What is CPQ?A Guide to Configure, Price, Quote

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Many businesses are still building quotes with the same tools that were considered cutting-edge in 1990, including word processing software and spreadsheets. While these may be familiar and convenient, they are unreliable and leave organizations succeptible to revenue loss.

Luckily, there is a better way. Configure, Price, Quote apps, often referred to as CPQ, have become vital for fast-growing businesses. They represent a critical issue that many face: how to produce accurate and professional quotes quickly, while eliminating errors and inefficiencies.

Introduction

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Introduction

Thinking Beyond Software

Signs you Should Switch to CPQ

Selecting the Best CPQ Software for Your Business

The ROI of CPQ

There’s Always More to Learn

Table of Contents

C is for Configure

We are configuring all the time. We create custom playlists for our music and build our cars on dealer websites, identifying which features best fit our needs and budgets. We can even design our own personalized shoes online. In our consumer purchases, this desire to configure may be driven by want, but in our business purchases, configuration is often driven by need.

CPQ software enables B2B sellers to offer unique combinations of products and services tailored exactly to their buyers’ needs. A good sales person guides customers to the best mix of products and services to solve their problems. Rarely does one size fit all.

P is for Price

How often do you sell at list price? Perhaps you offer special bundle or volume pricing; or maybe you allow extra discounts to sweeten the deal. Keeping track of current pricing and discounting can be a major headache. And, it can be disastrous to the bottom line when discounts are applied incorrectly or inconsistently.

CPQ helps manage pricing for all your products and services. Advanced pricing rules can be set to handle volume discounts, percent-of-total subscriptions, pre-negotiated contract pricing and channel and partner pricing. You can be sure that your pricing is accurate and optimized.

Q is for Quote

Once a sales rep provides a quote, their focus is usually on closing. They don’t want to worry about losing a deal because of a pricing error or a poorly formatted quote document. When reps create their own quotes manually, they risk typos, mismatched fonts, etc., which can lead a prospect to think the rep is unprofessional, or worse, uncaring.

With CPQ, a sales rep quickly generates a quote, sends it via email, and can even include e-signature to close the deal in just a few clicks.

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CPQ software not only helps experienced reps be more productive than ever, but it’s also a lifesaver for newer, less-experienced reps. CPQ automatically narrows down product selections to those that are most applicable based on need, company size, and other relevant factors. CPQ can then help reps with any additional configurations and even suggest appropriate add-ons, such as extra training sessions, extended service contracts, or complimentary products.

It knows your standard pricing and provides guidance for reps to add line-item or package discounts. In some cases, a rep can even enter a client’s budget and the software will automatically calculate individual

product discounts that matches. Think: quotes that capture better value.

Finally, CPQ generates a customer-ready quote. These documents can include your branding and formats, cover pages, tailored cover letters, custom terms and conditions, and even marketing materials, in addition to the quote itself.

All of this can be done in minutes, which saves reps time and energy.

Your Path To More Effective Selling

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You may be wondering how sales people ever do their jobs with traditional, legacy software!

The traditional process of using highly complex, hard coded software or manually pricing and quoting has a number of drawbacks, including lack of scale, disconnected processes, and lost time and money.

Thinking Beyond Software

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Traditional Quoting

Here are the typical steps a sales rep would take in a traditional process:

1. Figure out what products are best and what configuration is necessary.

2. Consult pricing documents or a static system(s) to determine the base price.

3. Determine eligible discounts and manually apply them, hoping not to make any errors along the way.

4. If a particularly large discount is requested, there may be a review period, which delays the process.

5. Once everything is approved, the rep now begins to create the actual quote document that can be sent to the customer.

Scale

Legacy CPQ systems that don’t scale can be a huge problem. Businesses that explore new selling models and recurring sales will often find that older CPQ systems are a bottleneck. It takes too long to incorporate change, if they can at all.

Disconnected Processes and Data

Here are some effects of disconnected, legacy systems: without full visibility of the customer, you never deliver on the full value of your products and services; revenue teams lose time true-ing up against contractual data which hurts the revenue recognition process; business decisions are never made with the

full picture in mind. And service teams have to spend extra time researching customer entitlements in order to properly meet SLAs.

Lost Time & Money

The phrase “time is money” may be cliché, but there’s a reason the saying exists. Whenever employees are not as productive as they could be, their company is losing money. Manual quoting keeps sales reps from finding and landing more customers. Many CPQ users say that the time to create an accurate quote is reduced from hours to minutes with the right tools. It gives sales reps time back so they can sell more.

Risks With Traditional CPQ

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Signs you Should Switch to CPQ

After talking to many sales leaders, we have identified six common signs that indicate underlying problems, all of which can be alleviated by making the switch to CPQ.

1. You are using legacy quote configurators or traditional CPQ software

If you are using legacy software to configure products and create price quotes, it’s time to move on. By using these outdated tools, you risk errors, waste time, and you just won’t be able to scale business.

2. Revenue growth is outpacing your ability to operate

As your business grows, so will the number of sales quotes you generate, and the amount of time your team will spend generating them. You can free up extra time for your sales team with CPQ, which enables your reps to generate quotes quickly and accurately.

3. You are looking for practical ways to implement intelligent solutions

In the fourth industrial revolution nearly everything is being labeled “smart”. But as a savvy business leader, you know it’s one thing to acquire new solutions just because it’s trendy and totally another to do so because it adds real business value. We will address how intelligence is critical to CPQ processes like approvals and pricing later on in this e-book.

4. You are sending inaccurate sales quotes to prospects

Whether it’s incorrect pricing or configuration, sending out inaccurate quotes is unacceptable. You are nurturing a relationship, and you don’t want to lead with embarrassing mistakes.

5. Someone manually reviews all quotes

Having a person look over sales quotes to ensure accuracy may work for the short term, but it just doesn’t scale. What happens when that person goes on vacation or gets sick? Will approvals just

stop? Can a temp be trained to take over? CPQ software can automate the process and improve accuracy and speed.

6. You are building a recurring revenue stream

Improving your relationship with your customers is not just about a strong customer service model, it’s also creating a sales model that meets modern demand. Today’s customers are gravitating to subscriptions and contract terms more amicable to the fast pace of business. Meeting them where they live from a business perspective means strengthening your relationships and nurturing them into brand advocates.

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If any of these signs sound familiar to you, it may be time for your company to make the move to a CPQ solution.

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How to Select the Best CPQ Software for Your Business

Once you decide that CPQ is right for you, how do you know which app is the best? Consider these questions:

Does it scale?

A better CPQ solution is built on a platform that you are already using (think CRM). The best solution goes beyond just being native, and comes with pre-configured, out-of-the-box features and workflow to meet your most common use cases.

The right CPQ solution scales along with your CRM, so growth is never an issue. When your CRM is upgraded to a new version, you don’t have to worry about breaking the integration with your CPQ because they share a common platform.

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Is your sales team mobile?

For reps on the go, you’ll want CPQ optimized for mobile devices. Even if your team spends most of its time in the office, mobile features can still be essential for winning deals. When your sales rep is armed with a mobile CPQ app, she can pull out a tablet or phone, create an accurate, professional-looking quote in just a few minutes, and deliver it to the customer’s inbox before their meeting is over.

How important is quick and affordable?

CPQ should simplify life for your sales team, and that should begin with the implementation. Once you have selected CPQ that meets your criteria, be sure to check references and speak to other customers who have implemented the same software. What was their experience? How easy was the implementation? Who supported them during the deployment? How responsive was the vendor? Were promises kept or were excuses made?

Asking these questions can make the difference between going live quickly or feeling the frustration of a seemingly endless implementation.

Is it practical and intelligent?

This ranges from intelligently designed workflow that comes out-of-the-box to full on Artificial Intelligence. Look for smart approval processes that support tiered and series based approvals. Look for pricing intelligence that allow you to price based on customer budgets, applying discounts across line items, and even system feedback telling reps that based on your data, you can price at X level for a better chance of closing the deal.

The ROI of CPQ

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Return on Investment

Because CPQ is generally considered a sales app, you may think that it only delivers benefits to sales professionals. But that’s not the case. The return on investment is real for non-sales roles, both inside and outside your company as well.

1. Your Customers

We all appreciate rapid response times. When you use CPQ, your customers receive quotes faster. CPQ tracks which customers are eligible for discounts so sales reps can offer the best pricing options, ensuring they get the best value. Your customers will also appreciate getting proposals that include accurate and appropriate product bundles and configurations.

2. Operations and Technical Teams

Operations and technical teams often have to clean up the mess when quotes contain inaccurate product configurations. By implementing CPQ, reps are guided to create sales quotes that are correctly configured and accurately priced every time, making it easier for operations to do their job..

3. The Quote Approval Team

Your company may have one person who reviews quotes to check for correct product configurations and another person who reviews them for pricing accuracy. These can be never-ending jobs, and as your company grows, those responsibilities do as well. With CPQ, you can enforce your business rules for pricing and configuration so the expertise can be automated, saving their time for more complex projects.

4. Your Sales Team

With CPQ, your sales team creates accurate, professional looking quotes and proposals. Your reps will be thrilled with the additional time they now have to prospect, generate leads, and close more deals!

5. You

Perhaps your role has nothing to do with generating sales quotes or managing product configurations or pricing. But after reading this e-book, you now have the best practices necessary to research and recommend the right CPQ software to your organization. You will likely be recognized as a hero for improving the lives of so many of your colleagues. You can thank us later.

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There’s Always More to Learn

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