvals already programmed into the system. This automation makes you look like a true sales professional, giving customers confidence in your processes and your company.
CPQ technology can help you increase savings and revenue
While business software applications like your CRM platform, knowledge management system, and web conferencing tools have increased the possibility of more efficient sales processes, CPQ applications have widespread effects on efficiency and revenue for the company.
Using CPQ applications allows sales organizations to focus on selling and replicating best sales practices rather than constantly retraining sales staff. When delivering quotes and closing sales becomes an effortless process, sales professionals see a growth in success — and with it, a growth in the company’s bottom line.
CPQ is the tool your sales team deserves
“Salesforce CPQ is about making the complex simple.”
The benefits of CPQ software include formalizing rules and pricing, establishing standardization across the company, increasing companywide efficiency, and more. The most important benefits of CPQ software, however, are the proven increase in revenues and decrease in costs.
Successful CPQ deployment depends on providing careful training and support to your sales staff and implementing CPQ in tandem with other departments. When done right, investing in CPQ software helps your company lead the way to a more effective — and, importantly, profitable — sales process.
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