7 Smart Tips for Selecting CPQ Software

September 5, 2023

CPQ is the Swiss Army Knife of sales. From the first time a sales rep quotes a prospect to when they renew their contract, it picks up the slack where spreadsheets, manual processes, and cobbled-together solutions leave off.

All CPQ solutions share this benefit. At a minimum, they all have basic features like guided selling, approval workflows, and quote generation capabilities that optimize the configuration, pricing, and quoting processes.

But are they all the same? Of course not…

That’s why it’s so important for the sales operations team to select the right solution — even though they’re meant to optimize the CPQ process, they might not optimize your CPQ process.

There’s a CPQ solution designed specifically for your vertical, company size, and business model. You just have to do your research to find it.

Best Practices for the CPQ Selection Process

Before finding the right CPQ software, you need to know what you’re looking for. You’ll have to look closely at your internal processes and define them before finding a platform that automates them.

Follow these best practices to get started on the right foot:

Define Your Goals in the CPQ Process

Every company has different goals when it comes to product configuration, pricing estimates, and the quotation process. You need to select a CPQ software based on your goals, so your first step is identifying what they are.

In the context of CPQ, your goals need to be tangible and relevant to your business processes. And no — “accurate quotes” isn’t enough (who doesn’t want that?).

Here are a few examples of goals that will actually help you select a CPQ solution:

  • A SaaS company’s biggest source of customer churn is billing errors. Since they started to offer multiple pricing tiers, add-ons, and a seat-based model for enterprise users, the data became too much for their current system to manage. They need a CPQ that can automate the billing process and track customer usage on a per-contract basis.
  • A B2B manufacturer discovers 90% of its targeted website visitors click away when they learn they need to contact a sales team member to receive a product quote. They need to find a CPQ solution that includes guided workflows, cost estimation tools, and product configurators that help prospects visualize what they’re buying on their own time.
  • A construction company working on large, ad hoc projects notices its prospects dropping out of the deal cycle a few weeks after the contracting process begins. After looking at timestamps in CRM, they realize upper management takes too long to approve cost estimates and contracts. They need to find a CPQ solution that automates the approval process and enables managers to access documents remotely.

To identify the goals CPQ can solve, look closely at your sales, website, and customer data to uncover behavior patterns throughout the CPQ process. The areas where you spot bottlenecks and inefficiencies are the ones you need to address with CPQ software.

Identify Company-Specific Requirements

Every organization has specific requirements that go beyond the basic goal of making sales cycles faster and improving the customer experience.

  • SaaS companies need subscription management and billing software to manage all their subscribers and recurring revenue in one place.
  • Airlines, utilities, and hospitality companies need a real-time pricing engine to support their dynamic pricing models.
  • Companies with highly configurable products (e.g., medical devices, automobiles) need a 3D visualization tool like the one from PROS that helps customers carry out the configuration process themselves.
  • Retailers need a mobile-friendly configurator that works on their consumer website and in physical stores.
  • Wholesalers need order management and inventory tracking features to support their B2B order cycles.
  • Agencies and professional services need a platform like PandaDoc CPQ that stores templates for multiple types of documents, such as sales quotes, proposals, NDAs, and service contracts.
  • Project-based companies in construction and manufacturing need a CPQ that helps them generate BOMs, takeoffs, and resource allocation plans.

Company size and scope also play a huge role in the solution you need. The bigger the company (or the bigger you plan for it to be), the more options you’ll need in terms of scalability and advanced features.

Look at Your Existing Tech Stack

There’s no point in investing in CPQ implementation unless you can integrate it with your existing systems. Otherwise, you’ll be stuck manually transferring data between two platforms, which defeats the purpose of process automation in the first place.

Depending on your company size, structure, and vertical, you’ll have some or all of the following tools:

  • Customer relationship management (CRM)
  • Enterprise resource planning (ERP)
  • Document management
  • Revenue intelligence
  • Billing and invoicing
  • Accounting
  • Sales enablement
  • Product information management (PIM)
  • Shopping cart/ecommerce platform
  • Inventory/order management

Integrating CRM and CPQ is the most important — it’s the foundation your sales processes revolve around. ERP is another essential one since it handles your financials.

Some CPQ software might replace a few of these other tools (e.g., document management or proposal software), while others require an API bridge or an integration between them.

Either way, you need a CPQ solution that integrates as easily as possible with the rest of your tech stack.

Form a Selection Team

If you already have a deal desk team, this step is easy — they’re the primary decision-makers.

If you don’t, your selection team will slightly resemble one. It should contain at least one leader from the following departments:

  • Sales operations
  • RevOps
  • Legal
  • Finance
  • Customer success
  • IT
  • Marketing

Depending on your business model, you might need to add a few other stakeholders. For instance, supply chain managers for manufacturers, fleet managers for airlines and shipping companies, or logistics specialists for ecommerce retailers.

Determine Your Budget

Once you have a selection team in place, your team needs to determine a budget that works with your existing revenue and cash flow and is reasonable enough to let you find a solution with the features you need.

CPQ software can be expensive, so depending on the vendor and the features you need, your budget could range from a few thousand dollars to tens of thousands per month. Prices vary from vendor to vendor, increasing with the number of users and additional integrations or features you require. Some solutions cost as little as $50 per month, while others run well into the thousands.

As a general rule of thumb, here’s what to expect:

  • Startups, small agencies, and professional services businesses: $50 – $100 per user per month
  • Scaling companies and those selling complex products: $100 to $250 per user per month
  • Enterprises and companies requiring custom-coded software: $250+ per user per month

As you can see, your software cost could quickly go into the thousands with just a few users. Do a cost/benefit analysis to help you understand the benefits of CPQ for your organization to make sure you’re investing in software that benefits everyone on the team.

Set an Implementation Timeline

Your implementation timeline will depend on the software functionality you need out of CPQ. If you have a basic configuration with no customizations or integrations, you might be able to go live within weeks.

However, if you have highly complex pricing rules and need a custom-coded feature, the process could take months — even up to a year.

It’s important to plan your implementation timeline in advance to avoid bottlenecks or delays. Talk with multiple vendors to get an idea of how long the process will take and plan your implementation accordingly.

Answer These 7 Questions to Select the Right CPQ

You wouldn’t buy a new car without test-driving it first, right?

But that isn’t enough to actually commit. You’d probably ask your salesperson a few questions before signing the contract, like “What’s the MPG?”, “Does it have automatic wipers?” and “How does this model compare to its competitors?”.

The same applies to CPQ software.

When you look at CPQ software demos, read online reviews, and go further down the rabbit hole, make sure to ask the following questions:

How much does it cost?

Ironically, some CPQ platforms have pricing models as complicated as the ones they simplify. That isn’t necessarily a bad thing if your company requires custom pricing and discounts. But if you’re running an SMB on a tight budget, you might want to stay away from feature-packed and expensive solutions (that you probably don’t need anyways).

A general rule of thumb: The software worth paying for has the features you need and very few (if any) that you don’t. Avoid overpaying and underusing.

Is it easy to use and intuitive?

User adoption is arguably the most critical factor for the success of any software implementation. If your team isn’t comfortable using it, they won’t. Then, you’re left with a hole in your company’s pockets and the same unsolved problem.

Look for a CPQ that’s easy to learn and intuitive. It should be simple enough that you don’t need extensive training or manual usage from day one. And if you decide on a custom solution, find a vendor that offers post-purchase support, such as IT implementation, user onboarding, and regular maintenance.

Is it a customizable low-code solution? 

Low-code (that is, solutions with pre-built components and drag-and-drop functionality) should be the foundation of any CPQ that you choose. That way, if you ever need to add or modify features in the future, it’ll be much easier and faster than rebuilding the entire thing from scratch.

Even businesses that require custom software components should have most of the toolset and integrations already built in, so they just need to tweak a few features here and there — for instance, updates to pricing rules, the product catalog, or sales methodologies.

Will it enable the sales team, deal desk, and customer collaboration on deals?

Although sales seems like a one-person task, it’s anything but that.

  • A sales rep often shares deals between two or more other sellers.
  • The deal desk team needs to review pricing estimates, quotes, proposals, and contracts before sending them.
  • The typical B2B buyer has several decision-makers from different departments.

A CPQ solution needs to bridge the gap between them all and simplify the entire process. DealHub CPQ is one of the best at this — its digital sales room technology (DealRoom) centralizes stakeholder and customer communication, so sellers don’t need to rely on email threads and haphazard communication records.

Does it have all the features needed?

Assuming you evaluated your business goals and defined your requirements for CPQ before even starting the search, you should already know what features your team needs from the software. Double-check that your shortlisted CPQ solutions have all the necessary features — a few missing options can make or break your entire implementation.

When potential sellers deliver product demos, give them the information they need (i.e., your goals and requirements) to show you the right features and describe how they fit into your workflow.

Is there ongoing support?

Especially if you don’t have your own IT infrastructure (many organizations don’t) or an in-house development team, you’ll need ongoing support from the software vendor to ensure everything is up and running.

Look for a CPQ provider that offers post-purchase implementation support and technical assistance when needed (such as bug fixes, feature updates, and integrations). Some vendors offer this for a fee on an ad hoc basis, and many enterprise solutions have IT members on-call as an extension of your team for an additional monthly cost.

Will it integrate with my other business operations software?

Again: If it doesn’t work with your existing tech stack, don’t bother.

By this point, you should already have a good idea of the other tools that your business relies on (ERP, CRM, Billing, RevOps, ecommerce, etc.). If the CPQ solution doesn’t integrate with them (at least via API or SDK), it’s not worth your time and money.

See if your prospective vendor could demo an integration between their product and your current tools. Most platforms offer native integrations for some tools, and yours might be one of them.

Final Thoughts on Selecting the Right CPQ Software

Finding the right CPQ software for your business is challenging because there’s no one-size-fits-all solution out there. You need to determine your needs, explore the available options, and ask the right questions before signing on the dotted line.

Ultimately, it’s about choosing a CPQ that’s intuitive and tailored towards both administrative users (sales reps, deal desk team) and customers, creating one fluid process for buyers and sellers.

For more help selecting CPQ software, check out our reviews and comparisons to make a more informed decision.

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