CPQs, the new Eldorado for selling complex products and services
You receive a request for quotation. Unfortunately, by the time you've prepared your quote, the customer has already chosen a more responsive competitor's offer.
As often happens, the customer was in a hurry and placed an order with the first supplier to make a proposal within their price range.
Many companies selling complex products or services experience this situation.
With a large number of variables that can change quickly, it is difficult to provide an accurate and professional quote quickly.
Although the problem has existed for a while, many sales managers still don't know how to solve it effectively.
CPQ solutions emerged to solve this problem.
What is a CPQ?
A CPQ “Configure Price Quote” is a software that provides real-time quotes for complex products or services.
This software enables sales representatives and even customers to generate quotes quickly with consistent and accurate pricing for highly customized product or service configurations.
To do this, it often works in tandem with CRM platforms, ERP programs and/or other sales technologies, which helps ensure the reliability and relevance of the data taken into account and the price displayed.
Without going into detail, product quotes with CPQ software are automated according to a set of pre-programmed rules, guaranteeing error-free pricing that takes into account quantities, discounts, customizations, optional product features, multiple revenue types, and incompatibilities.
The advantages of a CPQ:
- Creates instant quotes and self-service orders for all types of customers.
- Application of rules for 100% complete configurations and error-free quotes.
- The user interface is simple, intuitive and requires no training.
- Can leverage data from ERP, CRM and CMS systems.
- Create customer specifications and standardize needs gathering.
Thanks to its features and potential for excellent return on investment (ROI), CPQ is the future for many companies. In 2015, the CPQ market was valued at $157 million, and in just 4 short years, it reached an estimated $1.42 billion. The adoption of CPQ will continue to grow as companies see the real benefits of using it in combination with their CRM and ERP systems.
Benefits of a CPQ
Tedious processes such as generating quotes and proposals, and obtaining approvals, occupy 66% of salespeople's day (source: Zety).
When a CPQ is deployed and used correctly, it can have many benefits:
- Fast quote
The main quality of a CPQ is that it allows quotes to be established instantaneously. Knowing that 50% of customers place orders with the supplier who responds first to their request, we realize the commercial potential that a CPQ can have for a company. The software, therefore, offers a triple advantage: being able to respond to more customers, faster, and thus increase the number of orders.
- Accurate quote
Companies that do not use CPQ rightly do not want to speed up the process if it means giving incorrect prices, unapproved discounts, or promising customers configurations that are not available...
Paradoxically, CPQ avoids all these problems by clearly establishing pre-programmed rules. With a CPQ system, all configurations, all prices, all discounts, and all imaginable scenarios can be specified, making product configurations easy.
The prices established by a CPQ are therefore guaranteed error-free, and this has several advantages:
Confidence in its prices makes negotiations easier, as pricing is often a major point of friction for sales teams. It can happen that a salesperson wanting to close a sale offers too large a discount that ends up costing the company more than the sale brought in. This also has the disadvantage of making future negotiations with the client difficult, with the salesperson trying to guarantee a fair price for the client and the company.
On the other hand, if you are in the complex products business, you know that a bad data point, poorly reported, can, in the best case, make you waste time foolishly, or in the worst case, have disastrous consequences and cost (very) dearly. A CPQ helps to avoid human errors and thus save a lot of time and money.
- More effective salespeople
A CPQ increases the efficiency of sales representatives by giving them more time for customer relations and prospecting efforts. According to the Salesforce Research “State of Sales” report, only 34% of a salesperson's time is actually spent selling.
This figure leads to three important concepts:
– The more your processes can be simplified, the more time sales representatives have to meet with customers and close deals.
– Any time that can be freed up for sales representatives to talk with customers is a plus.
– Your sales representatives must be able to make effective and informed sales calls.
It is possible to make excellent calls thanks to CRM applications that allow users to carry out in-depth research and take notes. However, a CPQ is a valuable ally when it comes to closing the sale. The software allows you to configure products accurately, apply prices and volume discounts, and schedule approvals. All this automation, carried out quickly, demonstrates your expertise and strengthens customer confidence.
- Accelerated onboarding
CPQs are software designed to be easy to use. The user can use it without training, whether it is internal users (especially the sales force) or customers directly. Most of the complexity is hidden in the business expertise that is managed in the back office of your CPQ in particular. As a result, new sales representatives will no longer need to spend several months learning all the specificities of each product and will be able to be operational quickly.
- Successful customer experience
74% of buyers are likely to switch suppliers if they find their purchasing process too complicated (source: Salesforce). With a CPQ, the customer in a hurry will be able to get an answer, evenings, weekends and public holidays included. More generally, they will be able to obtain quotes when your sales teams are not available.
Is it for you?
You see the value of a CPQ. However, you doubt you need one. To know if you should actively consider adopting a CPQ, pay attention to these seven signs that you need such a system:
- Your sales representatives collect customer briefs in disparate formats (email, Excel file, CRM) and you have difficulty finding specific information over time.
- You are using old quote configurators or Excel matrices.
- Your break-even point on a project is too high due to your sales management costs.
- You send inaccurate quotes to your prospects.
- Someone manually reviews all your quotes before sending them to the customer.
- You have too many price requests to process and your sales representatives regularly complain about the price delivery times.
- Your average price delivery time exceeds 48 hours.
At Packitoo we have developed HIPE, a specialized CPQ for the packaging industry. We have extensive business expertise and have the necessary perspective to solve the challenges associated with selling custom packaging.
In addition to being a CPQ, HIPE also enables collaborative project management and reduces the back and forth between customers and internal teams (sales, sales administration, estimator, design office, pre-press).
To find out more about our tool and how we can help you achieve exceptional results: