A Deep-Dive Into How CPQ Supports DTC Sales

The direct-to-consumer model is exactly what it sounds like: cutting out intermediaries and selling your products directly to customers.

Businesses are adopting it left and right because it gives them more control over their pricing, brand image, and customer experience. And it keeps them from relying on a distribution network or retail partners, both of which can be costly and time-consuming.

While we normally think of configure, price, quote (CPQ) software as a tool for managing complex B2B sales processes, it’s also a powerful ally for DTC companies.

Really, it’s something that belongs in everyone’s tech stack.

Benefits and challenges of the direct-to-consumer model

At its heart, the DTC model is all about eliminating the middlemen in the supply chain, so manufacturers interact directly with their customers. The company themselves manage everything from production and marketing to distribution and customer service. By controlling the entire process, they ensure their branding, pricing, and customer engagement efforts stay consistent.

Benefits of the DTC model for manufacturing companies

Of course, the main benefit of the DTC approach is that manufacturers gain complete control over their sales and distribution processes. There’s no need to rely on retailers or other partners — they’re in direct contact with their target audience.

By extension, they can easily validate new strategies and adapt to market demands, whether that’s through launching new products, adjusting pricing strategies, or improving their customer experience. There’s no delay like there is through other retail channels.

Direct interaction with customers provides manufacturers with valuable insights into consumer preferences and behaviors. They use this data to personalize their marketing collateral, improve their products, and deliver top-notch service.

Not to mention, they generally have higher profit margins (though this depends on the product and other variables). Cutting out intermediaries reduces costs substantially, especially those associated with retail markups.

Challenges of transitioning to the DTC model

The operational complexity of managing the entire supply chain, from production to direct shipping, isn’t for everybody. You’ve got to handle logistics, warehousing, order fulfillment, and customer service — functions your distributors and retailers​ would otherwise handle themselves.

Shifting to DTC also means you have to develop in-house expertise in marketing and sales. Building a strong online presence, running digital marketing campaigns, and maintaining direct customer communication can require substantial investments in time and resources (though you will probably face this challenge regardless of who handles your distribution).

And the rise of fast delivery expectations (i.e., the Amazon Effect) means you need to meet high standards for order fulfillment and logistics. This challenge can strain companies that are used to longer B2B lead times.

Because you’re handling everything in-house, it’ll also be harder to scale your operations. While you’ll benefit from direct customer engagement, the money it costs to acquire them won’t change. And when you do bring new ones in, you’ll have to invest more capital to support the increased demand. When you use a distributor network, they already have the infrastructure to support this.

Exploring the growth of DTC manufacturing (and the reasons behind it)

The DTC ecommerce market will grow at an estimated CAGR of 24.3% between 2024 and 2029. With the growing demand for convenient online shopping and the rapid development of software tools to facilitate digital sales, this shouldn’t be a surprise to anyone.

Now, it’s going beyond your average ecommerce brands, though. Traditional manufacturing sectors like fashion, appliances, and consumer packaged goods (CPG), are all widely adopting DTC.

For these businesses, the ability to bypass intermediaries enables companies to retain a higher percentage of their profits — around 15-40% — while also controlling pricing and customer experience. It’s allowed some to significantly increase gross merchandise value (GMV), with ~11% of DTC companies generating over $100 million in sales.

Even though most manufacturers still rely on other channels to reach their total addressable market, you have no choice but to adapt. If you aren’t creating self-service experiences, you’re behind.

The role of CPQ software in self-service sales

McKinsey research highlights that 1 in 3 customers visit manufacturers’ websites as part of their purchasing journey. Despite the increasing demand for online sales for these types of products (1 in 3 is a huge number of total sales), only 1.6% buy from those websites.

That’s a tremendous untapped opportunity for manufacturers. Across the market, there are literally billions of dollars up for grabs.

The problem for most manufacturers is that direct-to-consumer sales happen without an intermediary. Their sites aren’t set up to support sales because their model has been primarily driven by brick-and-mortar stores.

To make it work, they need self-service sales software (specifically, CPQ). By integrating CPQ with your website or customer portal, you can create a self-service channel that makes it easy to buy from you.

1. Product configuration

The process starts when the customer decides they want to order something from your website. If you sell complex products (think: vehicles, appliances, electronics), this is how customers will select features like color, model, accessories, and technical specs.

In this process, the product configurator guides customers through available options, verifies choices are compatible and valid, and updates the product image in real-time to reflect their changes.

The CPQ is connected to your ERP system, so it always has the most up-to-date product and pricing information and manufacturing constraints. And since it uses rules-based configuration logic, the customer will only see valid options. So, you avoid potential ordering errors.

Depending on the nature of your product, you may also have contingencies (e.g., “If they choose Option A, they can only choose from Sub-Options B, C, and D”). The configurator automatically enforces these rules, as long as you’ve programmed it to do so.

2. Pricing calculations

As your customer sifts through the available product options, pricing rules in your CPQ system calculate the final cost and provide a real-time price quote. The customer can play around with the configuration and immediately see how the price changes based on their choices. That way, they can make fully informed decisions about what’s “worth it” for them.

When they’ve finished configuring their order, they’ll receive a final quote for the product. On the final page before they can proceed with the purchase, they’ll see the running total after applying taxes, discounts, and other fees (i.e., shipping).

You can also program your CPQ with discounts, promotions, and even customer-specific offers. Based on certain criteria (e.g., timing or customer login), the system will automatically apply these to the respective orders.

3. Quote generation and order submission

Once your customer has completed the configuration, they submit their order to you. The CPQ generates a quote that includes all their chosen options, their costs, taxes, and everything else for the customer to review. If everything looks good, they can proceed with the purchase.

After submitting the payment details and their shipping information, they’ll receive confirmation of their order via email.

At that point, your fulfillment team will also receive the order so they can start processing the order. If it’s a product that requires assembly or customization, the CPQ will create a bill of materials (BOM) for your production team to build the product to customer specifications.

CPQ features that support DTC business models

While there are several features that make CPQ software effective, there are five that particularly support manufacturers shifting towards DTC sales.

1. Product configuration

As we’ve gone through above, product configuration in self-service CPQ interfaces makes it easy for customers to select the right options and build customized products.

For DTC manufacturers, there are a few standout capabilities you can’t miss:

• Visual configuration
• Embedded assembly rules
• Real-time price calculations
• Complex product variations
• Compatibility verification

If you’re selling into international markets, you’ll also want to look for multilingual support (though most reputable vendors will certainly offer this).

2. Real-time pricing

Real-time pricing is a dynamic pricing strategy where pricing is calculated based on the current market demand, competition, input costs, and other relevant factors. With CPQ software, this happens automatically as customers configure their products.

Not only does real-time pricing optimize your profit margins, it also provides transparency to customers. They know exactly what they’re paying for and can see how different options affect the final price.

Even if you aren’t using true real-time pricing, the algorithm will still consider location-based factors like sales tax or VAT. It’ll also dynamically apply discounts and promotional offers based on the customer you’re dealing with or the product they’re buying.

3. Quote-to-cash automation

Your customer-facing CPQ interface automatically generates quotes with all the product info, pricing details, and terms of the sale. You can customize the quote or create a template according to your brand guidelines.

For high-value sales and complex orders, you can set up approval routing. An approval workflow automatically sends quotes over a certain value or that meet specific criteria to someone on your team to review. They can then take final action before sending the quote back to your customer.

Once everything’s squared away, the customer can pay on the spot.

4. Integration capabilities

Obviously, CPQ integrates with your ecommerce platform. But it also connects to your…

• ERP system for inventory management, product data, order processing, and financial insights
• CRM system for customer insights and order history
• Production/assembly systems to streamline the build process

Depending on the other tools you use, it might integrate with supplier portals, sales intelligence tools, or project management systems as well.

5. Self-service portal

We’ve talked extensively about how customers can carry out the entire sales process independently. To make the ordering process even more streamlined, you can create a knowledge base with self-help resources (e.g., FAQs, quizzes, helpful articles).

Connect these to your web interface to make it easy to find information and place orders in one go.

6. Analytics

CPQ software is one of your most critical sources of sales analytics.

Any time a customer or sales rep interacts with your system, data is captured. That includes product configurations, quotes generated and approved, discounts offered, and orders fulfilled.

This information gives you insights into:

• Which products are most popular
• What customer behaviors lead to larger orders
• Where in the world have customer orders increased (and decreased)
• How long it usually takes to make a sale

With these analytics at your fingertips, you can make smarter decisions about marketing campaigns, inventory management strategies, and the future of your product catalog.

How to Select a CPQ for Your Manufacturing Company

I’ve already written a full guide to selecting CPQ software and another detailing how to evaluate CPQ for SMB vs. enterprise needs, but there are a few nuances when it comes to DTC manufacturing that you want to consider:

Cloud-based vs. on-premise

I suggest going with a cloud-based solution for a few reasons:

• Lower costs
• Faster implementation
• Maintenance and upgrades are handled by the vendor

The exception to this is if you have specific security or compliance requirements. In those cases, on-premise deployment might be necessary.

Scalability

Look for a CPQ that can handle both B2B and DTC sales models seamlessly. This helps future-proof your investment in case you want to add new sales channels later.

PROS CPQ is an example of a system that handles this nicely.

User-friendliness

While this is a non-negotiable for any system, you have to consider the fact that customers are not sales reps who are skilled at using your product. You will need additional guided selling tools so that customers can easily build the products they want without getting confused even once.

The best way to assess this is to get a demo of the CPQ software and observe how easy it is for customers to navigate.

Customizations

Even though you’re selling standardized products, your customers have unique needs and preferences. Just like your web interface, the CPQ has to be customizable enough to add complex pricing rules, product variations, bundles, and other variables.

ERP integration

I can’t stress this enough. You need a CPQ that integrates with your ERP system. Otherwise, everything falls apart.

If these two systems aren’t connected, your self-service platform will have no way of sourcing and displaying up-to-date product data. Customers won’t be able to place accurate orders, and you’ll have a lot of manual correcting to do.

Not to mention, your financial reports will be completely inaccurate.

Support your DTC sales model with CPQ.

It’s time to leave behind the “as long as it works” mindset with your sales strategy. There is a smarter, more profitable way to sell your products. And it’s in line with what your customers are (almost certainly) looking for.

Use CPQ to let customers place orders themselves, offer transparent, error-free pricing, and streamline the fulfillment process. Then, use the data to improve your product.Ready to invest in CPQ with self-service capabilities? Check out our reviews of CPQ systems for the manufacturing industry to get started on the right foot.