BlackCurve has pointed out in earlier blogs the many problems associated with using spreadsheets to manage your prices. So, if you agree with us that solely using spreadsheets for this task is a bad idea, our recommendation is to make the switch to Configure Price Quote (CPQ) software. Many industry leaders use CPQ software to inject speed and accuracy into their sales engines – could this software be the answer if you are experiencing a sales slowdown – or are troubled by errors and time delays associated with using spreadsheets to manage your prices?
The words "configure, price, quote" illustrate that these software products can help with all three of these core operations for setting and controlling prices. In addition, CPQ software typically comes with a price engine that can assist businesses to keep prices more in line with current market conditions.
The popularity of CPQ software clearly illustrates the very particular nature of price-setting, the need to accomplish sales or contracts quickly, with the added benefits of opportunities to cross-sell and upsell. It can be applicable in business-to-consumer (B2C) sale interactions, but is more commonly adopted in business-to-business (B2B) situations.
What is CPQ Software?
A CPQ application can be thought of as an automated or guided sales quote generator. It is especially helpful for sales teams that sell customizable products and services and/or have a complex method to determine pricing. Related sales software categories include sales proposal automation, e-signature, and contract management. All such software tools are designed to make the sales process faster, smoother, and easier to audit.
CPQ software automatically pulls together all the necessary information, allowing salespeople to produce the quote and get back to the customer promptly. The pricing data is more streamlined, time is saved and more sales can be made.
Many global businesses use CPQ because it allows them to quickly and efficiently send out pricing data to hundreds of stores. The result is that a head office knows that every store contains goods that are appropriately priced, without having to spend time manually calculating the right price for every item.
or configuration element, essentially refers to “what products or services do I want?” Where you are selling complex items or bundles of items, it guides the user to ensure items are selected that are compatible, or supports in upselling/cross-selling opportunities to recommend e.g. “customers who bought this product, also bought…”.
element takes over once you have selected your components. It is the pricing engine that sits behind the scenes, and ensures the correct price is displayed for that combination of items selected. You may have set up certain bundle rules, or discount structures based on the combination of parts selected. The pricing solution takes the stress away and minimizes any pricing errors.
element is the final piece of the jigsaw. It takes the selected items and the assigned prices, then presents them in a professional formatted manner either shown to the consumer on the summary page of a website before they enter their credit card details, or in a company branded pdf, Excel, or Word document, ready to be sent out directly from the system or downloaded.
It can be difficult to manage pricing if a business offers a very wide range of products or services. In particular, it's tough to keep track of external factors, such as any special offers from competitors, and to work out how these should affect your prices.
You should consider CPQ if...
You are fed up with errors being made on quotes
You would like to implement new offers at short notice
You can see an opportunity to attract customers with precisely tailored offers
You suffer from a high or growing salesforce or customer churn rate
It takes a long time to create quotes
Your salesforce is not completely office based, they are spread geographically
You are spending too long manually administering the pricing process
You are having trouble managing thousands of products due to discounts or discontinued items
Your sales team feels it does not have all the updated information it needs
Your company operates on a global scale and you need to provide quick and accurate pricing data to dozens or even hundreds of stores
You want to cut back on sales quotes that actually lose you money
What are the benefits of CPQ Software?
1. CPQ increase your deal sizes
At various stages in the configure cycle it can present opportunities to upsell or cross-sell. Therefore it gives you the opportunity to increase your average deal size, which is good for your bottom line and business growth.
2. CPQ eliminates errors
Mistakes are almost inevitable when your salespeople manually configure proposals or place orders, which can significantly detract from your bottom line. CPQ software has been proven to eliminate 40% of human error because it allows the establishment of rules to automatically prevent incompatible orders and generate better, more accurate quotes. CPQ software makes collaborative selling much easier because it allows you to easily distribute and enforce your business rules, including pricing and discount information. It takes the worry away and automatically does all the checks to ensure the correct combination of items are quoted.
3. CPQ reduces your costs
By eliminating errors, there is a reduction in costs caused from re-working. Examples include having to manufacture the correct components again, or having to send out an employee a second time because the incorrect items were shipped the first time. Less time will be needed on training new employees on complicated product sets, as the logic is handled automatically.
4. CPQ reduces the time to market
When your marketing team wishes to introduce new products and customised offers, the CPQ tool-kit can be used to quickly set up the combination of items on the administrative side of the system, so they are then instantly available to the salesforce.
5. CPQ streamlines the quote-to-order process
No need for Ping-Pong email trails and calls between your office team and salesforce, to double check what products can be sold together and what the price should be. CPQ streamlines the process and allows a quicker turnaround of complex quotes. Not only will this increase your chances of winning an order as you can reply to the customer quickly, but it also frees up the time of your salesforce to do more selling, which supports business growth. The average sales person spends 45% of his or her day on inefficient tasks, yet a simple 5% increase in selling time can increase company revenue by 20%. By integrating with your CRM software, CPQ software automates many time-consuming tasks.
6. CPQ will increase customer satisfaction and create a good impression
When you are able to make a complex quote seem simple, your customers will be satisfied and impressed that you are knowledgeable about your product or service set. CPQ software standardizes your sales proposals, giving you control over not only what is quoted, but also the proposals' appearance. Your reps will make a cohesive, professional impression that enhances your brand.
7. CPQ creates winning proposals
Proposals must persuade your potential customers with a clear and convincing message. CPQ software can automatically include all data sheets, case studies, and other critical content relevant to your proposal and the prospect's industry. This will save your sales reps time, eliminate human error, and inspire key decision makers to sign up to your proposals.
8. CPQ inspires confidence in your prices
The more complex your offerings, the more variables will affect your pricing quotes - especially when product bundles and volume discounts come into play. CPQ pricing tools ensure that your salespeople can access current pricing information all in one place. This will ensure that you feel confident about your proposals, that they honour your margins and drive profits.
9. CPQ aids knowledge retention and productivity
CPQ software helps institutionalize sales knowledge, which can be beneficial for training purposes, especially in situations where pricing and configuration are complex.
10. Gain additional revenue with CPQ
Most companies gain 80% of their revenue from 20% of their customers, so the greatest profit potential lies in penetrating the most profitable accounts. CPQ software makes automated up-sell and cross-sell suggestions, enabling your salespeople to quickly increase the average quote and order size.
11. CPQ shortens the sales cycle
CPQ software significantly diminishes workload by automating even the most complex proposal administration, approval processes, and discounting guidelines. Open quotes can be automatically tracked and approval requests are generated when quotes exceed certain threshholds. Quotes can be produced very quickly. A 15% decrease in your sales cycle can yield a 30% increase in revenue.
12. Excellent ROI with CPQ
CPQ automation tools make your quoting process simpler, faster, and cheaper. It reduces sales cycle bottlenecks, enabling your sales team to present exactly the right product mix at the right time and cost to the right customer. CPQ software ensures enhanced proposal quality, higher customer retention, and shorter sales cycles. The ROI will be recognised in a very short space of time.
If you're not sure whether your business needs CPQ software, talk to your salespeople. Do they regularly run into problems with developing accurate quotes in the time frame expected by the customer? Do those problems prevent them from doing their jobs efficiently - or even lose the company significant amounts of money? CPQ Software will lead to:
An increase in quotation volumes
A lower cost per quotation
A growth in order value as a result of upselling, cross-selling and bundling
Valuable insight into customer/market behaviour
Improved time to market for New Product Introductions
Reduction in costly product returns
Less reliance on technical pre-sales
Quoting your customers faster than the competition!
A 2010 Aberdeen study showed CPQ empowered organisations optimized their bid-to-win effectiveness twice as much as non-CPQ users. On average, these CPQ users improved their year-over-year sales cycles by 40%. Can you afford NOT to invest in CPQ software?
- Aberdeen Group, "Sales Enablement Advances with Configure/Price/Quote Solution," February 2011
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