Remember those times when spreadsheets ruled the 1990’s and were touted as the game changer for every business organization? Three decades later, things are pretty much the same. So many industry leaders still leverage Excel spreadsheets for highly tailored configuration, pricing and quoting calculations. But these days we see evolving trends as many path breaking organizations are moving to the CPQ Cloud, thanks to it’s powerful and interactive features which not only aids business quoting processes, but also guides them through the entire sales cycle. In fact, Gartner predicts CPQ will continue to be one of the hottest enterprise apps for the foreseeable future, predicting a 20% annual growth rate through 2020 with the majority being from cloud-based solutions.
What is CPQ?
CPQ stands for Configure, Price and Quote. It equips itself as an extension of your CRM that helps you to create structured and scalable sales processes. CPQ is not just your average sales tool; it’s the ultimate tool for business transformation. With CPQ, you can be rest assured that your sales reps sell the right product combinations and it also efficiently controls discounting and automates approvals. Long story short- it turns your promises into reality.
Why is CPQ important?
- CPQ empowers sales reps to successfully close deals faster. Many businesses still rely on outdated methodologies to quote their customers and process sales. Sales reps find themselves in a state of chaos juggling spreadsheets and email in the final stages of their sales cycle. This hinders them from moving on to their next deal, wasting their precious time trying to figure out how to price a product or chasing down a contract approval. But CPQ changes all that. According to the Aberdeen Group, companies using a CPQ solution send prospects and customers 49% more contracts and quotes, experience a 105% larger average deal size, and have a 19% higher lead conversion rate. With seamlessly automated workflows, sales reps can now quickly configure and price complex products or services, simplify approval processes, and maximize sales opportunities with absolutely no errors.
- CPQ gives companies control and visibility over what’s being offered and what’s being sold. A lot of disorganized sales teams operate without clarity of what exactly they are doing- say for instance, sending out pricing that is not approved and pitching products that no longer exist. It becomes difficult to accurately track or forecast, when data is scattered in the traditional spreadsheets. CPQ helps sales teams move away from all this commotion.
- CPQ enables you to launch new revenue models. Many organizations across various industries are highly focussed on addressing the rising needs of customers and are looking forward to introducing new revenue models. As traditional business models get disrupted, they are realizing the importance of re-inventing their internal systems and business processes to enhance their customer relationships. CPQ empowers organizations to adopt new business models and aids in realigning the sales team according to the new requirements.
Are Quote to Cash & CPQ the same?
Although Quote to Cash and CPQ are terms used side by side, the tools and processes involved are not entirely the same.
Quote-to-cash plays a critical part in the buy cycle that begins the moment the customer decides to buy a product and ends when the business achieves its end goal, which is revenue. It pretty much covers the entire sales process spanning across quoting, contract lifecycle, sales order management, billing and even collections.
So what is a Quote to Cash Software?
Quote-to-cash software takes care of the entire Q2C business process, starting from quoting to revenue management. It’s integrated Q2C technology helps to bring in better pricing insights, automates quoting, contracting, account management, order fulfillment etc, which enhances the overall efficiency of the sales team.
Now coming back to CPQ, it is an integral part of the Q2C process. The second step (Configuration and Pricing) of the quote-to-cash process starts with CPQ: In this stage, the sales teams configure the right products/services for the customer, generates pricing and creates customized quotes for the client. This is the most critical stage for sellers as they have to prove they are actually delivering what they promised- a stepping stone to winning the client. Some of the common issues during this phase include:
- Misaligned products across multiple spreadsheets
- Outdated product offerings
- Order-entry errors
- Production errors
- Errors in promotion pricing
The CPQ software helps mitigate these pitfalls and accelerates the entire quote to cash process workflow. With the help of this tool, the sales team can configure even the most complex products or services in the blink of an eye.
When you compare Q2C software and CPQ software, Q2C provides an array of extensive features for several areas such as negotiation, invoicing, payment, renewals etc, but it can be a lot at times. CPQ is much easier to implement compared to Q2C. Ofcourse, they both have an edge over traditional tools and help SMEs and large organizations to create precise and accurate sales processes and close more deals. But you need to take your pick depending on your unique business requirements.
Do you really need a CPQ?
There are several factors that determine the need for a CPQ in your organization, and it may not be the same for all. Here are some factors to be considered while assessing the needs for a CPQ solution:
Size of the team
Generally if you have a relatively small sales team, say less than 100, or do not have thousands of products lined up, a CPQ solution may not be a necessity. Speaking of which, if the majority of your sales representatives spent their day creating quotes and problems, it may be hinting towards a greater problem here. You didn’t hire your highly motivated and enthusiastic team to get bogged down on spreadsheets. Their job is to close the deals!
Are you losing deals or missing out on customer satisfaction? Either way, it can be a result of inaccurate quotes. Rather than focusing on temporary fixes, it’s better to adopt a holistic solution which eradicates the chances of errors in quotes.
Complex Products and Pricing
Are you one of those organizations that produce highly complex products and services? For B2B organizations in particular, there are so many pricing options that it becomes challenging to price their products. For example, are you managing one time or subscription model or planning to migrate to that model? Do you handle multiple pricing types? Working with legacy systems to create quotes can only create more bottlenecks hindering long lasting customer relationships. In this case, using a CPQ solution can help support diverse pricing models effectively.
Selling your product or service through partners and distributors
Do you sell your products or services through third party partners and distributors? Are you grappling with keeping track of all the discounts? If yes, adding CPQ to your Salesforce instance would be of big help.
Interested to learn more about CPQ? This is just the beginning!
In our upcoming blog in the CPQ series, we will discuss in detail about the benefits of CPQ in your business organization. Or if you have any questions about CPQ, feel free to connect with our Salesforce experts for a CPQ consultation.