What is CPQ?
CPQ, also known as Configure Price Quote, is the method sales professionals use when configuring products or services, pricing the items being sold, and generating a quote. CPQ software automates the configure-price-quote process and enables sales teams to generate accurate pricing and professional quote documentation for streamlined approvals and collaboration on deals.
The demand for CPQ platforms has grown rapidly over the past decade. It is reported that 83% of sales professionals are using a CPQ system, according to Accenture’s recent study.
Advantages of CPQ
CPQ (configure, price, quote) software has become an indispensable tool for many businesses in the modern economy. CPQ software helps organizations simplify the process of configuring complex products, pricing offerings competitively across multiple channels, and quickly generating accurate quotes for customers. This automated solution enables organizations to quickly respond to customer inquiries with accurate pricing and product information.
Some of the key advantages of using CPQ software include faster quoting times, improved accuracy and consistency in pricing, increased sales opportunities due to better visibility into customer profiles, and deeper insight into customer preferences. Additionally, CPQ software can help streamline operations by automating manual processes such as order entry and contract management. By leveraging insights from predictive analytics, CPQ solutions can also help optimize product pricing decisions according to customer segments or market conditions.
For companies that sell complex products or services across numerous channels, CPQ software provides a comprehensive solution that simplifies the entire process of product configuration, pricing, and quoting. With this automated system in place, organizations can dramatically reduce operational costs while delivering superior service to customers with accurate product configurations and tailor-made quotes delivered in a timely manner.
Recently it was found that 81% of businesses are turning to analytics to gain better insights into their customers, according to Forbes. CPQ provides management with improved visibility into sales opportunities. The data generated by CPQ allows sales operations to analyze customer behavior, product preferences, and the pricing and discounts that lead to successful deals. These sales insights help your salespeople improve performance and close more deals.
Following on from this, CPQ can allow for large deal sizes with the potential to add-on deals that work with your specific customer. Guided selling with CPQ software enables sales reps to understand when a customer might need another item or that creating a package deal is better for them. This optimizes the customer experience and helps grow revenue.
A faster sales process will always result in more profit for a business. CPQ helps rid a business of incorrect pricing, wrong information, and outdated product knowledge. This increases sales team efficiency and productivity so they can focus more on growing customer relationships and less on administrative tasks.
One of the most crucial advantages of CPQ is the lowering of risk. By synching real-time product and pricing data with the CPQ software, sales professionals have a sense of security about product information and prices they wouldn’t have without it. CPQ helps avoid errors that lead customers to competitors and drain your business from potential earnings.
With all these points, a CPQ will allow you to take your business to the next level. More profits, more revenue, and higher efficiency lead to growth. Your business will have the green light for expansion thanks to CPQ software.
The CPQ Process Flow
The CPQ process is an automated system businesses use to simplify the laborious work of product configuration, price quoting, and ordering. Through CPQ software, a customer can quickly configure and purchase the products they need. The process also streamlines the sales cycle, allowing companies to accurately track customer orders, reduce errors, and improve customer satisfaction.
In the CPQ process, customers are guided through product selection and configuration steps. Sales reps rely on the software to gather information and data to personalize each quote to the customer and provide a tailored solution. It gives smart, actionable recommendations and allows salespeople to focus solely on the customer. By providing information on product features and functions, customers can easily customize their orders to meet their needs. Depending on the CPQ software being used, the user may be presented with a visual representation of their order or have step-by-step instructions for customizing it. This helps ensure that customers are getting exactly what they want in terms of features and options.
Once the user has finalized their order configuration, a price quote is generated by the CPQ software. This quote is based on factors such as product availability, volume discounts, and any applicable taxes or shipping costs. Sales reps can use intelligent prices to create bundles, make accurate quotes, provide customers with valid discounts, and more.
CPQ allows sales teams to align with corporate targets using the product and revenue metrics available. CPQ also provides dynamic contract management to compare previous contracts and spot any differences. For an efficient customer experience, CPQ provides e-signature functionality to close deals quickly.
Finally, once the user has reviewed their quote and accepted it, an invoice is created automatically by the CPQ software. The invoice will contain all relevant order information, including payment terms, so that customers can quickly make payments for their orders.
Overall, CPQ tools enable businesses to increase efficiency in configuring customer orders while reducing manual errors caused by manual data entry. Additionally, businesses can use this technology to offer more accurate pricing quotes for customers and reduce overhead costs associated with traditional manual processes.
Types of Customers that use CPQ
Any business that sells complex solutions or products, from technology and machinery to software and telecommunications, can benefit from CPQ software. Having a vast selection of products, various sales channels, or a lack of cross-selling can all be reasons to use CPQ software.
Customers who work with complicated equipment can benefit from CPQ software for the manufacturing industry. Sales in the manufacturing industry often requires customized complex product configurations. Quoting for this customer must be accurate and align with the requirements of the engineering team.
High-end technology businesses will use CPQ as their industry is ever-changing. The desired parts in electronics are highly specific and sought after, making CPQ valuable for this customer type. With the fluidity of CPQ software, tech companies can accurately track order information and simplify complex products.
CPQ solutions enable SaaS companies to optimize their pricing models by accounting for varying customer needs and preferences when providing quotes. The technology is also scalable enough to support both single-product sales and large multi-product deals. This makes it easier for SaaS companies to upsell and cross-sell additional products or services during the quoting process. Additionally, CPQ solutions can help support subscription management to ensure high customer retention and renewal rates.
Other customers who use CPQs include the food and hospitality industry, automotive manufacturers, and the medical industry. Basically, any business with interchangeable products is the type of customer that uses CPQ.
A buyer persona is an information-driven profile that creates a target customer. A CPQ allows you to visualize who your perfect customers are, what they like/dislike, what their pain points are, and what drives their decision-making.
Businesses can have multiple buyer personas in order to successfully appeal to a chain of decision-makers. In some instances, you will need to appeal to multiple types of people before the purchase is made, and each person will be viewing your product from a different perspective.
CPQ software is perfect for providing data and information that allows businesses to compile their buyer personas and understand their needs. Having data such as age, location, goals, and challenges can help a CPQ tailor a package, deal, or discount that is perfectly suited to that buyer persona rather than having a one-size-fits-all approach that will shun different types of customers.
Key Role Players
The key role players involved span from the sales team to the customer when a CPQ is involved. Other key role players include project teams when a CPQ project is underway in a B2B setting. A CPQ team has three key components to successfully function.
A technical lead is required to understand the CPQ platform and integrate it completely. They will understand the back-end mechanics, and work with technical documentation which includes code-related work to ensure the CPQ functions correctly.
Regardless of the project, a project manager is crucial to keep the work on track. In a CPQ project, the work can be fast-paced and always changing. A project manager for a CPQ solution needs to be very flexible, fluid, and agile to adapt to these conditions. A project manager for a CPQ needs to have strong problem solving, to understand how to overcome obstacles when implementing a CPQ. A project manager also needs to have a strong fundamental understanding of the product, its detail of it, and the place it holds in the market. Finally and most importantly, a project manager needs flexibility when combining all the above to see a CPQ project through to completion.
Another key role player in a CPQ process is the Solution Architect. This person is crucial to the maintenance of the CPQ system once it is in place after the implementation. A strong understanding and knowledge of certain CPQ software and technology is crucial, as well as an understanding of the business to see where the CPQ fits. Their knowledge of CPQ and CRM (Customer Relationship Management) platforms allows them to define the end goal of the CPQ and help all key stakeholders work collaboratively through it.
The other key role players can be found through the salespeople who utilize the CPQ daily through all of their clients in order to land a deal, the potential customers who are identified by the CPQ, and the customer service team who can thank the CPQ for their extended knowledge of the product.
Common Challenges Faced by CPQ Users
A CPQ system, for all its benefits to users, can sometimes be overwhelming and lead to many challenges and pitfalls. It can also make the whole process of sales seem inflexible and loss of that creative element that some sales and customers seek.
Common challenges faced by CPQ (Configure Price Quote) users are numerous. From complex pricing rules to product configuration details, CPQ can be difficult to master for even the most experienced user.
One of the biggest challenges for CPQ users is understanding and configuring pricing rules for their products and services. Pricing rules are often complex, with multiple levels of discounts, surcharges, and taxes incorporated into each sale. Without a deep understanding of how pricing works within the CPQ system, it can be difficult to configure accurately and efficiently. Additionally, users may face difficulty in managing large volumes of pricing rules across different customers or different geographies.
Another challenge faced by CPQ users is configuring product options correctly. Configuring the right combination of features, components, and options can be time-consuming and tedious work. Users must pay close attention to the details to ensure that configurations are accurate and up-to-date. Failure to do so could lead to incorrect prices quoted or products shipped that don’t match customer requirements.
Users may also find it challenging to keep track of all the changes that have been made within their CPQ systems over time. Without a reliable audit trail or process management capabilities built into the system, it can be challenging for users to understand how different versions of a quote or order have evolved over time. This makes it difficult for users to keep track of what has changed when troubleshooting issues with quotes or orders that have been generated using CPQ technology.
CPQ works as intended when it is aligned with other platforms in the business. Failed CPQ integration can lead to many other problems, such as not correctly saving data, not allowing teams to work together dynamically, or causing issues with other business platforms, such as CRM and billing.
Tips for Effective CPQ Implementation
CPQ is a powerful tool that can help organizations streamline their sales process and maximize profit. However, having a solid plan for CPQ implementation is critical for organizations to realize the full potential of this technology. Here are some tips to consider when implementing CPQ:
1. Identify Your Goals – Before beginning the CPQ implementation process, it’s important to identify your organization’s objectives and desired outcomes from using the software. This will help guide the implementation process and ensure that you get the most out of your investment in CPQ.
2. Understand Your Business Processes – It’s also essential to fully understand your business processes and how they will change with CPQ implementation. Take time to document and analyze existing processes, including every step involved in taking an order right through to customer fulfillment. This will allow you to identify areas where automation can improve efficiency or provide cost savings for your organization.
3. Assess Your Products & Services – Understanding what products and services you offer, as well as any options associated with them, is also critical for successful CPQ implementation. Invest time into organizing this information into a database with pricing, product features, and other relevant details so that it can be easily accessed by customers or sales reps during the quoting process.
4. Build a Customized Solution – When selecting a CPQ solution for your organization, it’s essential to choose one that is tailored to meet your specific needs while also offering functionality that allows room for growth over time. Consider factors such as ease of use, scalability, integration capabilities, customization options, and more when making your selection so that you can find a system that is aligned with long-term goals while still working within budget constraints.
5. Train Staff & Set Up Support Systems – Prior to launching the software with customers or sales reps, train staff on how to use it effectively and gain a thorough understanding of each feature available in order to maximize its value for users down the line. Once training has been completed, establish support systems such as FAQs or help center resources so users can access assistance if needed after launch day arrives.
Once the CPQ is live, ensuring there is support in place can be the final piece of the CPQ puzzle to getting it implemented in your business and fully functional. Having a team in place to manage the maintenance and training keeps the CPQ operating at peak performance for the key users.
Signs Your Business Needs CPQ Software
If you’re in the process of evaluating your company’s sales and order cycle, then it may be time to consider investing in CPQ software. CPQ is a specialized software solution that helps businesses configure complex products and generate accurate quotes based on customer specifications. Here are some signs to watch for that point to a need for CPQ software:
- Your sales reps are spending too much time configuring product orders. With manual processes taking up much of their workday, they can’t focus on more valuable activities such as closing deals or prospecting for new customers.
- You’re experiencing too many errors with product configuration and pricing. This leads to incorrect orders being shipped out or inaccurate quotes being sent to customers.
- Your sales reps are dealing with complicated product configurations that require multiple steps when making adjustments or generating quotes. Without an automated system, this can lead to mistakes in the order process and delays in getting quotes to customers quickly.
- It takes too long for your sales team to generate customer quotes. An automated quote generation process improves efficiency and reduces the time it takes to get accurate quotes out the door.
- You don’t have visibility into your product catalogs across different channels, such as web stores, mobile apps, and print catalogs. A unified system provides insight into all available products so customers can choose what they want quickly and accurately without needing assistance from your team.
If you recognize any of these problem areas within your current order fulfillment process, then CPQ software might be worth considering as an investment option for your business. Automated solutions let you configure complex products quickly while providing detailed and accurate quotes for customers faster than ever before, allowing you to stay competitive in today’s demanding marketplaces while boosting customer satisfaction at the same time.
CPQ (Configure, Price, Quote) is often used to describe software that is used by sales to provide accurate quotes for complex and changeable solutions or products.
The CPQ process is a system for producing fast, accurate quotes that are crucial to sales success. As a result, a lot of the inefficient and time-consuming manual work is eliminated.
CPQ software can be criticized for its strict implementation processes, cost, or unfriendly user interface. These issues can often be the result of an incorrect implementation when carrying out the project.
CPQ is a sales tool to generate timely quotations. CPQ platforms and apps work in alignment with ERP programs and CRM tools amongst other business platforms to share and access data.
CPQ software is integrated into CRM to ensure that product pricing, changes, and quotation are all aligned and part of one sales method.