CPQ technology has been around since the 1980s. It started with a configuration system – or “configurator”, whose role in sales was that it enabled customers to choose their specifications.
Fast forward to today, the CPQ technology has evolved in every way imaginable. But what is CPQ?
Configure – The procedure of comprehending and packing a company’s product and service options. Tailored to the customer’s specific needs, whilst considering company policies and domestic/international regulations.
Price – Affected by a magnitude of factors; customer relationship, industry dynamics, economic conditions, as well as production volumes and bundles.
Quote – Amendments, renewals, and generation requires the internal approval of the quote, creating professional proposal documents, and having a process in place to quickly accept a client and amend or renew an order. A CPQ system can improve the speed and accuracy of this process massively.
CPQ (Configure Price Quote) is a sales tool for organizations to quickly and most importantly, accurately, generate quotes for orders. This automated quoting mechanism is designed to enable the sales team to sell better and make good revenue, faster.
CPQ applications often work coupled with CRM platforms, ERP programs, and other business technology, which enables the systems to work with integrated data and accuracy.
Did you know, just 33% of inside sales-rep time is spent actively selling. What are they doing rest of the 67% of the time?
They’re generating quotes and proposals and gaining approvals.
What does having a correctly implemented CPQ do for your business?
- Companies with CPQ software have a 105% larger than average deal size
- Companies experience a 17% higher lead conversion rate with CPQ software
- 26% more sales reps achieve their quota with CPQ software.
All of this because:
- CPQ enables 10x faster quote generation
- With a CPQ, users will see a 95% reduction in approval time
- CPQ enables moving from quote to cash 2x faster
- CPQ software has proven to eliminate 40% of human errors
You may consider your current sales quote generation to be adequate. However, look out for the signs your organization needs a CPQ implementation:
- You’re sending out inaccurate quotes
- You rely on spreadsheets and legacy systems
- Your sales reps aren’t spending their time selling
- You’re providing lacklustre customer experiences
- You’re not taking cross and upsell opportunities
- You still use face-to-face approvals
- Your sales cycle is slow
The main advantages of CPQ
- Worry-Free Deal Making: Automated workflows ensure your customer’s needs are accurately captured and matched with appropriate solution components. Breathe easy knowing that your team is always quoting valid and the most up-to-date configurations.
- Requirements Wizards guide the capture of customer needs
- Pre-set solution components automatically matched to requirements
- Proper approvals followed each and every time
- Sell Faster. Sell More: Pulling together complex technology and service quotes is challenging. Get rid of your spreadsheets and simplify the entire process with servicePath. Slam the door shut on competitors by responding with quotes in minutes vs days. Wow your prospects and renewal customers with timely information.
- Quotes in Minutes
- Right price the first time
- Leave nothing on the table
- Complete Deal Transparency: Get complete visibility to the financials of every quote and track the entire history of each deal. See your overall deal flow and potential impact on operations through servicePath’s dashboards.
- Instantly see margins, unit costs and discounts on every deal
- Track all deal activity from initial conversation to final close
- React faster to changing business and market place conditions
Professional Analyst Advantages of CPQ (Equiteq):
- Increase productivity of sales team and back-office functions by automating the sales process
- Optimize quotes and discounting to improve profit margins
- Increase revenue from guiding sales to opportunities for cross-selling complementary products and services
- Create efficient, accurate, and tailored sales processes that improve the sales experience, thus enhancing the sellers brand, which improves their conversion ratio and opportunities for repeat business
- Streamline processes, while also ensuring that sales teams are meeting company compliance policies and regulatory
“The immediate outcome of developing an automated CPQ process with a unified set of business processes is significantly increased productivity for a company’s sales team, allowing its sales reps to focus on selling, instead of administrative tasks” – Gilles Muys, VP of Customer Solutions, Simplus.
Best of breed CPQ system handles complex pricing beautifully.
It does this by empowering the user to:
- Phase the implementation of different services and being able to make changes to those product/service groups – for example, you can defer the start, you can terminate a service coming maybe a little bit further on and you can also make pricing and cost adjustments.
- View all the products, all the pricing in centralized system as a grid view. The user doesn’t have to navigate throughout the quote, each individual configured product and sub components within. They’ve got it all in one place.
- Manually enter the varying quantities for each respective period (month).
With servicePath’s Advanced Pricing Engine’s advanced features and functionality, complex pricing is no longer complex.
A best of breed system’s cost to serve analysis capabilities allow the user to __
Renewals no longer take days and rows and rows of work – multiple quote iterations are generated within a few clicks!
Cost to Serve:
Analysis that calculates the profitability of products, customers and routes to market, and provides a fact-based focus for decision making on service mix and operational changes for each customer.
On the first quote deal modeling is vital, as a complex quote can quickly be generated without having to run it through the finance department. This is possible because all the thresholds and margins are already built-in because of our ability to support the cost of serve. Meaning it’s extremely quick to get a complex quote out. Furthermore, the second and third iterations are equally as fast, whereas other vendors have to run their quote through finance for detailed approval; as they are very complex and there is a magnitude of moving parts. This can add hours, days, and even weeks for getting a complex quote out.
Deal modeling includes the ability to be able to look at a quote through various filters that are important to an organization.
Who cares about CPQ and why?
CEO: A CEO’s top priorities; Customer Acquisition, Business Performance Management and Corporate Development are all, in one way or another, largely contingent upon one of the core activities in any business – sales. “Sales is one of the core activities in any business. Without a good customer acquisition process, you can’t grow.” – Frank V. Cespedes, Lecturer of Business Administration, Harvard. Needless to say, a tool like CPQ that guarantees quote accuracy and speeds up selling is a valuable asset for any business.
VP of Sales: The VP of Sales often develops sales proposals and responds to customer inquiries and requests for proposals for high profile client accounts. The VP of Sales also ensures that employees in the sales department are equipped with the products like CPQ, that they require to succeed in their duties.
Sales Management/Operations: CPQ systems enable operations to reduce errors, protect margins, and effectively manage standardized contracts for profitability by:
- Reducing pricing and quoting errors through managing constraints and rules
- Formalizing change control processes
Viewing and managing commissions in real-time
- Reducing risk and ensuring compliance Standardizing proposal management
- Building process efficiencies with workflow authorization and approval process.
- Maintaining approved contract repository
Customers: Sitting at the end of the spectrum, customers wholly enjoy the benefits of a CPQ system. When presented with quick and accurate quotes, you can turn around quick accurate quotes that have no errors and issues in them.
Marketing team: CPQ systems enable marketing teams to better enable sales with more accurate marketing materials and value-based sales tools. Key benefits of CPQ solutions for marketing include:
- Providing branded proposal documents and contracts
- Ensuring all marketing documents have accurate up-to-date pricing and product configuration information
- Developing customer-facing product catalogs
- Providing sales playbooks that increase win rates
- Providing value-based sales tools like propositions, white papers, ROI/TOC calculators, and benefit estimators
CTO: Cares that it’s easy to use and implement by the sales team. Furthermore that it’s codless so it doesn’t consume lots of their cycles. They also care that its future proof, meaning that if it’s agnostic of a CRM it gives the CTO the independence to move on and select the best solution and tools.
Channel Partner: CPQ systems allow companies to support, promote, and control the configuration and pricing through their distribution channels. This benefits the channel network by:
- Improving cross-channel visibility and management
- Enabling quick roll-outs of new products and pricing configurations locally and globally
- Streamlining channel order flow from lead to close
- Reducing errors by allowing users to centrally access, manage, and control offer and document content
- Tracking and measuring channel activity by product and price
- Protecting channel margins and preventing unauthorized discounting
Digital transformation should be at the forefront of every organization’s mind, and is defined as “the adoption of digital technology to transform services or businesses, through replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology”
CPQ enables organizations to go from using old manual processes such as the ‘zombie’ spreadsheet to using automated processes. With this in mind CPQ goes hand in hand with digital transformation and for many organizations can be seen as the first step towards digitization. It’s understood that when organizations look to digitally transform a core benefit they want to reap is helping to support the sales team. Quote-to-cash is a sales employee’s best friend in the light that it allows for quick, accurate quotes and this provides more time for selling and chasing leads.