CPQ Software: 5 Benefits You Shouldn’t Compromise On
How does a business best establish and maximize a configure, price, quote (CPQ) software? While this is a complex question, there are a handful of factors that should be considered regardless of your unique business traits. In this article, we review common challenges to look out for and benefits that should not be compromised in order to make the most of your CPQ software solution.
Why do you Need CPQ Software?
Providing a quote to a potential customer might be the final step after a hard-fought sales pitch process – and the last opportunity to showcase the value of your product or service. As the world gets smaller and more connected, you also need to ensure consistency of quoting between sales representatives so that prospects and customers (and your sales team) understand differences in quotes and factors into their final pricing.
When responding to a quote request, it’s essential to understand what you want your customers to know about your business. While price itself is significant, it may not be a customer’s only consideration when making a purchase.
Sales teams will tell you that time can kill deals. Showcasing your ability to provide a quick quote turnaround or produce detailed, complex quotes to your customers may be your differentiator versus the competition. These factors – and others – should be considered when designing your CPQ software and supporting systems. These are just a few reasons why it’s critical to understand the who, what, when, where, why, and how of your CPQ solution beyond just the software itself.
- Who are the day-to-day users, decision-makers, and recipients of the price quote?
- What are the primary and secondary goals of your CPQ system? What does your customer want and need from you? What internal problems do you intend to solve with CPQ? What pricing methods are you using today?
- When are the appropriate times to use the system? When does the customer need the price quote?
- Where does the system live? Where is the sales team when generating quotes?
- Why do you need CPQ software? Why do you win or lose business, and how can a CPQ software solution drive more wins?
- How do you determine a recommended price or approvals? How do you deliver price quotes? How do you track win rate and other KPIs?
Common Challenges in the Quoting Process
We often hear speed to quote is a hurdle to winning business, but another top reason for losing a quote is not taking into account all factors that can affect a final price. The presented price may not ring true to the prospect, as it may not feel like it was tailored to their business and their immediate needs for the product or service. A good CPQ solution should understand you, as the user, as well as your end customers and their needs, to ensure pricing considers customer motivation and feels like it was built specifically for them. CPQ inputs for pricing and the final output to present to the prospect should reflect what makes you and your customers different to ensure you hit the mark.
Another common challenge in the quoting process is sales team engagement and collaboration. A CPQ solution doesn’t stop at the computer screen, and neither should your quoting process. It doesn’t matter how quickly or accurately your CPQ can generate a price target if your sales team isn’t using it. Likewise, if the quote wasn’t recorded in a centralized system, you’ll never understand the profitability or success of your CPQ software.
A successful configure, price, quote software solution has many valuable outcomes, including faster quotes, more accurate quotes, higher close rates, and even better ROI. With those benefits at stake, your CPQ software and supporting systems and workflows should be chosen and regularly assessed with a close eye on business goals, processes, and results.
5 Benefits of CPQ That Should Not be Ignored
Regardless of your industry, route to market, or customer type, below are 5 benefits of a CPQ solution that should be carefully evaluated and employed.
Benefit #1: A CPQ Software that Expedites Speed to Quote
In many businesses, the currency is speed. That could translate to quote deliveries on demand, in 1 hour or less, or even a 24-hour turnaround. Whatever your definition of “quick” is, it’s no secret that customers don’t want to be left waiting too long for a response. Generating a quote within a reasonable response rate paves the foundation for a positive customer experience.
However, having the ability to deliver quotes fast enough isn’t necessarily a challenge with the CPQ software itself. We often see businesses where their quoting process is long, manual, and there’s a high volume of quotes leading to significant backlog. This lack of operational efficiency results in lost business, especially in competitive scenarios. These foregone profits appear to be from a slow response rate. Yet, when digging into the originating cause, speed to quote can be slow for one – or all – of the following reasons:
- Underlying quote process is manual and hasn’t been codified into a CPQ software that is both accessible and used
- Pricing process isn’t fully understood or followed, leading to a lengthy process to develop a single price quote
- The approval process is cumbersome or misunderstood
Instead, deliver price quotes quickly and efficiently with:
- Quick access to price recommendations and targets
- Automated visibility to cost
- Ability to review prior quotes or sales agreements
- Requests submitted and answered via a technology system vs. email
- Centralized data and decision-making that doesn’t rely on SMEs for every decision
- User adoption with training and support
- Ongoing review of system adherence and success
Benefit #2: A CPQ Software that Optimizes Price Quotes
As mentioned, one agent for speedy quotes is having accurate, profitable, and relevant price targets. There is a sweet spot between speed and accuracy that enables timely quote responses while also delivering a price that will be a win for the business. While volume growth may be a key component to your sales strategy, sacrificing profitability for the sake of higher win rates – or vice versa – is not sustainable for growth. Said differently, it doesn’t matter how quickly you respond to a quote request or how frequently you beat out the competition if your pricing strategy isn’t producing reliable price targets.
The first step toward better price targets is building a differentiated pricing model that accounts for the customer, product/service, order, and market factors that make up any transaction. There are a variety of pricing methods that can be utilized when building your pricing strategy. However, the key is to carefully curate a pricing model that generates accurate, profitable quotes that are specific to the customer-product scenario and account for both your business’s distinct value and market conditions at the time of the quote.
If you’re looking for strategic pricing help, INSIGHT has a unique capability to build dynamic pricing models that enable maximum profitability. Our custom-built models change and adapt over time to produce the most reliable and profitable quotes on demand.
Benefit #3: A Tailor-Made CPQ Solution
There are a lot of CPQ tools in the market and they range from completely off-the-shelf to entirely custom-built. For most businesses, there’s a sweet spot that employs some level of customization so the software functions within and works for the unique traits of the business, while also eliminating the cumbersome and potentially expensive process of developing a home-grown software. While it’s often assumed that more customization results in higher investment – financially and timewise – it’s also critical not to sacrifice certain tailor-made features for what might seem like time or financial savings right now. What you believe you are saving now you may be sacrificing later down the line.
Consider your ideal scenario:
- What systems should your CPQ tool be compatible with and why?
- How will the commercial team – sales reps, sales managers, leadership – interact with the tool? Will there be a need for mobile in-the-field login or different views by user?
- What data would you like to see when generating a quote, for example: prior quotes, peer customer quotes, win-loss data, regional or product performance data, relative margin based on how price targets change, etc.
- How complex is your quote build-up and what factors are adjustable? This could include payment terms, warehouse location & freight terms, engineering costs, customer profile details, special packaging requirements, volume or quantity breaks, value-add features, price caps for customer sensitivity, etc.
- Do any of these factors expire, require approval, or need to be routed to other departments?
To get the most from your CPQ software, out-of-the-box solutions that offer simple-to-configure pricing models and short implementation times should be reevaluated for:
- Level and type of configuration offered vs. true customization
- Constraints for specific industry nuances or user types
- Support activities through and post-implementation, including add-on fees for training or changes to the configuration
- Model adjustment cadences as the business or market changes
- Ability to sustainably integrate into your current – and future – systems and processes
INSIGHT offers CPQ applications that are never one-size-fits-all. Our DRIVE Software Platform enables us to build applications at scale, while also taking an individualized approach with our data scientists and developers to deliver a tailor-made solution.
Benefit #4: CPQ Systems that Support Sales Usage & Adoption
It doesn’t matter how quickly or accurately your CPQ can generate a price target if your sales team isn’t using it – the tool or the recommended quote. One potential benefit of a CPQ system that should not be ignored is the ability to track if, when, and how the sales team is using the tool or the price target, and ability to increase the usage and adoption.
Successful sales adherence begins with creating a system that is easy for the sales team to use. When considering what systems your CPQ software should be compatible with, keep in mind the daily sales processes and tools people are already utilizing. Some options include:
- Add a module within an existing CRM system
- Build a stand-alone CPQ application based on sales feedback
- Forego a front-end application and integrate your pricing model directly into a system that the team is already successfully using today
If usage ever wanes, be ready to evaluate the need for tool enhancements or training. Another consideration is monitoring sales behavior by region, individual rep, or other key groupings. If no one is logging into the tool, what enhancements, training, or accountability initiatives will change behavior? If only certain sales reps are using the recommended price, does the pricing model need adjustment or does the commercial team need education on how the quote was generated?
A successful CPQ tool is easy to use, agnostic to other systems in use, and supported by sales adherence processes and policies to ensure usage and adoption.
Benefit #5: An End-to-End Integrated CPQ Solution
No business can be sure of their success without measuring results. Whether your goals are around win-rate, volume growth, speed-to-quote, or profitability growth, an efficient measurement process will allow you to make better business decisions.
One last benefit that shouldn’t be ignored is a feedback loop that generates granular and insightful measurement results. The cornerstone to any successful INSIGHT partnership is measuring real results to ensure impact – and that’s no different for CPQ software. By developing an integrated end-to-end solution – that is, a quoting software that integrates the outcomes of quotes back into a business’s reporting systems – there is an ongoing, operationally efficient feedback loop to reliably and timely see results and make adjustments for continuous improvement and profit growth.
Configure, Price, Quote with INSIGHT
Providing timely and accurate quotes to potential customers is integral to any new business acquisition strategy. INSIGHT can help by delivering tailored, client-specific on-demand quotes through CPQ software and integrations. Our dynamic pricing engine offers clients the ability to tune and adjust the pricing model at a regular cadence so that quotes are never stale and are always relevant for customer and market conditions. Contact us to learn how to generate quick and relevant quotes that are always optimized for your business and profitability goals.