What Is CPQ Software?
January 27th, 2021 (Updated 08/15/2022) | 5 min. read
By Milan Haba
What Is CPQ Software?
Spending hours and days with pricing managers haggling about prices and quotes can be a daunting task. Understanding what your customers want is one of the key metrics in getting your pricing right.
However, studies have shown that sales reps waste 50% of their time unproductive prospecting and error correction. The era of heavily relying on spreadsheets and manual handbooks is long gone. Though customizable and familiar, spreadsheets are not user-friendly. Scrolling through thousands of rolls to pick out data might also be prone to errors.
In the same vein, relying on CRMs for your pricing needs can be cumbersome. Most CRMs enhance sales techniques but are primarily limited when it comes to generating quotes and proposals. You might have heard about CPQs but still don’t understand why investing in a CPQ could help your business.
This article will aim to demystify the myths about CPQ solutions and how your business can benefit from investing in a CPQ this year.
What is a Configure Price Quote (CPQ) Software?
CPQ stands for Configure, Price, and Quote. As its name implies, the solution primarily focuses on generating quotes for orders.
A CPQs software helps sales reps meet their customers’ needs through customized solutions. Sales teams use CPQs to ascertain the costs of selling a product or service. It can also be made available to customers to calculate its worth to buy particular products. CPQs can recommend prices based on historical data and customers’ preferences through artificial intelligence.
What’s the Story Behind CPQs?
Understanding customers’ specific needs has always been a significant challenge for sales teams. In the early 1980s, a system was introduced to gain better customer insights.
Almost a decade later, configurators were integrated with CRMs. At least, as back-office tools until companies wanted to de-clutter their manual sales processes, hence opting for automation tools.
In the late 90s, the CPQ technology witnessed growth as eCommerce began its baby steps. Configurators gradually became an integral part of the sales process. CPQs have gained momentum in recent years as every business wants to scale more. Small and medium organizations now depend on CPQs to solve their quote-to-cash problem and boost efficiency by streamlining and automating processes.
Why Is CPQ Used?
As customer buying habits continue to evolve, there is an impending need for companies to always scale faster through efficient tools. CPQs enable sales teams to personalize the customer experience through advanced artificial intelligence. Business buyers are becoming more demanding than before. 79% of business buyers want their sales reps to be consultants and not old-style sales pros. To avoid back-and-forth talks with internal teams when generating a proposal for a client, we recommend that you get a CPQ solution. Excel sheets have been around for ages, but it would be best to automate data to avoid the risk of losing data.
How does CPQ help your business?
Reduces Sales Cycle
A lengthy proposal generation cycle can be frustrating for your clients. Investing in a CPQ enables you to automate quotes and approval processes. Counting on manual handbooks and spreadsheets makes it difficult for you to scale. You can integrate CPQs with your CRM. CPQ-supported sales reps take 27 % less time to produce a typical quote or proposal than those not using CPQ. Shorter sales cycles enable you to send prospects 49% more contracts, proposals, quotations, and RFP responses.
Improves quoting efficiently
There is a high tendency to get stuck in data mining with spreadsheets. Tracking and managing data becomes difficult, and sales reps might have difficulties closing deals quickly. Integrating a CPQ solution into your sales process could prove vital to an efficient quote management process. You can select products and manage discounts easily. THROUGH ADVANCED AI, your CPQ can create alternative quotes and update your proposals throughout the sales pipelines. CPQs are proven to eliminate 40% of human errors and reduce quote revisions by 13%.
Achieve Pricing Transparency
Create transparent target pricing with CPQ based on your customers’ willingness to pay. A CPQ solution ensures a more transparent pricing guideline and easy approval workflows.
With a clear-box approach to pricing, you can ensure all stakeholders have a transparent outlook on your pricing processes. In addition to that, a good CPQ gives you complete control over your discount policies by enabling you to understand the possible impact of a discount.
Empowers Sales and Reduces Losses
Most sales deals require approvals at different stages. Sales reps spend hours and days during these approvals, causing unnecessary delays in closing deals. Delays usually harm cash flow and customer satisfaction. A good CPQ tool gives you an edge over market forces. According to Aberdeen’s study, people using are 60% better at speaking intelligently about competitors and differentiators. Knowing the market keeps you ahead of the competition. Best-in-class CPQ users could save $1 million in sales rep replacement costs over ten years.
Boosts Conversions and Revenue
Companies that leverage CPQ software achieve a 17% higher lead conversion rate, 7.5 times higher year-over-year increases in customer renewal rates, and gain a 105% larger average deal size.
A CPQ solution gives you a better understanding of your customers’ needs. Gaining these insights can be vital in personalizing your offers and making it easier to close deals.
Why Are We Talking About CPQs?
Pricing accuracy and precision are the talk of the town these days. And rightly so, customers, especially B2B, are more focused on tailoring their efforts to achieve their organization’s big picture. 83% of business buyers want salespeople focused on helping them achieve their company goals.
Studies reveal that AI use by sales teams will more than double in the next three years. We recommend that you invest in a good CPQ to smoothen your sales journey. Salespeople usually wear many hats in different organizations, and you might hear that CPQ enables you to scale better. However, you are unsure if you need a CPQ or pricing software. The question is What’s the difference between CPQ and Pricing Software?