Unlocking the True ROI of CPQ Solutions

July 17, 2024

CPQ (configure, price quote) is a software platform sellers use to accurately configure and price complex products before delivering pricing estimates to their customers. It also includes features for buyer engagement, contract management, and sales performance management.

Without it, sales teams can’t keep up with the ever-growing complexity of product catalogs and won’t be able to offer accurate pricing information to their potential customers. They also will have quite a hard time turning quotes around in a timely manner.

But the true ROI businesses get from CPQ goes beyond sales process automation. Data in CPQ guides pricing decisions and reveals sales opportunities. And integration with CRM and ERP systems creates a seamless handoff between sales, fulfillment, and finance.

To get the most out of CPQ, you have to understand how to properly set it up and get your team to use its features to their full potential.

In today’s article, we’ll break down why you need to invest in CPQ for your business, and how to properly implement it to ensure the highest possible return on investment.

The benefits of CPQ for sales operations 

Modern sales organizations can’t function properly without a way to accurately present their customers with the right products at the right price.

But it’s more than just quoting software — CPQ is so effective not just because it streamlines the CPQ process, but because it fills in all the other gaps in the quote-to-cash process.

Buyer engagement tools like digital sales rooms ensure sales reps are always responsive to prospects, while document generation features help reps create accurate and compliant contracts. Best of all, the entire workflow happens in one system.

When you account for all these factors, CPQ provides several benefits to businesses:

Increased sales efficiency and quote accuracy

According to data from Experlogix, businesses generate quotes 10 times faster and reduce approval times by 95 after CPQ implementation.

There are a few things driving this:

  • Guided selling tools help sales reps quickly choose the right products and configurations for customers.
  • Pricing rules based on cost, competitor pricing, internal policies, and other variables ensure quotes are always accurate.
  • Software-powered calculations eliminate pricing errors and allow for quick adjustments based on customer needs.
  • Automated approval workflows get pricing and configurations approved in minutes instead of days.

All of these contribute to a faster quote delivery time and a higher deal velocity.

Improved sales productivity

Reps spend anywhere from 28% to 36% of their time actually selling, depending on whose data you look at. While there are plenty of reasons for this, most of them boil down to one thing: manual tasks that take up too much time.

CPQ automates the most crucial points of friction in the sales process:

  • Configuring products and bundles to customers’ specifications (otherwise done by hand)
  • Getting approval for special pricing requests (typically sent via email or Slack messaging)
  • Delivering the quote to the customer (which traditionally isn’t interactive or dynamic)
  • Creating proposals and contracts (otherwise done in Microsoft Word or similar software)
  • Handing off orders to the fulfillment team (CPQ integrates with ERP systems, eliminating manual data entry)

When your reps don’t have to deal with administrative tasks or wait days to get approvals, you have a more productive sales team overall.

And, since sellers can create quotes independently through a standardized and consistent process, your sales ops team has time to focus on higher-value activities.

Higher win rates and average deal sizes for the sales team

The adage that “time kills all deals” rings truer than ever today. Long sales cycles = poor lead conversion rates.

Sales is all about momentum — speeding up the quoting process and maintaining a line of communication means prospects won’t have time to forget about the sales conversation or start working with faster-moving competitors.

Not to mention, you can program guided flows for upselling and cross-selling opportunities, which have a documented effect on increasing your average deal size.

Since reps can use CPQ to send branded, professional-looking quotes your customers can interact with, it also makes your company seem more professional.

When it’s all said and done, deals are 105% larger when a company uses CPQ. And they convert way more of their leads into closed deals.

Better customer experience

Of course, the results of improving your sales effectiveness show themselves in higher quota attainment, larger deal sizes, shorter sales cycles, and cost savings. But they also make the buying experience better for your customers.

  • Customers can respond to your quote with feedback or questions and get an immediate response from your sales team.
  • Decision-makers don’t have to wait for days to hear back from someone.
  • The contracting process is more collaborative and smoother.
  • Quotes are highly accurate, which limits the number of revisions that might be necessary.

All this translates to happy customers, improved brand reputation, stronger customer relationships, and repeat business.

Maximizing the ROI of your CPQ solution 

To get the most out of your investment, you have to choose one with the right features for your business, implement it correctly, and facilitate user adoption.

Here’s how to do it:

Data integration and automation

CPQ shares data with CRM and ERP systems. To ensure a smooth CPQ implementation, you need to map out all the data sharing between these three systems.

That includes:

  • How CRM- and ERP-driven processes connect with CPQ, and where those touchpoints are
  • Which data fields matter — and the standardization of those fields
  • Where data is coming from and where it’s going to be stored
  • Which fields have bidirectional data sharing (i.e., they can be altered in either CPQ or the other system)
  • Setting up a process to cleanse and manage any duplicates that arise from data integration

Every time a customer, product, or pricing information changes in one system, the other two systems must reflect that change. If not, you’ll risk creating errors and confusion for your sales team and customers.

Once you have a process for handling data, you can automate tasks like quote generation, approvals, contract delivery, and order processing.

Advanced features and functionality

CPQ can either automate your current processes or create unnecessary friction in your sales cycle. When selecting a CPQ software for your business, you have to consider which features you’ll actually need.

  • A SaaS company will need features like subscription management, seat-based pricing, and self-service portals.
  • A medical device company will need features for creating visual product configurations that can easily be shared with buyers.
  • A contract manufacturer would need CAD automation and vendor portal integration.
  • An ecommerce retailer needs features like upselling and discount management.

And that’s in addition to standard features like guided selling, product bundling and configuration, pricing and discount management, quote generation, digital sales rooms, and contracting. Be sure to do a thorough analysis of which features will fit into your workflow and which ones are unnecessary.

Integrations with other business systems

To guarantee ROI from your CPQ system, you have to integrate it with the rest of your business systems.

  • Billing
  • Contract lifecycle management (CLM)
  • CRM
  • Ecommerce portals
  • ERP
  • Partner relationship management (PRM)

Compared to other applications, CPQ software is highly customizable. The key is finding the right integration partner to maximize your ROI and make customization seamless for your entire sales cycle.

System updates

Admins will have the ability to program product rules into your CPQ. These include product hierarchies, pricing dependencies, and discounting rules. They’ll also be responsible for setting up user permissions and workflows.

Periodically review and update your backend configurations to reflect the changes you’ve made to your product offerings, pricing model, or discounting and bundling strategies. That way, your system always reflects your most up-to-date pricing and can give you the data you’re looking for.

User adoption and training

You need initial and ongoing training to ensure sales reps and sales ops teams are aligned on CPQ best practices.

During initial implementation, your vendor will probably provide training sessions to your team. However, as your sales cycle evolves and new hires come on board, sales leadership will have to offer ongoing training.

Ideally, you should involve members of your sales team in the buying process. That way, how your reps feel using the platform can play a role in your final decision.

Post-implementation, you can monitor user adoption by tracking key metrics like:

  • Number of quotes created
  • Quote-to-close ratio
  • Time spent on configuring products, pricing and discounting
  • Overall changes in quota attainment, deal size, and sales cycle duration

You should also create an open dialogue with your team and encourage them to give feedback. As they come up, address challenges or roadblocks to CPQ usage.

Improving internal systems and processes

At the end of the day, software is just a tool. And if your underlying sales workflows are flawed, CPQ can’t fix them.

Before going all-in on a new platform, you need to fine-tune your internal processes and see how they can be improved.

For example, you can simplify your quote approval process by mapping out who needs to sign off on each quote or by setting up automated approvals for specific scenarios.

You can also identify areas where you’re losing potential deals and see if CPQ can help close those gaps.

Is CPQ worth the investment?

The short answer is: Yes…when done right.

CPQ is a powerful tool that, when managed correctly, streamlines your sales processes and gives your team a productivity boost. On average, every $1 invested in CPQ nets a return of $6.22 — a return of more than 500%.

But like any investment, you have to carefully plan and execute before reaping the benefits. By following these best practices and properly taking advantage of its full functionality, you’ll be well on your way to maximizing the potential of CPQ for your organization.

Ready to explore your options? Check out my article on essential features of user-friendly CPQ software to learn what to look for when evaluating different vendors. Also check out our reviews, comparisons, and recommendations by industry for a better idea of what’s best for your sales team.

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