Is CPQ the next BIG thing? And why it is important for your sales?
Companies today can no longer rely solely on reputation. You may have the best product on the market, but unless you provide great experience that your customers expect, you risk alienating them and losing them to a competitor. Companies used to stand out by implementing customer relationship management (CRM) systems and systemizing their outreach processes. But not anymore, because CRM as a solution is commoditized – 91% of companies with more than 11 employees now use it. Today, I want to discuss how you can leverage your CRM investment and boost sales capacity and sales rep productivity to a completely new level. I would like to introduce you to CPQ and explain why it SHOULD be your next IT investment, especially if your products are configurable and you’d like to sell more. But first, let’s start with unpacking the acronym – CPQ.
CPQ stands for Configure, Price, Quote, and it is a solution that takes the most important parts of the sales cycle out of Excel spreadsheets, notebooks and stickers and puts them into an automated sales tool that delivers error-free quotes. This tool automates and simplifies lengthy quote processes to help sales representatives close bigger deals while ensuring great customer satisfaction. Subsequently, your Sales team can abandon the old-fashioned Excel spreadsheets and other online and offline outdated tools for a faster, smarter, and better-integrated selling process. Minimize the administrative burden and allow your sales reps to dedicate more time to selling. To get a better understanding of how CPQ software works, let’s break it down into a three-stage process.
This tool automates and simplifies lengthy quote processes to help sales representatives close bigger deals while ensuring great customer satisfaction.
Subsequently, your Sales team can abandon the old-fashioned Excel spreadsheets and other online and offline outdated tools for a faster, smarter, and better-integrated selling process. Minimize the administrative burden and allow your sales reps to dedicate more time to selling. To get a better understanding of how CPQ software works, let’s break it down into a three-stage process.
The quoting process starts with the configuration – the process of putting different elements together to create a final product. It might sound easy, but, in reality, many product variations are so complex, so it can take years of experience before an employee can deliver a zero-error quote. In this case, a company either experiences high onboarding costs or copes with the risk that inexperienced sales employees cannot deliver personalized product configuration on time, losing the deal to competitors.
CPQ solution offers a guided selling experience that navigates sales representatives throughout the configuration process, highlighting options available for customization, as well as the ways in which a choice for one facet of customization may restrict or open options for another. This way, even your newcomers will be able to configure your complex products starting from day 1 quickly and without errors.
Additionally, CPQ helps to increase deal size with upsell and cross-sell recommendations, offering products that would have a perfect fit into existing customer bundles. The best of breed CPQ solutions can even generate 2D and 3D visuals to accompany your quote, providing the customer with a clear view of the products they’re buying.
After a sales employee has configured the product/service/bundle, it should be priced correctly. For some of the companies, pricing is a rather complex task, especially if pricing catalogues are fragmented and sales employee needs to browse through different spreadsheets looking for the right line item. It gets even more complicated for pricing of the customized configurable products and services since these products may have millions of permutations. All this takes a lot of precious time that a sales rep could dedicate to selling.
In the age of globalization, static, one-size-fits-all pricing should be gone and replaced with clear discounting and pricing rules that would differentiate based on product, customer, region and even time-of-the-year level. CPQ tool allows you to forget about tedious pricing processes and would automatically pull up prices from catalogues based on your inputs.
A more advanced CPQ tool allows to set up a pricing process that would account for every nuance of the sale – fluctuations of the raw materials prices, customer buying patterns and other data signals. Or even make one step further and start selling services instead of products, offering subscriptions and enjoying recurring revenue.
Another important part of the process is an approval process. In many organisations, getting a deal approved can be a long and complex process. And while sales employee is running across the organization to get all the signatures, your customer gets frustrated, and your competition can get in. You don’t want that.
The benefit of CPQ is that you can cut down time spent on paper-based approvals and create a set of integrated workflows, simplifying, standardizing and accelerating the process, ensuring full visibility to everyone involved. You can provide role-specific discounting permissions and use automatic approvals for simple ordinary deals. Or you can set up parallel and sequential workflows, specifying what critical information to show for approvers so they can make the decision (which, by the way, can be just as simple as pressing “Accept” button from your email).
This way you will establish a process that would increase your chances to offer the most reasonable price for the customer quickly and accurately, without damaging your company’s profitability.
Once the sales employee is done with configuration and pricing, you should send a highly detailed quote document to your customer. Some say that this is the least important part of the process, but I would disagree. You might have a very detailed explanation about product components and correct pricing, but if your customer sees an unprofessional, incorrect proposal document that is hard to read, chances are you lost your deal.
CPQ turns time-consuming MS Word-work into an automated process of proposal preparation, automatically creating a clear professional-looking document with all the details about the configured products, prices and discounts. You can give your sales employee access to add different sections in the document that would help to secure the deal, like relevant reference stories, ‘About Us’ section, technical and legal documents – anything, with a click of the button. If accepted, the quote forms the basis for the order and the invoice further down in your ERP system.
Success in the digital economy hinges on a sales experience that is quick, easy and perfectly personalized. While this is a huge benefit for buyers, customization complicates the lives of sellers. Statistics says that vendors who respond first win 50 per cent more deals. Your sales representatives need to deliver quotes fast and errorless.
CPQ solution allows to improve your sales productivity by standardizing and automating your configure-price-quote process. CPQ can either serve as a stand-alone solution or be integrated with various systems. With seamless integrations into CRM and Enterprise resource planning (ERP) systems, CPQ allows sales to bridge the gaps across the business. This improved connectivity means data from across the organization feeds the CPQ application to ensure that in every engagement, the customer receives the right quote, the right configuration, the right price, delivered quickly on any device.
The high-quality sales data gathered by the CPQ solution can help in adjusting the pricing strategy and streamlining the supply chain. This would enable even the simplest organization to sell complex products profitably.