A number of companies, especially the sales oriented ones, face a common problem of identifying accurate and professional sales quotes and eliminating errors and inefficiencies. In spite of them being common problems, many sales leaders don’t know how to effectively address it.
CPQ here comes into action. It is a growing software category that tackles this challenge head-on.
So, the very first question that arises here is What is CPQ?
CPQ stands for Configure, Price, Quote. CPQ software is a sales tool for quickly and accurately generating quotes for orders by the companies. CPQ applications usually work in a lineup with Enterprise resource planning (ERP) and Customer relationship management (CRM) programs.
CPQ software produced quotes are automated as per a certain pre-programmed set of rules to ensure error-free pricing taking into account quantities, customizations, discounts, and optional features of products.
Despite its availability for decades, CPQ is being seen as the latest wave in the ocean of sales optimization tools. CPQ, with its functionality and a high potential for ROI, is on the horizon for many smaller companies as well. In the near future, CPQ adoption growth will continue as companies are visualizing the real benefits in using CPQ in conjunction with their ERP and CRM systems.
CPQ – Understanding the practical side of the coin!
- Escaping the turbulence of quote and review processes
- CPQ formalizes pricing and rules which allows sales teams to quickly deliver quotes. The sales process is retarded frequently by the sales team’s inability to deliver accurate quotes. But most organizations don’t want to accelerate the process at the cost of providing incorrect prices, unapproved discounts, or promising unavailable customers configurations. Therefore, the review process itself acts as a barrier to closing sales.
- Unavailability in the company in terms of customer options, configurations, and prices, especially when offered by the sales reps, often becomes a barrier in delivering timely quotes. As a virtue of CPQ, this conflict with the customer and within the organization is avoidable by clearly establishing pre-programmed rules.
- A CPQ application can help in specifying every conceivable configuration, discount, price, and scenario, which makes the product configurations and options pretty much straightforward based on the company’s capability.
- Yet another pain point in organizations is Pricing. Discounts offered in efforts to make the sale end up costing the company revenue. They even make future negotiations to obtain a fair price with the customers difficult. CPQ’s automation allows the deal to coast through the sales pipeline, making an organization company efficient and successful.
2. CPQ allows for greater collaboration among departments, wiping out silos.
- When it comes to efficiency, CPQ brings much more on the table than simply making accurate quotes quickly. One of the biggest pros of CPQ is that the whole company can be involved.
- CPQ applications are capable of pre-determining configurations. Subject Matter Experts in other departments can suggest desirable options and configurations.
- CPQ isn’t just a sales department thing. CPQ applications can be optimized by IT departments to benefit the whole organization. In successful deployments, CPQ analytics can be used by the IT departments for finding demand and product trends.
- Generally, sales, manufacturing, and development are distant entities within the company. CPQ acts as a link between departments and allows communication and standards to firmly settle in place.
- CPQ can be integrated with ERP systems, streamlining the entire process. The integration of CPQ and ERP offers a link between sales and operations. The delivery status can be monitored by the Sales team and the sales process can be monitored by the executives while trends can be monitored by operations to plan for new deals.
- Better decisions can be made to meet customer demands and needs. On-time production increases as well since operations, materials, and manufacturing departments are in the loop.
- Also, combining CPQ with ERP reduces operating costs.
3. CPQ increases the efficiency of sales staff, leaving for more hang time with customers.
- According to research by CSO Insights, on average, only 35% of a salesperson’s time is available to sell. Thus any time, freed up for sales to talk with customers is a bonus and it’s not just about having calls. Rather, for every good reason, it is about having a great call making a difference.
- When deployed and used correctly, CPQ users have reported an average 15% increase in efficiency. Isn’t that commendable?
- CRM applications allow in-depth research and note-taking capabilities for clients which in turn ensures the possibility of making great calls.
- When it comes time for the sale, CPQ software helps in making the transition from sales journey to decision seamless. While software applications like CRM and web conferencing tools have increased the possibility of more efficient sales processes, CPQ applications make broad strokes for efficiency and revenue for the company.
- It has been reported by CPQ users that their profit margins have grown over non-users, year-over-year. Over a 5-year span, avant-garde users have seen 4-fold growth in net profits, which is due to time savings, limited product discounts, and the ability to offer diverse options while discussing customer’s needs.
- CPQ users also report increased sales rep retention.
- Using CPQ applications, sales organizations can sell and replicate the best sales practices rather than retraining the sales staff constantly. With CPQ applications, delivering quotes and closing sales becomes an effortless process for salespeople.
Let us take a broad overview of the benefits of CPQ listed below:
- Formalizing rules and pricing
- Establishing standardization across the company
- Increasing company-wide efficiency.
- Proven increase in revenues
- A decrease in costs.
Successful CPQ deployment depends on carefully training and supporting the sales staff and implementation of CPQ in a lineup with the IT, manufacturing, engineering and materials departments.
‘The winds and the waves are always on the side of the ablest navigator’
Having learned the uses of CPQ, it is important to understand that when the conditions are just right, CPQ makes a company ride the wave smartly that further translates to profitable sales processes.