What Is CPQ Software?
This should be worrying because it’s the sellers who are first to produce a complete, accurate quote that wins the deal at least 60% of the time. Perhaps because suppliers that make buying easy are 62% likelier to win high-quality sales.
Configure, price and quote (CPQ) solutions will no doubt have already have crossed your path, but let’s take a deeper look at what they are, where they came from, and how they can help you achieve five-times-greater revenue growth year over year.
What Is a Configure Price Quote Solution?
A CPQ solution enables the design of quotes based on customer-specific sales inquiries. You can configure a specific product portfolio within the scope of a quote (based on your overall product catalog), define related pricing, send outputs for internal approval, negotiate with a customer and possibly re-iterate on specific quote conditions.
The best CPQ solutions are enhanced by functionalities like pricing guidance that provides optimal price recommendations based on historical sales and suggest relevant up-sell and cross-sell opportunities.
What’s the Story Behind CPQs?
Customer specifications have always posed a problem for sales teams. So, way back in the early 1980s, the first configuration system was used to help manage this part of the process and to ensure customer choices were compatible.
Configurators were soon integrated with CRMs, but were still regarded as back-office tools until the early 90s when sales force management systems started to catch on and an increasing number of companies wanted to automate the many tedious manual tasks expected of the sales team alongside actual selling.
Finally given front-office status in the late 90s, CPQ technology started advancing by leaps and bounds and by the time ecommerce took off, configurators were an integral part of the sales process.
By the 2000s, even small sales organizations were looking to CPQs as a solution for their quote-to-cash problem and to boost efficiency by streamlining and automating processes.
Who Needs a CPQ?
As companies (and their portfolios) grow, it becomes more and more difficult to manage pricing, price appropriately, identify upsell opportunities, quote accurately, and keep track of the competition. Out-of-date Excel spreadsheets, multiple back-and-forths, and long approval cycles result in slower quote response times and lost opportunities. To make matters worse, inaccurate pricing information and a lack of deal guidance often lead to errors, an excess of unapproved discounts, and significant margin erosion that no-one notices until it’s too late.
Any company of any size in any industry that wants to streamline sales processes, accelerate quoting times, win more opportunities, protect margins and grow their revenue will find the tools and capabilities of a CPQ invaluable.
The Benefits of a CPQ for All Businesses
1) Shorter Sales Cycle
A CPQ will allow you to respond to requests and inquiries with speed by streamlining and automating your quoting and approvals processes and integrating them with your CRM.
CPQs can shorten your sales cycle by up to 28% by enabling you to send prospects 49% more contracts, proposals, quotes and RFP responses. CPQ-supported teams enjoy 45% greater proficiency at responding quickly to RFPs while those without CPQ tools take 73% more time to produce a typical quote. A CPQ can help you generate complex quotes in a timely manner with 21% higher effectiveness.
2) Greater Quoting Accuracy
With a CPQ, you can quote with higher accuracy and confidence and win more opportunities. By establishing rules to automatically prevent incompatible orders and generate better, more accurate quotes, CPQs are proven to eliminate 40% of human errors and can reduce the number of quote revisions by 13%.
3) Achieve Pricing Transparency
Unclear pricing guidelines, complicated approval workflows, and millions of product combinations all make profitable quoting a nightmare. Leverage the clear deal guidance of a CPQ to create transparent target pricing that’s based on willingness to pay. With a clear-box approach to pricing you can make sure all stakeholders understand the prices they’re quoting, how they relate to your business objectives, and how to defend them.
4) Keep Discounts Under Control
A good CPQ will enable full transparency on discount policies, help you fully understand the impact of a discount in advance, and support you in tightening the reigns on customer-specific discounts.
5) Reduce Losses in Profit
Quality CPQs allow you to access your complete deal waterfall when quoting to see all profit reducers at a glance, and to use historical price and cost data for rapid insight into sources of margin compression.
6) Empower Sales
Enable your team to bring their real skills to the table, by eradicating time-consuming administrative tasks and providing the tools they need to work sales miracles. A top CPQ can transform your sales team into informed decision makers.
Not only can those using a CPQ be 60% better at speaking intelligently about competitors and differentiators, but 26% more sales reps achieve their quota with a CPQ solution. In fact, according to HubSpot, best-in-class CPQ users could save $1 million in sales rep replacement costs over 10 years.
7) Boost Conversions and Revenue
By accelerating the sales cycle, producing error-free quotes, pricing according to willingness to pay and quoting at optimal prices, organizations leveraging the capabilities of a CPQ can boost conversion rates and revenue.
Why Are We Talking About CPQs?
Pricefx was recently named Gold Globee® Winner of the Configure Price Quote (CPQ) software category at the 16th Annual 2021 IT World Awards, which recognizes vendors with “advanced, ground-breaking products, solutions, and services that are helping set the bar higher for others”.
We’re proud to be trailblazing with our cloud-based integrated CPQ solution and we look forward to sharing its cutting-edge technology with you soon.