Configure Price Quote (CPQ) software brings together three critical elements of the sales cycle. It can be applicable in B2C sale interactions, but is more commonly adopted in B2B situations.
The Configure (or configuration) element
This essentially refers to “what products or services do I want to include?” Where you are selling complex items or bundles of items, it guides you to ensure selected items are compatible, or supports in upselling/cross-selling opportunities to recommend, e.g. “customers who bought this product, also bought…”.
An example from a B2B environment. A lighting manufacturer has been asked to quote for a job that involves providing light fixtures for a university corridor. The corridor is 30 metres long, and the customer would like to have the lights suspended from the ceiling with no exposed cabling.
To quote for the job, the sales person uses a configurator to select a design of light fixtures, and enters the parameters requested. Because of the configuration rule setup in the system behind the scenes, the system first tells the sales person that they can have a 28-metre fitting (because the chosen design comes in standard 4 metre lengths).
It works out all the associated suspension kits needed, caps required to hide the cabling, and connection kits to join the individual components together to make up the complete 28-metre fitting. It may even suggest certain upselling opportunities such as maintenance packages available on some of the items selected. The configure element comes into its own when you have thousands of products and subsequent numerous combinations of those products.
An example from a B2C environment. You’re looking to purchase a new computer, so you visit a reputable online retailer. You select the laptop brand you would like and start the checkout process. Step 1, you are asked what size you would like the screen to be. Step 2, you are asked how much memory required. Step 3, you are asked what graphics card you would like, and so on. This guided selling approach again ensures you are presented with the correct combination of components.
The Price element
Takes over once you have selected the components. It is the pricing engine that sits behind the scenes, and ensures the correct price is displayed for that combination of items selected. You may have set up certain bundle rules or discount structures based on the combination of parts selected. The pricing solution takes the stress away, to minimise any pricing errors.
The Quote element
Is the final piece of the jigsaw. It takes the selected items and the assigned prices, and presents them in a professional formatted manner either shown to the consumer on the summary page of a website before they enter their credit card details, or in a company branded pdf, Excel, or word document, ready to be sent out directly from the system, or downloaded.
In earlier articles we have covered topics such as the reasons why Excel-based pricing could be hurting you business and the ROI of Price & Quote Management software. CPQ is a system that can replace your Excel processes and also deliver real return on investment. You will impress your customers with the speed and format of your quote.
What are the benefits of CPQ Software?
Increase Your Deal Sizes
At various stages in the configure cycle CPQ can present opportunities to upsell or cross-sell. Therefore, it gives you the opportunity to increase your average deal size, which is good for your bottom line and business growth.
Eliminates errors
No one wants to manufacture the wrong item, ship the wrong component, or not send all the required items to a customer. CPQ takes the worry away and automatically does all the checks to ensure the correct combination of items are quoted.
Reduces your costs
Eliminating errors supports a reduction in costs caused from re-work. For example, having to manufacture the correct components again, or having to send out an employee a second time because the incorrect items were shipped originally. Also, less time will be needed on training new employees on complicated product sets, as the logic is handled automatically by CPQ software.
A reduced time to market
When your marketing team wishes to introduce new products and customised offers, the CPQ toolkit can be used to quickly set up the combination of items in the admin side of the system, so they are then instantly available to the sales force.
Provides a streamlined "Quote to Order "process
No need to play email ping pong and calls between your office team and sales force to double- check what products can be sold together - and what the prices should be. CPQ streamlines the process and allows a quicker turnaround time of complex quotes. Not only will this increase your chances of winning an order as you can reply to the customer quickly, but it also frees up the time of your salesforce to do more selling, which will again support business growth.
Increases customer satisfaction
Where you are able to make the complex seem simple, your customers will be satisfied and impressed that you are knowledgeable about your product or service set.
When should you consider CPQ?
- You would like to implement new offers in a short time
- You can see an opportunity to attract customers with precisely tailored offers
- You suffer from a high or growing sales force or customer churn rate
- It takes a long time to create quotes
- You want to eliminate errors in pricing
- Your salesforce is not completely office based, they are spread geographically
- You are spending too long manually administering the current process
What makes BlackCurve the ideal choice CPQ solution?
BlackCurve provides a complete CPQ solution. The platform has been built from the ground up, with a focus on making it easy and simple to use. Best of all, because it is cloud based, we can deploy the system quickly, so you are reaping the benefits from a very early stage.
Related posts
Why Use Configure Price Quote (CPQ) Software?
What is Configure Price Quote?
To Cross Sell or to Up-sell That is the Question
What Can A Pricing Solution Do for Your Business?
11 Disadvantages of Using Excel to Manage Your Pricing
3 Reasons Why You Need Configure Price Quote Software
How CPQ Software Will Free You From Spreadsheet Hell
Common B2B Quoting Challenges and How to Solve Them
Sources
http://blog.sellingpower.com/gg/2011/06/part-i-10-ways-configurepricequote-cpq-software-can-skyrocket-your-revenues.html
http://www.gartner.com/it-glossary/configure-price-quote-cpq-application-suites/
Nagle, Tom; Hogan, John (2016). The Strategy and Tactics of Pricing
Simon, Hermann (2015). Confessions of the Pricing Man: How price affects everything.
Hamilton, Warren D (2014). Pricing Strategy: Tactics and strategies for pricing with confidence.
McFarlane, Bill (2012). Pricing Strategy: How to price a product
Bird, Tom; Cassell, Jeremy (2012). Brilliant Selling: What the best salespeople know, do and say.
Aberdeen Group, "Sales Enablement Advances with Configure/Price/Quote Solution," 2011