Reducing Sales Cycle Time with CPQ Automation

June 13, 2024

Throughout the sales cycle, there are plenty of manual tasks that eat into productivity — data entry, quote building, and drafting sales proposals, to name a few.

Not to mention, there’s tons of room for error when dealing with spreadsheets and manual calculations.

According to research from Salesforce, the average rep spends just over a quarter (28%) of their week actually selling. And a big chunk of that time is taken up by administrative tasks, most of which could easily be automated with software.

CPQ (configure, price, quote) software is the ultimate game changer when it comes to reducing sales cycle time. With CPQ automation, reps can generate accurate quotes, proposals, and contracts in a matter of seconds, reducing pricing errors and freeing up valuable time to focus on selling.

But how exactly does CPQ automation reduce sales cycle time?

Let’s dive in.

The problem: slow and error-prone manual quoting

When you use spreadsheets and documents to create quotes, you run into a few issues:

  • Time wasted on data entry and formatting (even if you work from a template)
  • Inconsistent pricing, product configurations, and policy adherence across different reps
  • Human errors in configurations and calculations, leading to incorrect quotes and unhappy customers
  • Delays in quote delivery, with sellers having to constantly go back and forth with leaders to get approvals and with customers to finalize details
  • Lack of visibility into pricing and product trends

Not to mention, it’s flat-out unprofessional to present a potential customer with a manually created quote that looks like it was thrown together last minute.

And it’s far more difficult to get it done that way — there’s no way for them to take action on the spot, so it takes much more time for them to give you a definitive answer.

The solution: CPQ automation to streamline your sales workflows

Workflow automation with CPQ solves practically all of the problems associated with manual quote delivery.

Among the features that make CPQ software so effective are:

  • Product configuration with guided selling tools. Reps can easily select products and options that are relevant to each customer, avoiding tedious manual calculations.  The interactive system leads them through a series of questions, to which it applies pre-built rules and logic to ensure that only valid products are selected.
  • Pricing automation. Product pricing is automatically calculated based on factors like quantity, discounts, and any special terms or policies. CPQ can even handle tiered and usage-based pricing models, multi-year ramp deals for subscription businesses, and complex price-optimized calculations based on unique configurations.
  • Visual configuration. For complex products (e.g., medical devices), visual tools help reps work with engineers and customers to build a virtual version of the product. This makes it easier to accurately showcase the product, helps the customer envision the final result before committing, and streamlines the handoff between sales and engineering/production.
  • Document automation. CPQ software generates branded, professional-looking quotes, proposals, and contracts in just a few clicks. It also creates BOMs, technical specs, and more — all without manual data entry or significant user input. Version control is built-in, and documents are easily accessible and shareable from a central repository.
  • Approval workflows. When someone gives a customer a discount or configures a certain type of product, CPQ automatically routes the quote to the appropriate approver for sign-off. That way, you don’t have to worry about reps giving away the farm or making mistakes that cost you money. And there’s always 100% accountability.
  • Pricing optimization. Some systems, like PROS CPQ, use AI to determine an optimal price in real time. Based on current market prices for inputs, production capacity, and profit margins, they calculate a total price that’s feasible for the business.

CPQ also integrates with CRM and connects to ERP systems, making it easy to automate the whole process, from sales to production to fulfillment.

Benefits of CPQ automation for sales operations leaders

Sales organizations often implement automation for the sole purpose of increasing speed and productivity. While these are clear reasons to invest in CPQ, its benefits go beyond that.

Here are a few of the most essential benefits of implementing a CPQ solution:

Reduced sales cycle time

Switching from manual processes to modern CPQ software reduces sales cycle times by 28%. A shorter sales cycle means a few things:

  • Your reps can close more deals in the same amount of time (higher revenue growth)
  • You can handle a larger sales volume without adding new reps (lower cost of sales)
  • Your reps have more time to focus on building relationships and creating upselling opportunities with existing customers.
  • Your team can quickly identify and resolve bottlenecks in the sales process, optimizing efficiency and streamlining operations.

It’s also worth mentioning that CPQ eliminates the most critical contributing factors to longer sales cycles. By eliminating the need for manual data entry, approval processes, and back-and-forth communication with customers, reps can move deals through critical milestones and get from the initial quote to the final close with ease.

Improved customer experience

With traditional quoting, the customer receives an estimate they can’t do anything with. They might know the final price and understand the breakdown, but they can’t take any action.

With CPQ, the customer can immediately accept the quote and send it back for processing. Or, they can use the visual configuration tools to make adjustments, submit an amendment, or respond to the rep with questions and feedback.

If the software you use includes a digital sales room (e.g., DealRoom from DealHub), they can even discuss the quote with their sales rep in real time.

The immediacy and interactivity of a CPQ-driven quoting process create a better customer experience, improving the chances of a successful sale and building trust between the customer and your business. Long-term, it also sets the stage for productive customer relationships.

Higher quote accuracy

Manual quoting processes often lead to errors. Some common issues include:

  • Calculation mistakes
  • Incorrect product selection
  • Inaccurate discount application
  • Miscommunication with customers regarding pricing and configurations

These errors can lead to wasted time, lost revenue, and unhappy customers. CPQ streamlines the process and minimizes the potential for human error, ensuring that quotes are accurate every time.

Increased sales productivity

Data compiled by Eperlogix reveals that businesses using CPQ generate quotes 10x faster and see a 95% reduction in approval time.

An increase in sales efficiency means…

  • More deals closed in the same amount of time
  • Higher conversion rates and average deal sizes
  • Revenue generated with fewer resources, lowering your cost of sales
  • A better selling experience and higher employee retention

Perhaps most importantly, CPQ-enabled sales efficiency gives you the ability to quickly and easily scale your sales operations as your business grows. No matter how many deals you have to manage or how many new reps you onboard, your CPQ can handle it.

Better data and sales forecasting

One of the biggest problems with manual quoting is a lack of data. Without information on who’s buying your product and the total value of their purchases, it’s nearly impossible to forecast sales accurately or make high-level decisions about pricing, product selection, and discounts.

Especially when it’s integrated with CRM and ERP, CPQ gives you granular insights into:

  • Pipeline management
  • Revenue by product or customer
  • Sales team performance
  • Trends in pricing and discounts
  • Average deal size
  • Price elasticity
  • Seasonality

This all makes it easier to forecast future sales. Better forecasting means it’s easier to set sales goals, communicate with investors, and allocate resources for operations and growth.

CPQ automation empowers your sales team.

Whether you’re a manufacturer, SaaS company, or professional service firm, CPQ software is a powerful tool that automates the most cumbersome and error-prone parts of the sales process.

Its ability to streamline internal workflows, facilitate transparency and faster communication with customers, and produce insightful data that informs strategic decisions makes it an invaluable asset for sales operations leaders

By freeing up time and resources, CPQ not only reduces costs and increases revenue but also empowers sales teams to focus on what matters most: building relationships and closing deals.

Ready to invest in CPQ? Check out my guides on features to look for in user-friendly CPQ and how to evaluate CPQ for SMB vs. enterprise needs. Also check out our reviews, comparisons, and industry-specific recommendations to choose the best platform for your particular business.

CPQ Integrations