The sales process for many companies is more complicated than it seems. There’s more involved than just pitching a product to a customer and hoping they’ll buy. In various industries, including the technology and software landscape, companies need to customize their offering to their buyer.
This means investing in a process that combines an assessment of a company’s needs, with the configuration of a solution, an evaluation of pricing, and the delivery of an accurate quote.
CPQ, or “Configure, Price, Quote” software is a solution that helps to facilitate this customized approach to sales, saving salespeople time and accelerating sales strategies. Here’s everything you need to know about CPQ solutions.
What is CPQ Software? Understanding CPQ
“CPQ” or “Configure, Price, Quote” software is a sales tool reps can use to generate quotes rapidly and accurately for orders. In today’s world, this technology often works in tandem with other business technology, from ERP programs to CRM platforms.
Without CPQ software, businesses can suffer from a slower, more complex sales process, which involves manually configuring and pricing each solution individually. Rushing through the manual process can lead to giving customers the wrong prices or making promises companies can’t keep.
However, leveraging CPQ software helps to streamline the customer journey and sales process, by creating quotes with a pre-programmed set of rules, ensuring error-free pricing.
While many people tend to think of CPQ software as a solution for B2B business deals, similar technologies are used by retail customers every day. For instance, the Starbucks Coffee app allows users to customize (configure) their order, determine a price, and see a full quote for the product.
Used correctly, CPQ software doesn’t just give companies an opportunity to improve their sales strategy, it can also reduce customer churn, increase win rates, and boost revenue.
How Does CPQ Software Work?
Most CPQ solutions have similar functionalities. They essentially give companies all the tools they need to determine exactly how a solution should be priced, based on a customer’s needs, and other factors, such as product availability, discounting strategies, and offers.
While the modules and components of a program can vary, depending on the solution you choose, all CPQ software tools will allow salespeople (and sometimes their customers), to:
- Configure an order: This process could be as simple as checking boxes on a screen for the options and add-ons a customer chooses. In the backend, the software checks the choices made against a set of pre-built rules to determine orders are actually possible to fulfil.
- Track prices: In modern CPQ software, prices of products and solutions can be updated in real-time, based on the choices users make. The right toolkit can automatically adjust prices based on the number of products chosen, or the configuration of a solution.
- Quote creation: Once the configuration and pricing stages are complete, the CPQ software can then generate a quote for the “overall solution”. The salesperson can then take the results of the CPQ software to the customer, to begin the negotiation process.
Why Salespeople Need CPQ Software
Salespeople have limited time on their hands, and increasingly complex sales processes to manage. As a result, most sales reps only spend about 34% of their time selling, while much of their additional time is spent generating quotes and proposals, and gaining approval for their suggestions.
Studies show that implementing CPQ software correctly can help salespeople create quotes up to 10 times faster, reduce approval times by 95%, and half the speed to purchase.
Although not every company necessarily needs CPQ software, there’s a good chance your team could benefit from these solutions if you:
- Currently use legacy quote configuration tools
- Struggle to adapt to revenue growth
- Want to build a recurring revenue stream
- Frequently send inaccurate quotes to prospects
- Require someone to manually review your sales quotas
Remember, accurately pricing solutions can be a major pain point for sales teams. Price is one of the biggest objections sales professionals often need to overcome. This can prompt some reps to offer discounts to a customer that harm your revenue, and make future negotiations with clients more difficult. A CPQ solution can help to reduce these problems and boost your revenue potential.
The Benefits of CPQ Software
As sales processes become more complex, and businesses strive to reduce the length of the sales cycle, CPQ software is becoming increasingly popular. It helps to ensure sales teams can avoid digging through spreadsheets and investing endless time in manual calculations. Plus, it gives reps the power to create quotes they know will be approved, reducing waiting times.
CPQ software can:
- Accelerate sales cycles: CPQ software dramatically improves how quickly a salesperson can get a customer to make a purchase. The time to complete the process is anywhere up to 10 times faster with CPQ software. The shorter your sales cycles, the faster your business can grow, increasing revenue and profits.
- Improved accuracy: CPQ solutions allow for excellent collaboration between sales, financial, legal, and customer service teams, while also boosting the accuracy of the quotes you give to your customers. CPQ systems can give users accurate insights into what is and isn’t possible, reducing the risk of mistakes.
- Standardized processes: CPQ software helps to standardize the process of delivering quotes to customers, and generating sales. It gives companies comprehensive visibility into their operations, and minimizes the risk of errors on a comprehensive level. Some solutions can even make it easier to monitor the status of deliveries with ERP integrations.
- Increased efficiency: The more your processes can be streamlined and automated with CPQ software, the more time salespeople will have to meet with and research customers, make sales, and build rapport. This leads to a more productive workplace, where employees can make the most of the time they have “on the job”.
- Better revenue and savings: Using CPQ applications helps companies to focus increasing revenue, rather than training and guiding staff. When delivering quotes and closing deals becomes effortless, you increase your potential revenue, and reduce your operating costs, improving financial health.
- Greater business insights: With integrations to your CRM and ERP systems, CPQ systems can give you access to more data you can use to make intelligent decisions about business growth and new opportunities. Youi can more easily monitor customer trends, and determine which sales strategies increase ROI.
Choosing the Right CPQ Software for Your Business
CPQ systems are growing more advanced in today’s digitally transforming world. Innovative solutions can feature everything from integrations with your existing business tools, to intuitive AI capabilities. In most cases, CPQ systems are “configurable products”.
This means many companies often engage in conversations with potential providers to customize their technology to suit their needs. Before you start reaching out to vendors, it’s worth thinking about what’s most important to your business. What kind of constraints and rules do you need to account for when configuring solutions? How complicated is your pricing formula, and how complex could it become with the addition of new customizations and deals?
Think about whether you want your software to be able to handle data tracking tasks, and enable collaboration between teams, and how you’ll enable your employees to use it effectively. In most cases, it’s important to ensure the technology you choose is easy to use.
One important thing to keep in mind is that no matter how your CPQ platform is configured, it should always be able to leverage data from your existing tools. Your CRM and ERP technologies can significantly increase the value of your CPQ software, and ensure data alignment and accuracy throughout your entire ecosystem.
Depending on your business structure, you may also need to look into other integration options. For instance, you might want your technology to work alongside inventory tracking tools, customer interaction management, and customer data platforms.
Does Your Business Need a CPQ Solution?
If you’re operating in an industry that allows your company to sell customized solutions to customers, and you often need to configure orders, and create accurate quotes, a CPQ system is essential. The right CPQ solution will formalize your quote creation and pricing rules, establish standardization across the company, and increase companywide efficiency.
What’s more, successful CPQ deployment can reduce operational costs, increase revenue, and ensure you have the foundations in place to build strong relationships with your customers. As companies continue to search for ways to adapt their solutions to the needs of many different customer segments, CPQ technologies are likely to become a mainstay of the technology stack.
Just remember, there’s more to implementing CPQ software than choosing the right solution. You also need to train your staff to use these tools, and guide them on how to manage data, collaborate with team members, and streamline their workflows.
Learn more about how you can train and empower your sales teams with both software, and coaching solutions today, by joining the HSE community.
