Trends in the software world are like Star Wars fans — they’re everywhere. Over the past few years, CPQ (Configure, Price, Quote) has joined the party. Related to ERP systems and CRM software, CPQ solutions have bolted into the spotlight as a means for making sales teams more effective and productive. And one way to maximize the power of CPQ applications is by implementing CRM CPQ integration.
By connecting your CRM and CPQ solutions, or purchasing a CRM with built-in CPQ capabilities, you can put your sales team in the fast lane to success.
What’s CPQ, why is it important and what benefits will it infuse into your business? Read on to find out!
What Is CPQ?
CPQ is a sales tool that removes many of the complexities sales reps face when preparing product quotes and provides a platform for buyers to customize products tailored to their needs. It also stores all a company’s price and configuration details to ensure accuracy no matter the unique buying scenario.
CPQ software is the fuel that drives sales cycles for any company that sells complex, configurable products and services. The greater customization a product has, the more important it is to support selling efforts with a CPQ application that scales across all selling channels.
Without a CPQ tool, landing a sale can be time-consuming. Managers need to know that sales reps aren’t offering discounts that aren’t allowed and check that the configurations they provide are valid, which extends the approval process.
With CPQ systems, companies are able to address common sales pain points:
- Automate the process of generating a quote
- Provide insights that boost deal sizes
- Greatly reduce the length of sales cycles
- Cut back on human error
- Ensure consistent, accurate pricing for any type of deal
- The global CPQ market is growing at a 20% Compound Annual Growth Rate (CAGR) through 2020. Cloud-based CPQ applications are generating the majority of revenue growth, growing at a 46% CAGR through 2020, according to Gartner.
- We’ve already seen manifestations of this prediction, as the CPQ market grew 35% year-over-year in 2017, according to Gartner.
- Despite the growth, only 40% of sales teams surveyed use a CPQ solution, according to a 2018 Salesforce report.
- However, the same report found that CPQ adoption is expected to grow by 82% by 2020.
If you’re after additional insights into the reasons why CPQ is so valuable, we covered that in our article The State of the CPQ Market.
Why Your Company Needs a CPQ Application
Without CPQ software, quotes come to life in a manual, time-consuming way. Usually, it involves collecting information from several sources like spreadsheets and emails and then piecing it all together like a puzzle.
If a company only needs to create a handful of quotes a month, that approach is fine. But it can’t scale. Eventually, organizations reach the point where generating quotes eats into the valuable time the sales team could spend on more profitable activities.
The ability to unify product configuration, pricing and quoting in an application that scales across all channels is revolutionizing how companies sell customized products. Leading CPQ vendors also provide advanced analytics, intelligent agents and machine learning to improve selling effectiveness.
More than ever, consumers expect greater flexibility and freedom in defining what they want from the products they buy — a.k.a. mass customization. Case in point: the BMW Mini has over 10 million different ways to make one of their cars unique. And that number is from 2016.
Today, B2B organizations in industries like manufacturing and distributing offer configurator tools that allow buyers to customize their products. And in the B2C world, people can customize products ranging from their Apple device to that dream Ferrari.
This extreme level of mass customization has become normal. If you want to cater to consumer expectations, CPQ strategies alongside effective CRM CPQ integration are essential.
Before we delve into integration benefits, let’s quickly cover how CPQ impacts the supply chain.
Supply Chain Challenges Solved By CPQ
CPQ is particularly helpful in addressing supply chain pain points. Efficiency is a big deal — and often a challenge — in supply chains. CPQ software brings automation to the table to streamline supply chain operations in multiple ways.
First, CPQ can simplify the sales cycle. The complexity of having countless variables in place makes it much harder to execute lead-to-order cycles using traditional methods. With CPQ in the picture, accounting for customer needs becomes easier and faster.
To facilitate a streamlined sales cycle, CPQ solutions can update your supply chain management software on needed supplies and parts in advance so that you can stay ahead of the demand. That prevents issues from cropping up when an order comes through. It’s also possible to plug inventory limits into the CPQ, which signals sales reps and customers that resources are low and may impact the buying process.
With greater product customizations comes the need to offer custom pricing. CPQ supports the range of pricing options required in the manufacturing industry. For example, if an enterprise organization needs to order 500 new desktop computers with unique configurations, CPQ systems use rules-based engines to generate a price that takes into account things like discounts based on the purchase order size.
Since supply and demand directly impact supply chains, agility is a critical component of success. Demand planning tools help predict market shifts, but they’re not foolproof. Using CPQ, companies can offer a range of configurations to prevent products from stagnating when market demand takes a nosedive.
Alongside efficiency, customer experience has grown into a major factor companies need to consider to remain competitive. Personalization, driven by the increasing demand of buyers to be in control of the process, plays a central role.
CPQ meets the customer experience challenge in several ways:
- Guiding buyers through the configuration process
- Letting them tailor products to precise specifications
- Speeding up the sales cycle
- Reducing errors
- Enabling organizations to deliver exactly what customers order at the right time
Now let’s explore the value of integrating your CRM and CPQ systems.
How CRM CPQ Integration Adds to Your Bottom Line
CRM applications are a powerful tool in your company’s toolkit in their own right. However, not every CRM includes CPQ features. Integrating a CPQ system into the mix can strengthen your customer relationship management. Specifically, CPQ apps enable your sales team to produce more, close more and win more.
How does CPQ accomplish this? Let’s go over some examples:
This is where the magic starts. A centralized storage catalog is the engine that powers the enhanced productivity and efficiency of your sales team. And since one of the main goals of CPQ systems is to cut the ties with spreadsheets, it’s a top reason for using a CQP application.
The range of product customization options makes having a location to easily store that information critical. CPQ provides a database that automatically tracks configurations and bundles so sales reps don’t have to manually track every price and product, or build quotes from scratch each time.
Shorter Sales Cycles
Traditionally, generating quotes took a significant amount of time and prevented sales reps from replying to customer requests quickly. In fact, research found that sales reps only spend 35% of their time selling. The top culprit? Administrative tasks, which take up nearly 15% of a sales rep’s time in a given week.
CPQ can solve that problem by simplifying and streamlining the process of generating quotes. And using software to handle those tedious, repetitive tasks pays off. Research by Aberdeen suggests that using a CPQ solution leads to a 13x reduction in sales cycle length.
CPQ software eliminates much of the manual work involved in creating quotes. Because sales reps can pull information automatically from the catalog, it’s much easier to generate a complex quote in a shorter time frame. That accelerates response times, which cuts down on the length of sales cycles.
Larger Deal Sizes and More Deals Closed
If sales teams spend less time generating quotes, they have more time to pursue new customers and close more deals. Simple math.
The Aberdeen report just mentioned found that CPQ users had a 49% annual improvement when it came to meeting yearly quotas.
CPQ software also provides insights that sales reps can use to increase the size of a deal. AI and machine learning evaluate selling patterns to make suggestions for guided selling, upsell and cross-sell opportunities.
For example, with guided selling, the system will provide forms and questionnaires to guide customers through the process of picking the exact right configuration based on their needs. Salespeople have access to that information as well, which helps them make recommendations.
With the need for greater efficiency, it doesn’t make sense for sales reps to use a CRM for contacting and following up with leads, only to switch when it’s time to send a quote. CRM CPQ integration wipes away the need to move back and forth, creating a smooth workflow that allows sales teams to work more effectively.
Working from a central tool also enhances brand consistency. Salespeople can reuse templates that have your company’s branding. That simplifies their job and ensures you present a uniform presence to leads.
People won’t take your company as seriously if you can’t maintain consistency across your communication with them. Integrating your CRM and CPQ takes care of that.
Improved Visibility Into the Sales Pipeline
CRMs are valuable for a variety of reasons, one of which is greater insight into your sales pipeline. However, without a CPQ system integrated with your CRM, you lose an important part of the picture.
You can’t optimize what you can’t fully see. By connecting CRM and CPQ solutions, you gain additional understanding of how the CPQ step plays into the overarching pipeline and how to make improvements that drive higher close rates.
One of the greatest advantages of using software is reducing human mistakes. Given the number of details associated with configuring, pricing and quoting a product, letting software take care of the complexity can greatly reduce the number of errors your sales team encounters.
One of the valuable aspects of a CPQ is a rules engine. As the name suggests, this is simply a system that allows you to define the rules of engagement, so to speak. You can set rules that make the entire configure, price, quote process less prone to error.
A rules engine automates each step in along the CPQ road, ensuring errors don’t creep into the quotes your sales team sends out. Not only does the rules engine cut down on costly mistakes on your end, but it also prevents customers from sending an invalid order.
You can set up validation rules, product actions, alerts based on predefined criteria, filter rules and more. Such a level of control means you can configure various dependencies, attributes and more based on your particular business needs.
Cutting down on errors helps reduce your overall costs. CPQ software helps lower costs by greatly reducing the chance for user error, such as data entry mistakes or customers ordering a product configuration your company can’t build. Fixing errors can quickly add up, and it also sucks away precious time that sales reps can spend nurturing relationships and generating revenue.
The automation CPQ provides also helps you save time and money:
- It guides sales reps through the process, which helps new hires get up to speed more quickly and cuts down on training costs.
- It reduces the number of times a customer has to contact your sales team, leading to less spending on each quote generated.
Need reports? CPQ has them. With BI-enabled analytics and reporting features, you can drill down into specific metrics for deeper understanding. Here are a few examples:
- Monitor sales rep activity, such as frequency of discounts offered, number of deals closed and transactions approved
- Determine the best combo of products and pricing
- Analyze historical quotes to spot trends
- Pinpoint anomalies
Real-time insights allow you to optimize your process so you can win more. Reporting dashboards let you see statuses, and you can use the CRM CPQ data to build custom reports that inform decisions across multiple departments.
Higher Customer Satisfaction
Imagine if a construction company needed to order several types of exterior windows for a new office building. They want to configure the basic model to their requirements and purchase a different number of units for each size window. However, the manufacturer’s product and pricing limitations become frustrating.
Without a CPQ system in place, that scenario is a lot more likely to happen. CPQ removes those limitations so buyers can get what they need, and with less hassle. Plus, automation protects customers from missing any required elements during the configuration and guides them through the process using your pre-defined rules.
Another way CRM CPQ improves customer satisfaction is by speeding up response times. People don’t like to wait. If your sales reps can quickly send a quote based on a configuration, that makes your customers’ lives easier. And in sales, fast responses can mean the difference between closing a deal and losing the customer to a competitor.
Why is customer satisfaction so essential? Because companies who invest in a great customer experience will benefit.
Nearly seven out of 10 customers say they’re willing to pay extra in return for an exceptional experience, according to a Salesforce report from 2018.
And from the other angle, if you don’t provide that great experience, it’ll hurt your bottom line. The same Salesforce report found that 57% of customers left a company in favor of a competitor who provided a better experience.
No matter your business size, CPQ tools offer critical capabilities that put the power in the hands of customers, solve supply chain pain points and greatly simplify the process of generating quotes.
And with CRM CPQ integration, your company can improve efficiency, free up sales reps to focus on selling, limit costs, drive revenue growth and ultimately satisfy your customers.
In order to take advantage of CPQ’s full potential, it’s important to have an effective CRM system. We put together a free CRM comparison report to help make your decision faster and more informed. Get insights on top vendors so you know the landscape and are equipped to ace your CRM and CPQ strategy.
What do you think are the top benefits of CPQ for your company? Drop them in the comments!