Gone are the days when one-size-fits-all solutions were accepted in the market. With the expansion in the eCommerce sector, B2B solutions are obliged to develop configurable products.
Due to the utter competition between the companies and their need to stay one step ahead, there is an ever-increasing demand for customized and personalized services. But with dynamic products comes their dynamic pricing.
And with that comes the risk of calculating their prices manually, as each configured component may have dozens of interdependencies.
The single price tag method does not suit the highly competitive market anymore. And thus, the CPQ software was introduced. It helps in organizing a seamless pricing process of complex products by providing automated configuration and price management.
WHAT IS CPQ?
CPQ stands for configure, price, quote. It is a sales quoting software used by sellers to produce accurate quotes for configured and complex products. The correct product pricing may depend on various factors, from the competition and local economic factors to the cost associated with product production.
The CPQ software aggregates all the configuration rules, which can be related to different processes and their design features with price and marketing constraints. It also allows you to control the compatibility of configurable options, thus benefiting both the buyer and the seller.
It aims to provide ease to the Sales Reps to focus on product configuration and deliverable process rather than worrying about the risk of inaccurate price quoting. Thus giving them a better chance at establishing their relationship with the customer and offering a more positive buying experience.
How does CPQ Software Work?
When a customer agrees to buy your solution, it is just the beginning of your business relationship. To cater to their need to produce customized software with complex integrations, you need a relatively simple solution to create online quotations.
This won’t only solve your hassle of manually keeping track of all the components and configurations, but also help in saving your time and focusing more on optimizing your product for the customer.
To understand the process more clearly, let us breakdown CPQ into its constituent features:
The first step of the selling process is product configuration. With businesses needing complex and personalized solutions, it is challenging for sellers to be configurators.
To solve this issue, CPQ software provides configuration of the products exactly how the customer needs them. It can detect cross-sell and upsell opportunities, which increase the quality of the service provided.
This step technically works because the CPQ system first processes the data about the configuration elements, nodes, and options either manually or through some ERP or CAD system.
After this, some standard set of rules are entered in the system, abiding by which the system needs to be configured. It allows the users to choose what options they see fit for their product. And lastly, the CPQ configures a visualized product and transfers the configuration data to an eCommerce system, CRM system, or displays it on a built-in interface.
This provides flexibility and expands the options of configuring the product and eliminates the possibility of human error while doing so.
After the features and components of a product are finalized, then comes the question of its pricing. Customized solutions are more complex to put a price tag on. If done manually, the pricing structure can be tricky for the sellers and their team members.
The CPQ system eliminates the headache and reduces the risk of losing clients with its AI feature. The artificial intelligence algorithm helps the sellers determine their customers’ buying patterns and does market research to get an idea of what your customer is willing to pay.
Combining this with individual customer configuration gives the sellers the most reasonable price their customers would agree upon. Thus, this provides a personalized and rational price for your customers and helps maintain the seller’s profitability. The seller is also free to offer customized discounts and rules for individual customers without compromising the system.
Sellers need to know how to make a quotation proposal that is error-free and elaborate. After configuration and pricing are done, sellers need to act fast and send out the quotes as soon as possible.
This not only makes the sellers look promising but also increases their chances of closing the deal. When a customer is looking for vendors, they pan out their options for better product and pricing.
Keeping in mind the cut-throat competition, sellers must act quickly and send out a detailed quote as soon as possible. And thus, CPQ helps in creating online quotations which are personalized according to the customers.
It also allows the sellers to review the quote before sending it out to their customers.
Benefits of CPQ Software
It is quite evident how CPQ plays a vital role in the whole lifecycle of selling complex products. It takes care of everything, from preparing, estimating, to finally closing the deal.
CPQ’s automation eliminates the need to dig through multiple spreadsheets and hunt down information through various stages of a sales cycle. Thus, providing a competitive advantage to businesses, shortening the sales cycle, and eliminating the chances of making costly mistakes.
Here are some other benefits of implementing CPQ which your business can count upon:
- More Accurate Quote Creation: CPQ serves as an easy quotation software within all the chaos of the selling process. Product quotation is the apparent service the customer will demand from you. You need to be quick and produce an accurate quote.
You won’t want to send a customer a quote that lacks profitability or some compliance issues. And to reduce that possibility, CPQ allows you to collaborate between different departments in real-time to come up with quotes that would be error-free and thus increase your chance of closing the deal. This practice also cultivates a sense of trust in the company.
- Sales Efficiency: The most noticeable benefit of CPQ Software is how it increases sales efficiency. AI automation eliminates many tedious business processes, thus sparing time for the Sales reps to focus on maintaining and building their customer relationship with different clients.
- Integration: Another impressive feature of CPQ is how it allows you to integrate with other tools used by different company departments both within and outside of sales.
- Revenue Streams and Cost Efficiency: When someone said time is money-they weren’t lying. And when we tell you that CPQ won’t only save you time but also money, it is a noteworthy feature of the software.
The automation gives the sales reps and managers ample time to create a well-guided sales process rather than killing time assembling multiple spreadsheets. They can spend more time evaluating best practices, identifying areas of improvement, and improving their current sales processes.
This time saved can be used to pitch other potential customers, thus increasing sales and revenue streams.
Does Your Business Need a CPQ Integration?
Now that we have told you the benefits of integrating CPQ Software, the real question is, does your business even need it? And well, there are a few points which can help you determine that. Let’s have a look:
- If your business sells complex configurable and personalized products.
- If your business tends to estimate wrong selling costs for your products and thus loses money because of discounts.
- If your quotes often contain human errors.
- Your sales team is incapable of providing quick responses to customer requests.
- If the sales cycle of your offered products is too long.
- Your customers’ satisfaction level is not met.
If your business is facing a few of the above-stated issues, we highly recommend you give the CPQ software a shot. It won’t only help you create online quotations but also help improve your overall sales process, thus benefiting you and your customers. It will help you expand your customer bucket and give you time to deal with them efficiently!
You can consider several potential CPQ options available in the market. WorksLeader, Oracle, and SAP are some of the top names you can choose from.
So what are you waiting for? Integrate your business with CPQ software and see the magic of automation and AI!