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The Immense Value of a CPQ to Business Intelligence

August 19th, 2019 (Updated 06/20/2023) | 7 min. read

By Tolu Oke

What Is a CPQ? 

With a CPQ (configure, price and quote), you can provide smart, accurate and highly configured quotes to customers, transforming your sales organization and QTC (quote-to-cash) process. A CPQ removes errors and complexity from pricing by standardizing, systematizing, and automating pricing rules and conditions into one centralized platform. Sales reps can then access this information instantly, anywhere and at any time, when formulating a quote or doing a deal.  

Business intelligence is a catch-all term for a wide variety of tools, applications and methodologies that deliver information to end-users who are not necessarily experts in operational research. In the case of a CPQ, these end-users tend to be sales reps, but a CPQ can be of immense value to many departments within a company, as discussed later. 

A CPQ forms an essential element in the broader business intelligence ecosystem within which it operates. Business intelligence allows companies to collate vast quantities of data, analyze it, and present it back as actionable information, such as in what quantity, in what configuration and, most importantly, at what price products can and should be sold. 

What Can a CPQ Do for You? 

Data Digestion 

Business intelligence for pricing software is most effective when external market data and internal company data are combined. When it comes to perfect pricing, there is a vast array of variables that should be aggregated and analyzed, far beyond the scope of any Excel-based legacy system. Such variables include, but are not limited to: Direct and indirect costs; market demand; strength of competition; perceived product value; macro-economic forces; pricing strategy; lead times; prospect and buyer demographics; past, present and forecasted sales data; geography; pricing history; order quantity; and discounts.  

The more data you can analyze, the more intelligent your quote, and the more likely it will lead to a sale. A CPQ increases your agility and flexibility, enabling you to keep ahead of the market and beat the competition. If you are not continuously tweaking your prices in response to market and customer behavior, then you will, undoubtedly, be leaving money on the table. Data-driven decisions help you to make bigger sales, more often, to a broader range of customers. 

Play by the Rules 

A CPQ is a rules engine that ensures sales reps act according to company-wide guidelines outlined by executives and enhanced by the intelligent pricing capabilities inherent in the CPQ itself. This extra level of security protects margins and eliminates the risks posed by sales reps who over-discount in order to close deals or hit targets at quarter-end. This type of discount does not just cost the company money in the short-term, it makes sustaining a long-term relationship difficult if prices cannot be maintained. 

Pricing is hard. And without a well-optimized CPQ, costly mistakes are inevitable in any business, let alone rapidly expanding, global companies with thousands of customers, SKUs, discontinued products and discounts! Automation reduces complexity, human error and the number of deals and customers that succumb to miscalculations and a loss of confidence in your company’s abilities.  

Companies looking to branch out into new markets and explore global opportunities can integrate local prices, currencies, regulations and stock availabilities into their CPQ, slashing risks and management costs associated with such growth. Their CPQ can even be used by 3rd party partners down the supply chain, to ensure everyone is reading from the same page. 

Guided Selling 

With guided selling, reps are walked through a series of questions that lead to the optimal customer-product fit, and, thus, the highest chance of achieving a sale. The questions change according to variables such as the customer’s place in the life cycle, or the seniority of the rep conducting the negotiation. Deal-specific documents and templates are auto-assigned, and triggers encourage reps to upsell or push for bigger deal sizes, according to the answers given. Each rep can become a top performer, and new hires can get up to speed quickly, reducing the need for training. Professional- and consistent-looking quotes are created automatically and converted to orders and other relevant documentation at the touch of a button, meaning less time spent formatting and number-crunching, and less input from IT. 

Intelligent Pricing 

A CPQ considers every conceivable product option, configuration, upsell, upgrade, cross-sell, bundle, lead time, stock volume, regulation, and compatibility issues to secure sales in line with your customer-specific pricing strategy. This strategy might be to grow revenue, but it could equally be to improve customer satisfaction or increase customer retention, for example. Machine learning identifies patterns in your data and customizes your offering to suit the needs of both your company and your customer. This is the antithesis of a one-size-fits-all approach, where you simply apply a markup to your cost price across the board, yet to the user, this intelligent pricing feels immediate and effortless. 

Shorter Deal Times 

In the world of B2B sales, where time is money, it’s often the company that quotes fastest that wins the deal. Configuring a quote can be laborious and time-consuming, especially when data is tied up in Excel, with multiple file versions, and new product names nobody can remember. A CPQ will calculate the ideal quote for you instantaneously so that you can be first in line to provide a quote when making a sale. Data shows that nearly two-thirds (64.8%) of reps’ time, on average, is spent in non-revenue-generating activities, leaving only 35.2% for functions related to selling. With a CPQ, sales reps spend less time on data entry and more time interacting with customers and doing deals. 

Submitting quotes for review can slow down the entire QTC process massively, especially when managers are off sick and emails get missed. With a CPQ, neverending email threads become a thing of the past, and the entire approval process is streamlined. Most quotes can be sent without approval, providing they meet certain conditions, while others are flagged for review. A CPQ helps foster a sense of collaboration between reps and managers, and even staff in other departments who can access the software (albeit through different dashboards and with different permissions.) IT, manufacturing and finance, for example, can all comment on quotes, as required, freeing valuable data from silos. 

Business Intelligence for Pricing Software 

Prolonged sales cycles, quoting for incompatible line items, over-discounting, mismatched terms and conditions, incorrect tax models – these are all symptoms of a pricing system that has become bloated and overly complex. A CPQ resolves these issues, and more, turning quotes into contracts.  

A CPQ is one element of an overall digital transformation strategy that quickly shows an unmistakable ROI. It requires little input from IT, thanks to plenty of out-of-the-box functionality, and can grow with you as it’s cloud-based and inherently scalable. It’s no wonder that businesses of all sizes, whether they sell manufactured goods or subscriptions, are investing in the rapidly expanding CPQ market (valued at $1.1b in 2017 and forecasted to grow 25% this year) 

Business intelligence data analysis can super-charge pricing innovation within your organization, accelerating and improving decision making, identifying trends and opportunities, and also flagging potential risks before they become damaging. Business intelligence turns big data into significant opportunities for organizations that choose to harness its powerful and wide-ranging capabilities. With a CPQ, you can make pricing your company’s competitive advantage and start focusing on customers, not calculators. 

Tolu Oke

Director - Marketing , Pricefx

Tolu had 5 years of experience with content planning and strategy and got her start with inbound marketing.

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