In this article by Thrudur Starradottir, Consultant at Vendavo, explore the power of CPQ software to revolutionize your sales process. Learn what CPQ is, how it works, and the unparalleled benefits that sophisticated CPQ software can bring to your business.
What is CPQ?
Configure Price Quote (CPQ) is software that simplifies the process of generating customer quotes and makes them more effective. CPQ software is usually an extension to your existing Customer Relationship Management (CRM) platform, giving the software access to key details on your customers.
CPQ software collates these details and uses them to determine the best way to configure products for each customer, what the optimal price is, and automatically generates a quote. Using the software offers various benefits over doing the task manually.
CPQ is built on 3 building blocks, Configure, Price and Quote.
- Configure: Find the right products for your customer, in the right combination
- Price: Get the correct price for your customer, for the configured products or combination of products
- Quote: Generate a quote including the configured products, at the correct price, in a timely manner
Salespeople only spend approximately 39% of their time doing what they’re best at – selling. The rest of their time is spent on administrative tasks like generating quotes. This is, obviously, a less-than-optimal use of their time.
The configure, price, quote process can be very time-consuming – time that could otherwise be spent on more productive tasks like closing sales. Manual processes can also be vulnerable to human error.
What is a CPQ Software Solution?
CPQ systems simplify the process of generating customer quotes and makes them more effective. CPQ systems are particularly useful for businesses that sell customized or configurable products, as they can help ensure that the products are built to the customer’s exact specifications and that the prices quoted are accurate and competitive. CPQ software can also help sales teams manage pricing and discounting, track sales performance, and improve the overall efficiency of their sales processes. Overall, CPQ systems can provide significant benefits to businesses by reducing the time and resources required to create quotes, increasing sales effectiveness, and improving customer satisfaction through faster and more accurate delivery of quotes and proposals.
What Systems Does CPQ Integrate With?
CPQ software is usually an extension to your existing Customer Relationship Management platform, giving the software access to key details on your customers.
In addition, CPQ systems have the potential to integrate with other systems, such as CRM, ERP, and e-commerce platforms. This integration enables businesses to automate their entire sales cycle, from lead generation to order fulfillment. CPQ solutions can also be integrated with pricing optimization software, which allows businesses to create dynamic pricing models that are optimized for maximum profitability.
By integrating CPQ software and strategies with other systems, businesses can improve their operational efficiency, reduce errors, and improve their overall customer experience. Additionally, integration can provide a single source of truth for all sales data, allowing businesses to make more informed decisions based on real-time insights.
Vendavo Intelligent CPQ software helps you increase sales productivity and win rates while delivering an improved customer experience. Companies that use the CPQ system have seen reduced quote iterations, customer churn decreases, and increased win rates.
Win more deals and more profitability with Vendavo Intelligent CPQ.
How CPQ Works – An Example
To paint the picture of how Configure, Price, Quote (CPQ) actually works, I will use an example. The company using this CPQ solution is a manufacturer of heavy trucks that operates globally. They have multiple sales teams, of different sizes, working regionally.
When CPQ software is available to their sales teams, the sales reps can open the software on any device. When they start engaging with a customer, they can find their customer and start to create a quote directly. Depending on the choice of integration, the customer data can be pulled directly from the CRM, or it can exist in CPQ. Any key attributes of the customer, channel, organization, segment, size, etc. that could have an impact on either the products or prices they might get, are made available in the data.
The CPQ will then guide the sales rep through the product selection. Here things can be controlled in large part through the data. If products should be made available only for a specific type of customer, the data can be set up accordingly. The guide can accurately take the sales rep through finding the products and provide any further information necessary to the user.
Once all products have been added as a configuration, the sales rep will get the appropriate prices for the selected products. The price structure can be complicated, and can depend on combinations made within the quote, customer attributes of the customer, and so on. Having the prices available in the system makes it clear what the suggested target price is, and can even include the approved minimum and maximum prices for the products. The sales rep can here negotiate the details of the quote with the customer until a common agreement has been reached. The quote can then be generated with any other terms and conditions that may apply, and sent over to the customer.
As economic uncertainty persists, organizations are looking for ways to navigate the challenging business climate and lean into proven profitability improvement measures. One strategy growing in favor for sales and executive teams is the ability to quickly generate accurate, optimized quotes across digital commerce sales channels.”–Bruno Slosse, ceo at vendavo
Benefits of CPQ Software
As your company expands and your customer base grows, the task of catering to each of your customer’s unique needs becomes increasingly complex. Sales representatives face the challenge of efficiently accessing and utilizing a wealth of information to generate the most effective quotes. To address this issue, businesses can turn to Configure, Price, Quote (CPQ) software like Vendavo Intelligent CPQ.
CPQ software can work with vast databases, collating the relevant data in a fraction of the time and removing the potential for human error. The software will also have access to up-to-date pricing and other variables, helping to generate optimal quotes for individual clients at any particular time.
Other benefits of using CPQ software include:
Execute Your Pricing Strategy with CPQ
Include better pricing guidance for the sales reps to capture the price as per the set pricing strategy. Set a clear structure on the discounts that may be used, as well as a target price including a floor and ceiling price. What use is setting a great pricing strategy, if it is not executed?
Consistent Pricing and Discount Control
With multiple sales reps working with numerous customers, it can be very difficult to maintain a consistent approach to pricing and discounts. With CPQ software, consistency can be maintained with every quote.
Including a CPQ system in the sales process will increase efficiency within your teams. Referring to a single source of data will limit unnecessary overhead and administrative tasks. Most of the time, the quickest quote wins, so reducing the time-to-quote can be of high value. Create an environment and process that allows your sales team to focus the majority of their time on what they are good at: selling and adding value.
CPQ software makes working with multiple currencies seamless. The software has access to current exchange rates, helping to ensure accurate currency conversions.
Pricing up contracts can be complex, with numerous current and future variables to be taken into account. CPQ software can quickly collate the relevant details to generate an optimal contract price for all parties.
CPQ software has instant access to the information that helps it calculate discounts that benefit the seller and the buyer. Advanced discounts calculated with the software can help to increase revenue and convert more prospects into customers.
Single Source of Truth
Gathering quotes from individual spreadsheets is difficult and time-consuming. When you have a single system in place that pulls together the data from the suggested list price to the quoted price, you save time and reduce human error. CPQ provides a central location of this data, which can then be utilized to identify leakage in the price waterfall and increase the accuracy of the quotes sent out.
Better User Interface
People are increasingly used to the experience of shopping online as B2C consumers. Those preferences are driving up expectations in B2B as well. Making quoting more intuitive for users will increase efficiency and satisfaction.
Easily Onboard New Sales Reps
Growing the sales team can be a challenging task when the products sold are complex. By using CPQ software, your sales reps can be onboarded more efficiently as less “by heart” knowledge is required, and the system will guide new users through making the best recommendations to their specific customers.
Increase Staff Efficiency
Instead of having to spend time collating data from databases and documents, sales reps can focus on generating revenue. They will have more time to work with customers and develop a relationship with them, helping to increase sales and revenue over time.
Save Time and Money
Collating data from different courses can be time-consuming – potentially leaving customers waiting for quotes. CPQ software can collate all the information it needs in moments. Not only will this save you a lot of time, but it can also save you money in terms of reduced wages.
Any manual process is subject to human error at some point; those errors can be costly in terms of lost sales opportunities or lost margins. So there’s obvious benefit in reducing or eliminating those errors with intelligent CPQ.
Grab a coffee and watch the Vendavo Intelligent CPQ solution demo
Signs Your Organization Needs CPQ
Below are some of the most telling signs that your organization needs to adopt intelligent CPQ software.
- Need Help Managing Thousands of Products
Managing thousands of products is likely to be very time-consuming. So mistakes become more likely the more products you have. CPQ software will overcome these issues for you.
- Sales Team Lacks Updated Information
Does your sales team lack the up-to-date information they need to work effectively with their customers and generate optimal quotes? CPQ software will provide them with the information they need, whenever they need it.
- Global Scale
Are you operating on a global scale with many customers in different locations? CPQ software will help you manage such a large customer base, and help generate accurate quotes in your customers’ currency.
- Quick and Accurate Pricing
Are you finding it difficult to provide quick and accurate pricing for your customers? CPQ software will generate accurately priced quotes for you in a fraction of the time it would otherwise take.
There are numerous reasons why your organization should adopt CPQ software. It helps you generate optimally priced quotes that increase your revenue. It also becomes easier for you to manage a large client base, with human error eliminated. And quotes can be sent to customers much more swiftly, improving their experience. Perhaps most beneficial of all? That your skilled salespeople can put their skills to work where they matter most.
Top CPQ Capabilities
A modern CPQ strategy should improve every aspect of the product configuration management process, leading to shorter sales quoting cycles and better ROI for every quote. Not just today, but long into the future.
The following five capabilities will help ensure the CPQ you put in place today can continue to meet your needs as your business continues to grow and evolve:
1. Easy-to-use intuitive administration – Your CPQ software should be simple to use and require minimal training to master.
2. Extensibility through simple API – Your CPQ software should be flexible and easily integrate with your CRM, ERP, and other systems.
3. Programmatic document generation – A modern CPQ strategy should have document generation capabilities that make it quick and easy for your sales team to create professional, complete, and accurate proposals – so they can get back to landing more deals, at better margins.
4. Real-time pricing automation – Your CPQ should include a pricing tool that provides accurate, real-time pricing and product information during the quoting process, including multi-currency transactions and cross-sell. The rules engine should be flexible and adaptable. And it should be able to handle things like product groupings, discount constraints, and role-based pricing.
5. Multi-organizational quoting – Your CPQ software should share product catalogs. With multi-organizational quoting, a sales rep from one division can source products from multiple divisions, configure everything quickly and accurately, and provide the buyer with a single, consolidated proposal.
6. Agnostic and flexible – B2B sellers will need to think through the technology requirements that will power emerging new selling capabilities and channels. You’ll need to recognize the difference between flexible, agnostic CPQ solutions that will serve them well in all channels, and other systems that will put limits on your abilities.
You can learn more about the top capabilities to look for in a CPQ here.
Choosing a CPQ solution
When it comes to choosing a CPQ solution for your distribution or manufacturing business, it’s critical to approach the decision-making process with care and thoroughness. Selecting the right CPQ can significantly impact your company’s efficiency, profitability, and customer experience.
To ensure you make an informed choice, we recommend that you consult trusted industry analysts like Gartner, Forrester, IDC, and others. These analysts provide comprehensive evaluations of CPQ solutions, offering valuable insights into their capabilities, market presence, and customer feedback. Their reports can serve as a guide to understanding the strengths and weaknesses of various CPQ vendors.
Discover why Gartner named Vendavo a “Visionary” in the 2022 Gartner Magic Quadrant for CPQ.
While evaluating different CPQ vendors, it’s essential to assess your unique business requirements like your industry, product complexity, sales process, and integration needs. Look for a CPQ that can seamlessly adapt to your specific business workflows and enhance your sales effectiveness.
One CPQ that consistently stands out in the market is Vendavo Intelligent CPQ. It has gained recognition for its advanced features, intuitive user interface, and proven track record of driving sales efficiency and profitability for manufacturers and distributors. By leveraging intelligent pricing guidance, product configuration capabilities, and streamlined quote generation, Vendavo Intelligent CPQ enables businesses to optimize their pricing strategies and deliver exceptional customer experiences.
How Vendavo Customers Drive Success with Intelligent CPQ
The value you see after implementing Configure, Price, Quote software will differ depending on your industry and your organization’s unique objectives for CPQ. From reduced Time-To-Quote, to generally more accurate pricing and quoting, and better control and visibility of the price getting, CPQ has plenty of benefits to offer you. Hundreds of manufacturers and distributors have seen success with Vendavo Intelligent CPQ. Here are just three of their stories:
How Dynapac Drove Faster Proposals and Higher Margins
Dynapac, a leading supplier of soil compaction and paving equipment, wanted to centrally manage pricing and reduce unnecessary discounts for its aftermarket parts and capital equipment. Dynapac implemented Vendavo’s Pricepoint and Intelligent CPQ solutions. Their road construction equipment is expensive and complicated to spec and quote, but Intelligent CPQ puts all options and pricing in one central location that their sales and account management teams can access. As a result, Dynapac estimates that they’ve cut quote time in half on average.
Complex Quotes Under 2 Hours for Silverpoint Homes
Silverpoint Homes, one of the country’s largest modular home retailers uses Vendavo Intelligent CPQ to quote faster, easier, and more profitably. With Vendavo Intelligent CPQ, complex quotes that once took days to create are now ready in two hours. Transparency has improved, margin variations were reduced and customers enjoy a better overall experience.
How Dell Optimized Pricing
Dell is a $60 billion company with a massive product portfolio. The majority of the business is commercial, direct B2B business. Dell wanted to shorten their time to quote, get more effective with their pricing, and align their sales compensation with the right price setting. With Vendavo Intelligent CPQ, Dell is able to send 90% of their quotes out in under four hours.
Are you looking for similar results as Dynapac, Silverpoint Homes, and Dell? By assessing the financial impact of implementing a CPQ solution, you can make informed decisions about the potential benefits.
To help you calculate the ROI specifically for your organization, Vendavo offers a user-friendly ROI calculator. This tool takes into account various factors such as increased sales productivity, reduced quoting errors, and improved pricing accuracy.
By inputting your specific metrics, the calculator provides an estimate of the ROI you can expect from implementing Vendavo’s CPQ solution. Use Vendavo’s ROI calculator to gain valuable insights into the potential financial gains of your CPQ investment.
Summary and Key Takeaways
You could see unparalleled value by implementing a CPQ system in your organization. I highly encourage you to start looking at and mapping out the sales process. Chances are, there is great room for improvement where a CPQ solution might be the right fit.
If you want to get the full value of a good pricing strategy, where the appropriate price is set, you must also have the process and systems in place to get the right price from your customers. This is achieved by helping and guiding your sales teams and optimizing the quoting process.
- CPQ (Configure, Price, Quote) software automates and streamlines sales processes, helping sales teams create accurate quotes and proposals for complex products and services.
- Benefits of CPQ software include reduced time-to-quote, improved sales team efficiency, better onboarding of new sales reps, centralized data management, execution of pricing strategies, enhanced user interface, and more
- Top CPQ capabilities to consider include easy-to-use administration, seamless integration with CRM and other systems, programmatic document generation, real-time pricing automation, and multi-organizational quoting. You can read more about top capabilities here.
- When choosing a CPQ solution, consult trusted industry analysts like Gartner and Forrester for evaluations and insights into different vendors.
- Vendavo Intelligent CPQ is recognized for its advanced features, intuitive user interface, and proven track record in driving sales efficiency and profitability for manufacturers and distributors.
Quantify the value of CPQ for your business in 6 simple questions with our CPQ ROI calculator