What is CPQ: An Ultimate Guide

Imagine if you’re a startup business, and you receive a call from another company ordering 10 trucks worth of supplies. First, as a sales rep, you must walk your customer through all the possible options and explain each package. Next, you must go to your manufacturing department and determine what goes to the client’s bill depending on their requested specifications. Finally, all this information has to be recorded, go through the quoting process, and get back to the customer with the final quotation.

And before you know it, it had taken days or even weeks before you got back to your customer. And you don’t want wasted days.

However, many businesses go through the same situation. In fact, many companies in the manufacturing and retail industries face the same challenge alongside difficulties in operations.

The ever-changing landscape of B2B and B2C processes demands customization in delivering services. Therefore, it has become a reality for many sales teams that the one-size-fits-all mentality will never work anymore.

On the other end of the road, this benefits a lot of the consumers. It means they get to receive a personalized product crafted explicitly for their needs. However, this can cause hurdles for the business, especially in the most critical area – pricing.

If your business sells all products with the exact price quote for all, you wouldn’t have any problem. However, if you’re a B2B company, it may not work that way.

Most sales reps know that the selling process does not end with your customer buying your products or services. In fact, it is only the beginning of your relationship.

It is not unknown that the sales process can be pretty challenging if you’re a sales rep. In fact, the exhaustive processes actually take 66% of their time in a day.

Good thing many innovative technologies are available today that can enable your organizations with the tools they need to improve customer relationship management.

One of the most popular tools that address these problems is the CPQ software. Some examples of modern CPQ software available in the market today are Salesforce CPQ and the Oracle CPQ.

In 2019, the market for CPQ application software systems grew by 15.5%, with an estimated $1.42 billion. Additionally, The CPQ market is still expected to grow by $ 1.65 billion from 2021 to 2026.

Therefore, there is an undeniable need for higher productivity and revenue streams in companies – and CPQ software helps achieve these.

What is CPQ software?

So, what is CPQ?

According to TechTarget, CPQ stands for Configure, Price, and Quote. It is a programming system that enables sales teams and even independent customers to quickly generate accurate pricing for configurable products and services.

A CPQ software is primarily used to generate an accurate price quote for products with several features. The selling process for a software system is based on a standardized set of rules. It allows a business to customize and address multiple variables that will affect several variables that will affect profit margins.

A CPQ software should have the following functions

• The ability to create the bill of materials and service-level agreement (SLA) based on a customer’s choice of customization and configuration.
• The ability to adjust the quoting process quickly as requested by a client.
• A CPQ software has built-in templates which can be used for the digital proposal process, documentation, and processing of contracts.

Successful CPQ deployment usually come hand in hand with other platforms such as CRM platforms, ERP systems, and other digital technology, ensuring integration and accuracy.

When your company starts to grow, it is also expected to have more complicated pricing structures, which can result in challenges in management. For example, configuring price quotes can be very time-consuming and slow down business processes and the sales cycle.

This is especially difficult for those who offer products with several variables and features. What CPQ software does is define the pricing rules across the spectrum of variables that are not only constantly changing but are huge in numbers.

As a result, companies can optimize product configurations, combine configuration rules related to features and processes, and price them according to costs, competitors, and local economic factors. This gives customers the best price possible based on these factors and their preferences.

Components of a CPQ software

Companies have battled these price quote challenges by using the ever-famous Excel spreadsheet. For others, manually use note-taking and share them with their clients. However, these old solutions may not apply to running a 21st-century business.

There is a better way to attend to this possible sales cycle issue – investing in CPQ software. But how does CPQ software work? Before investing in software like this, you must understand each component.

Configure

It may be true that traditional and repetitive manufacturing still exists, but there is an undeniable wave of mass customization. One of the ways that customer satisfaction is achieved is by providing them products tailored to their personalized requests or product specifications… and not just that – they want it pronto!

In the past, manufacturing companies offered only a few options, giving customers limited choices. However, since the landscape has entirely changed, it will be easy for them to move on to another brand when they don’t get to see what they’re looking for.

Price

Some companies have straightforward and consistent pricing, which offers little variability. But suppose you provide an extensive product configuration. In that case, it is imperative for you to generate an accurate price regardless of a specific configuration.

The pricing component of CPQ software ensures that you will generate accurate quotes across different markets, geographies, and sales mediums. In addition, the CPQ software helps automate the generation of the whole pricing structure no matter how complex products are.

Moreover, you can manage your final quotation while including discount approval workflows, discount structures, customized pricing for favorite customers, and variable price books. You can also customize the price according to the bill of materials characteristics, production costs, and product features.

Therefore, you have to keep software that keeps track of all your pricing structures to ensure that your quotations are accurate. Check out the difference between inside sales and outside sales.

Quote

When you are able to make your configuration and pricing work together, you can create a quote ready for your customer’s review and consideration.

In coming up with a quotation, you have to consider two things – the accuracy of the quote and how it is presented. And your CPQ software should handle both of these effortlessly.

First, quotation documents are formal. CPQ solutions can help ensure that the information you’re presenting to your customer is clear, concise, and alleviates confusion.

When you’re able to generate accurate and well-presented quote documentation, it eliminates the possibility of redoing things, adjustments or modifications, and product returns.

The best CPQ software makes potential customers visualize your proposed products flawlessly. Visualization can make them better understand what you offer, confirm whether your products align with their goals, and foster brand loyalty by providing a comprehensive view of your offers.

How does CPQ software help in the Sales Process and Sales Teams?

More and more companies are implementing CPQ software to eliminate any bottlenecks in their sales process and other deep-seated risks brought about by traditional quoting.

Let us have a look at the different benefits of CPQ software for the sales process and your sales teams.

1. Streamlined sales process

With teams having a very reliable CPQ software, estimates are automatically produced that enable the sales product configuration quickly and address your customers’ needs based on their preferences and locations.

Also, automatically generating renewal quotes is easy, especially for existing customers. As a result, estimates can be produced in a timely manner without the hassle of bottlenecks impeding the entire process.

With CPQ software, companies can benefit from streamlined processes such as consistent pricing, discount control, multicurrency support contract pricing, partner pricing advanced discounting, and recurring billing.

2. Personalized quotes

With sales teams having a very reliable CPQ software, estimates are automatically produced that enable the sales product configuration quickly and address the needs of your customers based on their preferences and locations.

Modern Configure Price Quote systems are easily accessible as long as you can connect to the internet. Thus, customization is easy for any customer as they can easily access CPQ such as mobile devices or any compatible device.

Also, automatically generating renewal quotes is easy, especially for existing customers. As a result, estimates can be produced in a timely manner without the hassle of bottlenecks impeding the entire process. Explore the various sales outreach tools.

3. Improved quoting capacity

CPQ implementation reduces the time that you may need to create quotes. Faster quoting means that your capacity generates quotes will also be increased while ensuring quality services.

Utilizing a rules-based structure means that anyone can benefit from a guided selling process which can increase your capacity further. You will not have to rely on selected employees from your sales team, and you can indeed deliver revisions and exhibit sales efficiency.

With Configure Price Quote software, you can maximize your time and empower your sales team to focus on fostering relationships for customer success.

4. Heightened accuracy

Sending inaccurate sales quotes can be inevitable for many sales reps. You’re human. It happens. However, if it consistently happens, your business can eventually suffer. Therefore, sending accurate quotes is crucial to building your business with a seamless sales pipeline.

A CPQ system has proven to eliminate 40% of human errors overcoming the risk of poor services. As a matter of fact, 76% of consumers tend to stop doing business with a brand after only one bad customer experience. And you don’t want that to happen.

When you have CPQ software, you lessen the risk of human errors by delivering accurate and reliable sales quotes all the time.

5. Better brand image and awareness

Marketing your brand is essential for your business growth. By producing a well-presented and consistent quote process, your brand image in the market is also enhanced.

When you have a unified sales tool, you’re more likely to produce the same imagery and templates for your quotes. In addition, your overall business image can help define your brand better. Thus, helping your business show customers that your price is on point.

6. Reduced unnecessary costs

Implementing a CPQ system can help reduce unnecessary costs making ROIs faster. You can achieve fast sales quote process and increase conversion rates while eliminating the cost brought by errors.

Therefore, with a CPQ solution, you can benefit from both cost reduction and revenue growth, resulting in a positive buying experience for both the customer and the business owner.

7. Consistent strategy

CPQ solutions allow you and your multiple departments to follow the best practices consistently. For example, you have a CPQ system in place. In that case, your employees can perform excellently in selling and providing the best services to your potential customers. As a result, you’re sure to have more chances for success.

8. Diminished need for learning

With everything automated, your users are thoroughly guided even for the most complex products and services. And not just that, the learning process is shortened to the point that sometimes no training is no longer necessary.

9. Competent employees and empowered partners and customers

A well-implemented CPQ solution can create competent employees and motivate your sales organization as a whole. In addition, it can give your business the confidence boost that it needs to be able to discuss product configuration details with clients and prospects and to carry out quotes that fit their needs and the way your clients choose to engage.

10. Increase productivity

A CPQ tool enables minimized errors, and optimization of personalized sales quotes. In addition, real-time customer data and quote processes can be generated seamlessly.

It can minimize any possibility of back-and-forth processes, ensuring everything occurs without any delay and bottlenecks. You are sure to have a strategic approach for optimized processes.

Who benefits from CPQ solutions?

Many companies feel the importance of implementing an effective CPQ solution. Here are the primary beneficiaries of a successful CPQ deployment.

Customers

Your customers are the heart of your business. It is important to achieve customer satisfaction and let them have an engaging experience. Customers become more positive and more confident about the buying process.

A CPQ solution makes every process more straightforward, so customers do not have to wait around for a quote for too long. Therefore, the selling process is quicker and more accurate.

Next, customers benefit as they have a wider variety of options. With a CPQ system in place, customers can confidently switch options as they have the freedom to fully explore what you have to offer.

Business owners

Aside from companies understanding what is CPQ and implementing a CPQ platform that works for you, you will start seeing a whole new level of efficiency and speed. Your reps can quickly carry on with your sales pipeline, improving productivity.

You need not spend so much time on training employees or teaching sales associates the complexities of the whole quoting and selling process. Since CPQ solutions can effectively handle product configuration business rules, it removes the need for differentiated training.

The configure, price, quote (CPQ) system can consolidate all your product information and lets you have a single source of knowledge. It lets you have unified pricing and configuration rules, and you can enable your dealers, suppliers, and customers to quote products without the need to go through your sales reps.

Sales team

The Configure, Price, Quote (CPQ) software can motivate your sales team is doing their daily tasks. As a result, you can ensure that your sales reps are selling the right products and closing deals quickly.

Along with the increased number of sales, you will also see an improvement in the size of orders. A CPQ solution can help your sales reps to overcome the use of spreadsheets and emails when it comes to the final stage of their sales cycle.

You will not worry about having miscommunication with a customer or waste hours trying to figure out how to configure a price quote. Instead, you are sure to generate quotes and process orders for configurable products quickly.

CPQ software for your sales team

As your business grows and your business processes become more complex, using the right CPQ tools is the upgrade that your company needs.

It provides your business tons of benefits from a macro perspective of things. Therefore, you have to find a CPQ solution that will enable your business to streamline all your business processes.

Today, many advanced business solutions with top-notch artificial intelligence are built into the system. However, technological advancement is not enough.

Your potential customers should be able to see that your business is reliable and understands their needs.

A lot of Configure, Price, Quote (CPQ) software works best in tandem with different sales management tools

One of these tools is Sloovi.

Sloovi can keep your outreach processes quicker and less complex. You can also optimize all operations to improve conversion rates with total efficiency and productivity.

Watch your revenue double up with top-tier analytics and be the best in your industry.

Check out Sloovi‘s subscription pricing today and see what plan works best for you!