Definition of CPQ
It’s a good place to start, unravelling the acronym: CPQ stands for Configure Price Quote; so this is all about a key point in time of your sales process – reflecting the details of your customer requirements into a tangible cost-based sales quote.
CPQ software meets the challenge that has emerged from two worlds colliding – customers demanding personalized offers (no two customers are the same!) and an organization’s complex and configurable offer catalogue. This hyper-personalization and customization for clients can create a headache for a sales team at the point of price quotation – productivity can lower and errors can occur.
One of the key elements of CPQ software is the increased level of automation. If your end offer is the result of multiple configurable elements (product, service, experience, level, size, length, business rule, contract type etc.) the software is there to make this easier. CPQ surfaces the elements to combine, suggests up-sell and cross-sell, builds the sales price as you go and even allows certain price flexing according to the specific customer or sales person.
Is CPQ software right for my type of business?
The need for customization spans multiple sector types whether you make, distribute, service or sell – if your organization has a level of complexity arising from your efforts to personalize your offer; CPQ will be relevant. Within CPQ software itself, there are multiple choices a sales team can take – and it need not break the bank – as there are solutions that fit both SMB and enterprise level needs. One such sales engagement platform for enterprise that includes CPQ functionality is DealHub, this user-friendly and comprehensive sales software unifies additional features such as Content Sharing, Guided Sales Playbooks, Document Generation, Customer Insights, Automated Renewals and Contract Management too.
Ask yourself these questions if you need a CPQ:
- Is your sales team experiencing slow turnaround times when generating quotes for customers?
- Does your business include a lot of complex products with even more complicated pricing models?
- Can your sales reps accurately and efficiently create quotes for those products?
- Is your business over-discounting products and losing out on that revenue?
Unlocking benefits of CPQ software for the sales team and the customer experience
Increased sales efficiency (faster quote to cash)
According to Aberdeen Research, CPQ software has been shown to shorten the average B2B sales cycle by 27%.
Realizing increased revenues
By positively affecting and controlling margins, sales teams who use CPQ software see an increased average deal size. And when you combine this with higher closing ratios and lead conversions; the potential to increase revenues builds from the beginning.
Improved sales productivity
In their report: “Breaking the Law of Physics: Shortening the Last Sales Mile through Workflow Automation” Aberdeen Research reported that CPQ users increased their proposal volumes, with 49% more contracts, proposals, quotes and RFP responses sent out.
Reduced errors in sales proposals
Due to the level of built-in automation and intelligence in CPQ software, sales teams do not have to spend time unearthing multiple pieces of data and criteria in order to create the quote for the customer. Research shows that quote revisions drop by 13% when using CPQ software.
Increased sales rep empowerment within business controls
Thanks to the automatic inclusion of business rules built into CPQ, twinned with workflows for fast approvals; the sales professional can self-serve when building their customer proposal; spending less time not just in its creation but also less time waiting for authorization on discounts. A CPQ user has pre-built levels of discounts available to them and their customer in the background, so any additional authorization is on an exception basis rather than the norm.
Comparing your Sales CRM vs CPQ
But why isn’t your usual sales CRM enough to do the job? CRM software is great for pushing the sales cycle along, tracking the pipeline and managing relationships at multiple sales stages. Sometimes it is but you will know, or your sales team and customers will certainly tell you – if your current sales processes are not meeting more complex needs.
I’ve taken a high level snap shot of some common sales processes in the table below and compared a leading CRM – Microsoft Dynamics 365 Sales and an integrated CPQ accelerator that my team developed to fill the gaps.
|Sales requirement||Microsoft Dynamics 365 Sales||CPQ accelerator from Prodware|
|Search for product||New search product (The feature was improved)||Define criteria to search product in a large catalogue|
|Discount validation||Very simple mechanism may not meet needs||Can easily implement a complex mechanism|
|Approval process||Nothing in standard need to be implemented||Can easily implement a complex mechanism|
|Easy to use and navigate UI||Dynamics 365 Classic Unified Interface||No limitations: user friendly and modern|
|Implementation and Configuration||Can be complex depending on the rules you want to implement||Simple|
|Document management||Standard feature||Friendly Interface|
|Import and export||Need to follow different steps to import and export||Export and import in one click|
|Up-sell and cross-sell||Basic management||Products linked are immediately visible|
If you would like to understand more about the choices available to you of CPQ software to help you provide your customers with what they want in the sales cycle, please contact me.
Article initially published on LinkedIn