A Beginner's Guide to CPQ (Configure, Price, Quote) Tools
CPQ software is a tool designed to help sales teams of organizations to quickly produce accurate quotes. CPQs automate product pricing for customizable products. Cloud-based CPQ, like that of Salesforce, can provide data real-time allowing the sales team to continue the juggernaut of inching a customer ever so closer to a purchase, rather than wasting valuable moments during a crucial call doing the math behind quotations. The lead in every sales team is the one who is deemed the Subject Matter Expert (SME)
Configure, Price, Quote – CPQ software is a tool designed to help sales teams of organizations to quickly produce accurate quotes. CPQs automate product pricing for customizable products. Cloud-based CPQ, like that of Salesforce, can provide data real-time allowing the sales team to continue the juggernaut of inching a customer ever so closer to a purchase, rather than wasting valuable moments during a crucial call doing the math behind quotations.
To provide a layman example of what a CPQ does, imagine that you are a car salesman. A potential customer walks into your brand new showroom and you’re chatting them up. You’re doing all the talking behind getting them to go on a test-drive. They’re impressed. The big talk of money starts now. You hand them a brochure that quotes the ex-showroom price. Now comes the back and forth, where you do all the math. Once you start the negotiation process, you have to factor in what insurance best suits the credit score of the individual, what accessories, what color is the customer opting for, is there a way you can push him to buy the upgraded model if you offer better EMI, can you push more accessories as necessities – all this while trying to keep the customer from moving on to the next showroom. A CPQ software can factor all these in and provide the customer and you with accurate quotes on a real-time basis for every single option that is added or deleted over the base price.
How are CPQs leveraged in today’s business model?
Most of the corporates today don’t stick to a single product model. They provide an expanded base, with each product having several options and features. This process is a result of the way DevOps and innovation are transforming in today’s Lean and Agile industries. Using CPQ software is crucial for such companies as the software can help them determine which product to sell based on customer needs. Advanced CPQ softwares can even factor in economic situations, market pricing and competition to provide tailor-made quotes based on the customer
Why use CPQ?
- Reduces wasted time
Optimizing sales efficiency is largely an intangible factor for most B2B organizations. With the help of CPQ, the sales team can work smarter and more efficiently. CPQs help apply lean thinking principles as a sales functionality, by “eliminating waste” of a valuable sales resource – Time. Improving efficiencies of time-bound processes like submitting a proposal, goes a long way in determining sales outcomes. Moreover, quicker sales processes are the ideal tool for setting up a wide landscape for companies that want a continuous revenue stream rather than a one-time-purchase.
- CPQ is the SME to sales
Product knowledge is the starter that leads to caviar topping. The lead in every sales team is the one who is deemed the Subject Matter Expert (SME). A pundit of product capabilities, SMEs use their vast knowledge base to poke and prod at the pain points of the customer and offer the medicine as the product. A CPQ performs the task of an SME and essentially forces the sales team to ask the right questions to the customers. Using CPQs help sales teams understand the breadth and depth of the deal and identify the suites that would set them apart from competitors. Most salespersons are good with talk, but can’t get explicitly technical over minute details. CPQs are the solution to help reduce the small fumbles, thereby increasing cross-selling and upselling.
- Improves transparency
Having a handy ledger by your side that tells all, eliminates the need for going back and forth on configurations. Comparisons are much simpler and this key feature of a CPQ software is what helps accelerate the sales process. Moreover, CPQs also help determine expected ROI and provide a backbone to the salesman for minimizing discounting. As most CPQs also record sales calls, sales teams are better able to address queries and questions and eliminate confusion and general banter.
- Improves Quote Accuracy
CPQs ensure that only the latest approved pricing and discount rules are applied – a crucial support system for sales personnel. This eliminates common quoting errors, that more often than not, happens due to a cell that wasn’t updated in an Excel sheet! Human errors such as missing information, the wrong entry also cause major losses and embarrassing faces that salespeople dread. Ensuring automatic compliance with business rules, sales teams across geographies and sectors benefit from the increased confidence in the numbers they quote.
- CPQ + CRM = increased profit margin
Another one that boosts transparency, on the whole, role-based access to CRM software have greatly helped improve trust and confidence between either party. Integrating CPQ software in CRM functionality helps increase revenue and allow customers to choose pricing and additional features on-the-go.
Data behind CPQ software
- Mitsubishi has reported a 95% reduction in approval time using CPQ and 5-% increase in quote-to-cash
- AVITRU observed 10 times faster quote generation
- Nimble storage saw 2 times faster quote-to-cash with CPQ
- Global CPQ software market is growing at CAGR 9.3%
- Dexter + Chaney showed a 30% higher quote accuracy after adoption
- Domino Printing Sciences reports 80% faster quote delivery
When does your organization need a CPQ?
- While most organisations think that their product structures are too simple to think about a CPQ investment and leave the decision to the future, here are a few telltale signs that you may benefit from CPQ:
- You have an array of similar products with different functionalities
- Your customers are happy but your deal cycle time doesn’t match with the revenue cycle
- Excessive manual errors and arbitrary discounting is killing your profitability
- You require segmented quoting based on geographies.
- You are manually entering into Excel to close the gaps of your CRM software / using legacy quote configurations
- You are wasting employee time by manually reviewing quotes
- You want a build a recurring revenue stream but your sales strategy is confined
- You aren’t making using of cross-selling and upselling strategies effectively
- Lack of quote transparency is affecting trust and confidence for after-sales procedures
How to choose a CPQ for your organization?
The talk of the 4th Industrial Revolution is all up in the storm, and you’re still yet to put your running shoes on? Here’s a quick run-down of how you can decide what CPQ is best for you:
- Can the CPQ integrate with your existing CRM? If so, how efficient would it be?
- Is your CPQ mobile? ETAs are a disaster-term in the quote universe. Cloud compatible CPQs eliminate this problem,
- Does your CPQ take advantage of AI and Data Analytics?
Which Top CPQ Software to use?
In no particular order, here are a few CPQ software that are popular choices in the market:
Apttus has very often been cited as the #1 enterprise multi-channel sales tool. The Silicon Valley-based global provider is a hybrid-cloud platform that utilizes tech from Salesforce, Microsoft, and IBM. Apptus clientele includes Adobe, HP, LinkedIn, and PayPal.
If you are already a Salesforce consumer, using a native Salesforce platform is highly recommended. The cloud-based easy-to-use app comes with several advantages that include easier implementation and a proven track record. The Salesforce CPQ allows you to manage the entire deal process from quote generation to cash collection.
CallidusCloud (SAP CPQ)
A global leader in cloud-based sales and marketing solutions, CallidusCloud helps identify leads, ensure proper territory and quotes distribution and automates CPQ. This combination is quite a unique strategy and over 3900 organizations rely on CallidusCloud. Some customers include Barclays, HSBC, and NBA.
If you have thought about building a homegrown solution to automate CPQ, the biggest challenge you face would be with maintenance. A problem that quite often goes unaddressed is that good Salesmen most often have skills that lie out of the computer and calculator realm. While product knowledge is key, a sales team’s biggest challenge is that fumbling numbers reduce confidence, and counteracting that throws off the balance, inevitably reducing efficiency. A confident approach is a key to making a good sale, and keeping things moving is the smartest thing to do. Stagnation over numbers is the biggest bottleneck to closing deals promptly and CPQ can help your sales team overcome this. Moreover, it is extremely important that you use data-backed solutions that can factor economies to your quote structure, as it will largely determine your competitiveness in an unstructured market with very few players. Sales teams are usually highly motivated to drive the sales themselves, but lack of support is what kills the burning fire and that’s exactly what a CRM can counteract.