Is CPQ Software Right for Me?
Configure, Price, Quote (CPQ) software might just be the secret to bridging the gap between the escalating expectations of your company’s customers and the current experience and skills of your sales staff. The era of reliance on spreadsheets and manual handbooks is history for most companies. However, implementing a CPQ Software solution might not be for every business. So, we know that CPQ software is great in many cases but how can you know if it’s the right solution to help solve your business needs? That’s exactly why we are looking at demystifying some of the myths about CPQ in this article and answer the question – “Is CPQ Software Right for Me?’
At Pricefx, we combine CPQ software with a suite of 360-degree pricing solutions including unique and industry-leading price optimization capabilities, value estimation and large deal negotiation tools.
So, let’s kick the tires of CPQ Software and dig into what the software is, what it does, discuss its benefits and drill down to who it is right for, who may not need it at all and why.
What Is CPQ Software and How Does it Work?
As mentioned above, CPQ stands for configure, price, quote. CPQ software is often an extension of, or integration with your Customer Relationship Management platform (CRM) to create a standardized sales process for your business. It also makes the overall sales process easier, faster, and more organized while working efficiently hand-in-glove with a pricing software solution.
As a powerful, user-friendly sales tool, CPQ shortens the sales process while reducing the time spent by your sales team on performing administrative tasks. It will allow businesses to improve their quote response times, increase sales win rates, and drive overall revenue growth. But there is a bit more to it than that. Let’s examine the ‘C,’ the ‘P’ and the ‘Q’ individually.
The ‘C’ – Configure
Loosely explained, the ‘C’ – Configure – means configuring products, services, or solutions to meet a specific need. Imagine you are choosing a new vehicle – for example, you tell the salesperson in the showroom you a blue vehicle with automatic transmission, white leather interior and running on diesel fuel. That’s configuration. The car salesperson in this scenario probably asked you a set number of questions to assess your needs, like:
- What color vehicle do you want?
- What transmission type do you want?
- What interior material do you want, and what color?
- Do you want a gas, diesel, hybrid, or electric vehicle?
Similarly, CPQ software asks sales reps or customers a series of questions about each customer and, depending on the answers given, can narrow down (i.e., configure) a potentially vast, complicated product catalog into an optimal customer-specific selection.
The software can also assess products that are incompatible with one another, thereby minimizing quoting errors and subsequent costly product returns. The software can point salespeople towards more functional combinations or recommend additional products and services – great for salespeople and customers alike.
Ordinary salespeople are transformed into solution sellers and trusted advisors, providing added value to customers. Meanwhile, the ‘C’ of CPQ can empower your business bottom line by increasing by intelligently recommending product upgrades, upsells, and add-ons for customers.
The ‘P’ – Price
The “P” in CPQ stands for price. With a complex ,or widely varied, range of products will come even more complex pricing structures. If your business is offering customizable products, you will not be able to have a predetermined price laid out before they’re configured.
Sales teams that attempt to craft prices on their own manually are at risk of losing business and revenue due to offering less than optimal prices and generating slow turnaround times on quotes.
Used at its best, intelligent CPQ software implements artificial intelligence optimization to pick up on customer buying patterns and market research to determine what your customers are actually willing to pay.
Essentially, CPQ can provide price guidance and authorizations to ensure that you are offering a reasonable and customized price (including promotions, rebates, and discounts) to your customers while maintaining profitability (and other business objectives) for your company.
The ‘Q’ – Quote
The ‘Q’ is for ‘Quote,’ and with modern CPQ software that will usually come as an electronic document containing information about the products or services they are looking to buy, plus contact information, a table of prices with a grand total, terms and conditions, and several blank panels for dates and signatures (or e-signatures).
With CPQ Software, your Sales Representatives can produce professional quotes and proposals containing all the products being quoted along with their pricing, company branding information, billing and shipping information and customer and product-specific terms and conditions.
All quotes are centrally stored, making requoting simpler as they can be regenerated for similar deals or quotes.
CPQ-generated quotes also serve as internal electronic records with sales/quote expiry dates, eliminating the need to go back-and-forth on configurations and quote generation, empowering your sales team can do what they do best – sell products and close the deals.
How Can I Use CPQ Software in MY Business? – A Use Case Example
Imagine yourself as Kit Home (also sometimes called mail-order or catalogue homes) manufacturer that supplies homes shipped to your door in flat packs with precut (and often partially assembled) materials for self-assembly. You sell to individual buyers but also do deals with building contractors who assemble the homes for customers in bulk tract and public housing complexes. You operate in 35 of the mainland United States plus Central America nations and many of the Caribbean countries.
- Your CPQ Needs?
You are looking to eliminate paper and spreadsheet processes and improve your quote-to-purchase time. You are on the lookout for a technological solution that would provide improved quoting, standardizing pricing and discounting across countries and customers, and sales analysis for your quotes and purchases.
- Your CPQ Solution?
You choose to adopt CPQ Software to improve your quoting and pricing process, standardizing it across all states and countries. The software serves as a sales enablement tool from quote all the way through to order fulfillment.
- Your CPQ Business Outcomes?
CPQ streamlines your quoting process for bulk orders from hours to 15 minutes, giving your salespeople and customers a faster understanding of pricing and saving your salespeople from a tedious manual quoting procedure.
Thanks to the software’s cross-channel and multinational capabilities, your customers will enjoy increased efficiency since they don’t have to wait days for quote approval and can have the flat packs on their doorstep quickly, faster than they previously received a quote, let alone product delivery. They result – increased efficiency and profitability for both you and your customers.
The 3 Main Benefits of CPQ Software
1. Deliver Quality Quotes
Many customers are only ‘shopping around’ when they request a quote, getting quotes from 3 or more vendors, so efficiency is key. However, accuracy also plays a big part in CPQ.
The beauty of CPQ is its real-time function, a critical component in creating accurate quotes for your customers.
CPQ Software allows your company to accurately reflect the cost of providing your goods. And it ensures that your margin targets are being achieved.
Prices, discounts, and expenses are amalgamated to produce the best result for you and your customer.
You can maintain and view multiple versions of the estimates while at the same time keeping control over the entire process.
What’s more, CPQ software allows you to collaborate with other departments to send your customers the best, legally compliant and most accurate quote possible.
2. Increase deal size/up-sell and cross-sell
CPQ Software can track your customers’ preferences. For example, the next time you are preparing a quote for a previous client, the software can suggest just the right mix of products and services for that client specifically. CPQ allows your salespeople to cross-sell and up-sell more easily and optimize the maximum profitability from each quote prepared and delivered.
3. Better Customer Service for Your Clients
Everyone is striving for better customer service these days. According to a 2020 Study by Forbes, it was revealed that an astonishing 96% percent of customers may leave your business after just one unpleasant experience.
With CPQ Software you will be delivering personalized quotes to your clients, enabling better customer experiences and overall service.
Who Is CPQ Software Right For?
CPQ Software will assist your company in your business-to-business or business-to-customer dealings if your organization:
- Is experiencing slow turnaround times when generating quotes for customers
- Includes a lot of complex products in your quotes with even more complicated pricing models
- Struggles to create quotes accurately and efficiently for your complex product line
- Operates on a global scale and needs to provide quick and accurate pricing data to dozens or even hundreds of stores across multiple regions or jurisdictions.
- Is losing out on revenue due to the over-discounting of products
- Has siloed quoting procedures. Previous customer quotes only be found on the devices of sales reps who generated them.
Who Is CPQ Software NOT Right For?
Many businesses can manage pricing and produce quotes perfectly well without using CPQ. Clearly, CPQ software is extremely useful in certain business situations, such as large organizations that have broad product ranges and operate across multiple regions, but many businesses are not in this situation.
If you do not have thousands of products in your range, or a variety of negotiated prices or possible configurations, then CPQ is probably not necessary for you. If your sales reps can develop quotes for customers without making serious errors or losing prospects due to the process taking too long, then CPQ may only provide marginal benefits. Also, if most of your business is from very large and one-off project quotes for something like running a call center or building a skyscraper, and those quote look extremely different from one customer to another, incorporating 3rd party products and services that differ wildly, then CPQ might not deliver the efficiency or effectiveness that justify the cost.
When deciding whether to invest in CPQ or not, you need to weigh up the potential benefits of the software against the costs. If your business is a small one and your product line straightforward, then it could be that the quite marginal financial benefits that your business may gain might not be worth the cost of CPQ.
How Does the Pricefx CPQ Software Model Differ?
At Pricefx, the CPQ software offers all the benefits we have mentioned above. That includes automation of quoting, ordering, and contracting processes involved across the sales cycle, in addition to configuring the products, pricing the order with our unique real-AI price optimization, and rapidly generating flawless quotes with fewer clicks.
Rebate and Channel Management is another critical point of difference with the Pricefx CPQ solution, coordinating rebate programs to enable collaboration, automating program tracking and payouts and providing a single source of truth for all your rebate data, accessible to all relevant employees and channel partners in one place.
Finally, the Pricefx Dealing Planning Tool facilitates the planning of large, complex deals with guidance and contextual information to support the negotiation of giant deals in one, central location. Importantly, it anticipates buyer objections and offers counter proposals, while remaining aligned with your organization’s business objectives. Combined with the efficiency of the CPQ solution, Deal Planning enables businesses to get the most value and profit from the customers that generate most of their revenue.
That’s Great – But Aren’t CPQ Software and Pricing Software the Same Thing?
Now you know what CPQ software is, what it does, its benefits, who it is for, and who it’s not for and how it works here at Pricefx.
You’re probably wondering now is how CPQ Software differs from Pricing Software in general?
At Pricefx, we hear that question a lot from our clients. So, that’s why we’ve prepared this blog article to answer all your questions on the differences and to learn more: