CPQs, the new Eldorado for selling complex products and services
You receive a quotation. Unfortunately, by the time you make your quotation, the customer has already chosen the offer of a more responsive competitor.
As is often the case, the customer was in a hurry and placed an order with the first supplier to make a price proposal.
Many companies selling complex products or services are in this situation.
With so many variables that can change so quickly, it's difficult to provide an accurate and professional quote quickly.
Although the problem has been around for some time, many sales managers still don't know how to solve it effectively.
CPQs were introduced to solve this problem.
What is a CPQ?
A CPQ (Configure Price Quote) is software that provides real-time quotes for complex products or services.
This software enables sales reps and even customers to generate quotes quickly, with consistent, accurate pricing, for highly customized product or service configurations.
To achieve this, it often works in tandem with CRM platforms, ERP programs and/or other commercial technologies, ensuring the reliability and relevance of the data taken into account and the price displayed.
Without going into too much detail, quotes produced 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.
CPQ strengths :
- Create instant quotes and self-service orders for all types of customer.
- Application of rules for 100% complete configurations and error-free quotations.
- The user interface is simple, intuitive and requires no training.
- Can exploit data from ERP, CRM and CMS.
- Creates customer specifications, standardizes requirements gathering.
Thanks to its functionality 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 the space of 4 short years it has grown to an estimated $1.42 billion. CPQ adoption will continue to grow as companies see the real benefits of using it in combination with their CRM and ERP systems.
The benefits of a CPQ
Tedious processes such as generating quotations and proposals, and obtaining approvals, take up 66% of a salesperson's day. (source Zety).
When CPQ is deployed and used correctly, it can have many benefits:
- Quick quote
The main advantage of a CPQ is that it enables instant quotations. When you consider that 50% of customers place their orders with the supplier who responds first to their request, you realize the commercial potential that a CPQ can have for a company. The software offers a triple advantage: the ability to respond to more customers, more quickly, and thus increase the number of orders.
- Precise quotation
Companies that don't use CPQ rightly don't want to speed up the process if it means giving incorrect prices, unapproved discounts, or promising customers configurations that aren't available...
Paradoxically, CPQ avoids all these problems by clearly establishing pre-programmed rules. With a CPQ system, every conceivable configuration, price, discount and scenario can be specified, making product configuration easy.
CPQ prices are therefore guaranteed to be error-free, and this has several advantages:
Confidence in your prices makes negotiations easier, as pricing is often a major sticking point for sales teams. It can happen that a salesperson who wants to close a sale offers too large a discount, which ends up costing the company more than it gained from the sale. This has the added disadvantage of making future negotiations with the customer difficult, as the salesperson tries to ensure a fair price for both the customer and the company.
On the other hand, if you're in the business of complex products, you know that the wrong data can, at best, foolishly waste your time, or at worst, have disastrous consequences and be (very) expensive. With CPQ, you can avoid human error and save a huge amount of time and money.
- More efficient salespeople
A CPQ increases salespeople's efficiency, leaving them more time for customer relations and prospecting. According to Salesforce Research's "State of Sales" report, only 34% of a salesperson's time is actually spent on selling.
This figure leads to three important concepts:
- The more your processes can be simplified, the more time sales reps have to meet customers and close sales.
- Any time that can be freed up for sales staff to talk to customers is a plus.
- Your sales people need to be able to make effective, informed sales calls.
Excellent calls can be made thanks to CRM applications that allow users to carry out in-depth research and take notes. However, a CPQ is a powerful ally when it comes to closing the sale. The software enables you to configure products precisely, apply prices and quantity discounts, and schedule approvals. All this rapid automation demonstrates your expertise and builds customer confidence.
- Accelerated onboarding
CPQ software is designed to be easy to use. They can be used without any training, whether by internal users (especially the sales force) or by customers directly. Much of the complexity lies in the business expertise that is managed in your CPQ's backoffice. In this way, new sales staff will no longer need to spend several months getting to know all the specifics of each product, and can be up and running quickly.
- Successful customer experience
74% of buyers are likely to change supplier if they find their purchasing process too complicated (source: Salesforce). With a CPQ, customers in a hurry can get an answer, evenings, weekends and holidays included. More generally, they'll be able to get quotes when your sales teams are not available.
Is it for you?
You see the value of a CPQ. But you're not sure you need one. To find out whether you should actively consider adopting a CPQ, pay attention to these seven signs that you need such a system:
- Your sales force collects customer briefs in disparate formats (email, Excel file, CRM), and you find it hard to retrieve accurate information over time.
- You use old quote configurators or Excel matrices.
- Your break-even point on a file is too high because of your sales management costs.
- You send inaccurate quotes to your prospects.
- Someone manually reviews all your quotations before sending them to the customer.
- You have too many price requests to process, and your sales reps regularly complain about the time it takes to receive a quote.
- Your average delivery time exceeds 48 hours.
At Packitoo we have developed HIPE, a CPQ specialized for the packaging industry. We benefit from extensive industry expertise, and have the hindsight to solve the challenges of selling custom packaging.
As well as being a CPQ, HIPE also enables collaborative project management, reducing the back-and-forth between customers and internal teams (sales, adv, design, DTP).
Find out more about our tool and how we can help you achieve outstanding results: