What is CPQ?
CPQ stands for configure-price-quote and refers to sales software used by companies to enable sellers to efficiently configure pricing packages and provide quotes to clients. CPQ aims to accurately price complex and customizable services and products such as cloud computing or Software-as-a-Service. CPQ sales tools leverage set rules and automation to quickly generate quotes. The rules of CPQ systems are unique and vary from business to business, but generally speaking, the parameters are based on prices, discounts, packages, optional features, users, and usage to name a few factors. CPQ software integrates with Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) tools.
Why do you need CPQ?
As a business grows, it becomes difficult to accurately configure and price products. There are many reasons for this, especially if the product or service offered by the business is complex. For example, a company offering a software package will find that the needs and desires of customers vary widely based on a number of factors.
One customer may be an organization that requires multiple licenses, various add-ons, and massive amounts of data storage. But a different customer, such as a startup or small business, may want to purchase the exact same software with less functionality and permissions. And what if the two businesses are located in two different states or countries, with different tax rates or operating under different regulations?
Taking all of these factors into account, how does the provider determine what to charge each customer? Many companies manually producing quotes and prices or without a sophisticated CPQ system find that the process of doing so is inefficient and limits their revenue potential. A solution for those companies is to partner with a CPQ provider.
From Software-as-a-Service to cloud computing, companies in these industries need a CPQ that can be customized to address the multitude of factors and departments involved in doing business. An advanced CPQ software enables sales teams to produce quotes quickly and accurately. This alleviates burdens throughout an organization by eliminating bottlenecks in the sales process. But the benefits go beyond efficiency. Ultimately, CPQ software can increase revenue by generating shorter sales cycles, identifying opportunities for upsells, and offering customers packages that precisely accommodate their needs.
What are the other benefits of CPQ?
Sales representatives spend more time on what they do best
According to a recent report, sales representatives spend only a third of their time actually selling to prospects and clients. Of the remaining two-thirds, the activity that consumes the most time of a sales representative’s day is generating quotes and proposals, and gaining approval for them.
While most businesses would agree that a sales representative’s time is best spent cultivating relationships, the unfortunate reality is that a significant portion of their time is consumed by tedious administrative tasks. By enlisting a CPQ software, an organization removes the process of manually generating quotes and approvals. In turn, sales reps can focus more of their time and attention on what they are paid to do: discovering leads and turning them into customers.
Reduction in quoting errors
Is there anything more awkward and painful than having to tell a potential customer that the price they were quoted is wrong? There are typically two outcomes in this scenario. One is that the customer is very understanding and has patience in receiving an updated quote. The second is that the customer is very upset after already spending the time to consider the price and how it will affect ROI, and sees your company or salesperson as untrustworthy. Scenario no. 2 happens all too often and costs companies precious revenue.
A well-developed CPQ from an expert provider keeps this from happening. Quotes and pricing are consistent and accurate thanks to automated quote generation subject to highly customizable rules and flows. This protects your revenue and your reputation.
Compliance and regulations are built into the system
A quote is not complete until tax implications and compliance are factored into the equation. With a complete CPQ, these factors are built into the configuration process. Instead of having to pass configurations through compliance checklists and finance personnel for each package that is constructed, the CPQ automatically addresses compliance and tax rates. This reduces the possibility of errors or adjustments to quotes, and allows for quicker turnaround times.
Are you using the right CPQ?
If you feel that your revenue and the potential of your sales team is stunted by an outdated CPQ software or process, it may be time to make an upgrade. Below are eight common signs that a business needs to consider updating their CPQ software.
- A person in your organization is responsible for reviewing and manually approving all sales quotes.
- Operations are overwhelmed by and cannot keep pace with revenue growth.
- Business is interested in generating recurring revenue.
- Sales personnel cannot generate quotes and prices quickly or accurately, leading to slow turnaround times for customers.
- Existing legacy CPQ system fails to efficiently integrate data from multiple departments.
- Business model requires complex pricing and offers highly customizable packages.
- Roll outs of new products take too long to implement.
- Channel partner management is inefficient and partners’ selling potential is limited.
If you find that your business has anything in common with these eight signs, it’s time to speak with a monetization expert about how you can eliminate those issues. BluLogix offers an industry-leading CPQ software that enables customers to realize revenue growth and develop a seamless quote-to-cash process. Contact a BluLogix representative today to learn more about our CPQ software.