Savvy sales representatives always strive to maximize their interaction time with clients by streamlining the other parts of their job. They rely on electronic tools for optimal efficiency in handling what traditionally was a paperwork-centric workflow. Using a CPQ tool for administrative tasks allows them to be customer-centric rather than being bogged down in back-office follow-up. CPQ software is designed to automate product configuration and pricing, and quote generation for the customer.
What is CPQ?
CPQ software applications are powerful tools that automate and streamline the process of generating product pricing configurations and customer quotes. They are especially useful in situations where sales representatives need complicated product configurations, including potential discounts, customizations, optional features, and multiple product combinations. They are often run in tandem with CRM and ERP platforms and use a pre-programmed rule set, which greatly increases accuracy as well as the speed of proposal generation. CPQ software is seen as the newest wave in sales optimization tools.
How does CPQ Software Work?
The three components of CPQ platforms include the features that are part of the configuration (C), pricing (P), and quote generation (Q) workflow. Users may create, modify, send, and track documents accessing data from integrated CRM and/or ERP software
Configure
The first step in brokering a sale is designing the customized solutions that clients have come to expect. The configure function of a CPQ system provides the flexibility to create unique combinations of products and services, using stored business rules such as pricing and product compatibility. Some systems even allow project-centric solutions to be built.
Price
Multi-product, complex solutions require complicated pricing structures. Sales reps want to offer the customer options, but without CPQ software they must go digging through spreadsheets for the right pricing rules to create the quote. Customizable products must be configured with a unique price for each quote. Using the programmed business rules, CPQ software facilitates electronic pricing from simple catalog price book quantities through more sophisticated models such as value-based, outcome-based, or tiered pricing. These systems can also streamline the approval process where business rules are exceeded.
Quote
The quote function of CPQ systems is the most important one for generating customer documents in a timely manner. Once configuration and pricing are set, a final, accurate quote must be sent to customers immediately to minimize lost sales opportunities. Often these customers are requesting quotes from multiple vendors. Automating the quote generation and review process will also create consistent and compelling documents that make it easy for customers to compare options.
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Benefits of CPQ Software
Implementing CPQ software can optimize quote generation time, approval time, deal closing time, and employee efficiency. When a sales representative builds a quote, the software collates all possible scenarios and provides a customized template. This can be electronically routed to all involved stakeholders, shortening processing time. Pricing is consistent and controlled. Workflow tasks associated with repeat business, contract/subscription renewals, and add-ons can be automated. Collaboration between normally siloed departments can be facilitated – sales, management, finance, legal and marketing are all communicating more easily. Finally, CPQ software can provide business analytics useful for tracking sales trends.
The Importance of Integrations
The most powerful iterations of CPQ software include integrations to CRM and ERP platforms. This expands CPQ functionality beyond the sales department, and provides consistent pricing, marketing, and client communication across operations. Every step in the sales process, from quoting, purchase, manufacture and delivery to new deal trends and product design can be monitored quickly and accurately. The result is a company working as a team to make better, data-driven decisions.
Does My Business Need a CPQ System?
When evaluating whether your business would benefit from a CPQ system, consider the following factors. Are you/your employees:
- relying on outmoded systems for configuring sales quotes?
- noticing a repeating pattern of inaccurate quotes sent to prospects?
- spending valuable time correcting and resubmitting paperwork?
- losing revenue due to inconsistencies in pricing structures?
- experiencing slow turn-around time on quotes, resulting in a higher churn rate?
- processing portions of your sales workflow tasks manually?
- able to share sales process data across departments?
- experiencing growth beyond the capacity to manage sales operations manually?
- looking to expand your analytics capabilities?