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Quote Automation: Using CPQ Technology to Improve Sales

Mitch Lee< Mitch Lee April 24, 2024

In today’s fast-paced B2B environment, generating accurate, timely quotes is instrumental for maintaining a competitive edge. Manual quoting processes are time-consuming, error-prone, and often lead to lost sales opportunities. In this article, Mitch Lee, Profit Evangelist at Vendavo, explains how Configure, Price, Quote (CPQ) software can significantly automate the quotation workflow and drive greater efficiency, accuracy, and profitability.

CPQ transforms the entire quote-to-cash process. By leveraging quote automation solutions, businesses can improve their CPQ process, empower their sales teams, and deliver superior customer experiences. In this article, we’ll explore how CPQ can help you optimize your quotation workflow and overcome the challenges to accelerate your quote process and boost your bottom line.

Understanding Quotation Process Automation

The quotation process is an integral component of the overall sales workflow, as it directly impacts a business’s ability to close deals and maximize revenue. Several factors come into play when automating the quotation process:

  • Product configuration: The ability to easily configure complex, customizable products is essential for generating accurate quotes. CPQ platforms provide customizable configuration capabilities that allow sales teams and customers to build the desired product.
  • Pricing calculation: Manually calculating the price of a configured product can be laborious and subject to human error. CPQ and price optimization software automate this process, considering factors such as base prices, discounts, promotions, and cost of materials.
  • Quote generation: Automating the quote generation process systematizes creating and delivering quote deliverables. CPQ software can automatically generate quotes to include the configured product details, pricing, terms and conditions, and relevant sales collateral.
  • Workflow automation: Quote automation also involves optimizing the overall sales workflow, such as automating approvals, tracking quote status, and managing follow-up activities. This ensures a seamless and efficient quote-to-cash process.
  • Visibility and reporting: Automating the quotation process provides greater visibility into the entire workflow, enabling businesses to track the status of quotes, analyze pricing trends, and generate valuable reports for data-driven decision-making.

By addressing these key factors, quotation process automation can transform how businesses generate and deliver quotes.

What is CPQ and How Does It Help?

CPQ is a type of software solution that automates and streamlines the critical steps involved in the quotation process. The key components of CPQ include:

  • Configuration: An adaptable product configurator is typically inherent in CPQ platforms, enabling sales teams and customers to assemble products and packages intuitively.
  • Pricing: CPQ software automatically calculates the price of the configured product. As the cornerstone of advanced B2B pricing technology, this feature eliminates manual pricing calculations, ensuring precise, consistent pricing.
  • Quotation: Generate quote documents to include the configured product details, pricing, terms, and supportive resources to help educate prospects and facilitate the sale.

By automating these critical steps, CPQ software transforms the quotation process from a manual task into a swift operation, ultimately improving the company’s revenue growth and profitability.

What Does Quote Automation Eliminate?

Implementing CPQ-driven quote automation can help businesses eliminate several pain points associated with manual quotation processes:

  • Lengthy quote turnaround times: Enable sales teams to generate timely quotes in minutes, rather than days or weeks, allowing them to respond to customer inquiries more quickly.
  • Pricing inaccuracies: CPQ’s advanced pricing algorithms ensure that quotes are generated with the right price, considering all relevant factors and eliminating the risk of manual errors.
  • Inconsistent quoting practices: CPQ provides a standardized, centralized platform for generating quotes, ensuring consistency in pricing and positive customer interactions.
  • Lack of visibility and traceability: Get real-time visibility into the status of quotes and the ability to track pricing rationale and approval processes, providing valuable insights for data-driven decision-making.
  • Tedious administrative tasks: By automating the quote generation process, CPQ frees up sales teams to focus on more strategic activities, such as building customer relationships and closing deals.

By addressing these common challenges, quote automation powered by CPQ software can help businesses optimize their quotation workflow.

Steps in the Quoting Process

The quoting process is a critical component of the sales workflow that impacts a business’s ability to close deals and generate revenue. Understanding the key steps involved in this process is essential for improving sales operations.

1. Quote Submission

The quoting process often begins with a customer submitting a request for a quote, either through a formal RFQ (Request for Quotation) or a more informal inquiry. This step sets the stage for the entire quotation workflow. Utilizing CPQ tools can significantly accelerate the quoting workflow.

2. Quote Request Acknowledgment

The next step is to acknowledge the quote request and provide the customer with a timeline for the quote delivery. This helps set expectations and demonstrates the sales team’s responsiveness, which can be a key differentiator in the eyes of the customer.

3. Customer Acceptance or Rejection

After the sales team generates the quote, it’s presented to the customer for review and consideration. The customer may accept the quote as-is, request modifications, or reject the quote altogether.

4. Quote Transforms into an Order

If the customer accepts the quote, the process then transitions into order fulfillment, where the configured product or service is delivered to the customer. Ensuring a seamless transition from quote to order is essential for maintaining customer satisfaction and building long-term relationships.

Challenges in Manual Quote Processing

Manually managing the quote process can present challenges that hinder a business’s efficiency and profitability. Understanding these challenges is the first step toward sales optimization and implementing a more effective quoting solution.

Lack of Real-Time Tracking

When the quoting process is handled manually, it can be difficult to maintain real-time visibility into the status of quotes, the rationale behind pricing decisions, and the workflow’s progress. This lack of transparency can make it cumbersome to identify bottlenecks, track sales rep performance, and ensure consistency.

Pricing Errors

Manual pricing calculations are inherently prone to mistakes, resulting in inaccurate quotes and lost profitability. Ensuring that the right pricing factors are considered–such as base prices, seasonal discounts, promotions, and cost of materials–can be a time-consuming and error-prone process when done manually.

Missed Upsells and Cross-Sells

Without the benefit of data-driven insights and automation, sales teams may overlook opportunities to identify and recommend additional products or services that could enhance the customer’s experience and increase the overall value of the sale.

Excessive Discounting

Without a centralized, automated pricing system or CPQ platform, sales teams may resort to excessive discounting to secure a deal, which can erode profit margins and undermine the overall pricing strategy. This creates a vicious cycle where sales teams feel compelled to offer steeper discounts to remain competitive, diminishing profit margins.

Lengthy Quoting Process

The manual nature of the quoting process can result in lengthy turnaround times, leading to delayed responses and lost sales opportunities. B2B entities often have a limited window of time to make purchasing decisions. Lengthy quote turnaround times can cause them to lose interest or explore alternative options.

5 Ways to Speed Up the Quote Process

Accelerating the quote process is essential for businesses looking to improve sales efficiency and drive greater profitability. Here are five key strategies to help speed up the quote process:

1. Understand Customer Needs Completely

The foundation of an efficient quoting process lies in thoroughly understanding the customer’s requirements, preferences, and any specific constraints they may have. A solution like Vendavo’s Sales Optimizer leverages AI-driven insights to equip sellers with customer-relevant cross-selling offers, demonstrating that they truly understand what their customers need.

2. Automate the Quoting Process

Implementing a comprehensive quoting solution, such as Vendavo’s Intelligent CPQ can significantly modernize the quote generation process. By automating tasks, businesses can eliminate manual steps and deliver tailored quotes to customers in a timely manner.

3. Streamline the Approval Process

In many organizations, quotes must go through a series of approvals before they’re presented to the customer. By implementing an optimized approval workflow, businesses can reduce the time it takes to generate and deliver quotes, ensuring a more efficient process.

4. Collaborate Using Tools

Leveraging collaboration tools can enable sales teams to work together more effectively, share information, and make decisions more quickly. By fostering a collaborative environment, sales teams can leverage each other’s expertise and access relevant data and resources to support strategic selling.

5. Gather Feedback

Actively engaging with customers and incorporating their insights can continuously optimize the quoting process. Vendavo’s Sales Optimizer allows sales reps to provide specific feedback on the suggested cross-sell offers so the whole sales team can benefit from the learnings.

Difference Between Quote and Proposal

While both quotes and proposals are important sales documents, they each serve distinct purposes and have key differences in structure and content.

A quote is a concise document that provides pricing details for a specific product or service. It typically includes an itemized breakdown of costs, such as the base price, any applicable taxes or fees, and the total amount.

In contrast, a proposal is a more comprehensive document that goes beyond just pricing. Proposals are designed to present a tailored solution to the customer’s specific needs or challenges. They delve into the customer’s pain points, outline the proposed approach, and demonstrate how the offered products or services can address the customer’s goals.

Why Automate the Quote Processing with CPQ?

In competitive markets where efficiency and precision make all the difference in closing deals, leveraging CPQ software for quote automation makes for a compelling case in any organization’s sales process.

Automate End-to-End Workflow

CPQ’s end-to-end workflow automation optimizes every phase from quote creation to order fulfillment. This speeds up the quoting process and ensures accuracy by utilizing real-time data from integrated systems like CRM and ERP, effectively reducing manual workload and enhancing focus on strategic tasks.

Reduce Pricing Errors

Manual quoting is prone to errors in pricing which can compromise customer trust and financial integrity. CPQ addresses this issue directly by automating price calculations based on current data and predefined rules.

Eliminate Duplicate Quotes

Duplicate quotes can occur when sales teams work in silos without visibility into each other’s activities. CPQ centralizes quotation management, improving collaboration among team members while maintaining consistency across all client communications.

Increase Productivity

Sales teams often find themselves buried in administrative tasks, such as manually generating complex quotes. By automating these processes with CPQ software, they reclaim valuable time that can be better spent engaging with prospects or refining sales strategies.

Shorten Quote-to-Cash Cycles

Traditional quoting methods tend to prolong the quote-to-cash cycle due to lengthy approval chains and processing delays. With CPQ, businesses experience faster turnaround times, which accelerates cash flow and enhances customer satisfaction through quicker service delivery.

Automating Your Quoting Process with Vendavo’s CPQ Solutions

If you’re looking to transform your sales workflow and unlock the benefits of quote automation, Vendavo Intelligent CPQ is a powerful tool that integrates with Vendavo’s price guidance capabilities, providing a comprehensive platform to streamline the entire quote-to-cash process.

Vendavo Intelligent CPQ eliminates manual, error-prone tasks and empowers your sales teams to focus on more strategic activities. The solution’s guided selling software removes complexity, reduces errors, and increases productivity.

With Vendavo, you can maximize profitability, improve operational efficiency, and leverage predictive sales analytics to ensure your quotation is competitive and equitable, helping you forge solid customer relationships before they even place a purchase.