What is CPQ (Configure Price, Configure Quote)? Is your business in need of it? -
Finding the best methods to simplify your sales processes could be the key to running an efficient and lucrative selling operation. One popular solution for managing and automating parts of the sales process is by using CPQ (Configure Price and Quote) Software. However, what is a CPQ in terms of the primary advantages? Most importantly, do your business require it?
What exactly is a CPQ? What are the benefits of a CPQ?
CQ (Configure Price Quote) is a form of sales software that allows sales reps to quickly and efficiently configure items and services, calculate accurate pricing, and create estimates to email to the customers.
Here are some of the major benefits of using an CPQ:
- Accurate Product Configuration:It's easy for sales reps to design a customized set of goods and services based upon a prospective customer's needs and requirements. Since they're integrated in an existing system CPQs are also less likely to cause chance of miscommunications or errors.
- Professionally designed quotes for prospective customers:CPQs often have customizable templates that allow for standardization of the style of the quotes and make them simple to read for prospective customers. They also increase your chance of closing deals faster.
The right time is when to use a CPQ?
Companies typically think about a CPQ system when they want to do the following after hitting a certain point of growth:
- Cost compliance and uniformity among sales reps
- Making it easier to create and manage quotes
- The sales cycle is being shortened overall.
These are all especially important in the event that your sales staff gets caught up in many administrative duties that they can take on, and for those who want to establish efficient processes that can be scaled within your organization. In addition, price compliance and consistent pricing is essential when you want to ensure that your sales team isn't doing price changes that aren't authorized to meet quotas.
What most do not know is that CPQs are costly, complex, and difficult to maintain and implement.
Which are the negatives to using an CPQ?
There are a few disadvantages to consider in using CPQ systems:
- It can be expensive. There is a cost upfront in the event of implementing an CPQ, as well as the ongoing fees for subscriptions that can result in it being a major cost for businesses to invest in.
- It can take months to implement. Due to the complexity of CPQ application, it can take months to implement it and usually requires specific consultants for getting it off the foundation.
- The system is complex to operate and maintain. The CPQs are inflexible and are difficult to alter as well, and usually requires a really strong RevOps / Operations team to ensure it is maintained. They often require a massive overhaul anytime pricing or packaging needs to be updated.
Though CPQs could be beneficial especially in enforcing price conformity and consistency, the complexities in implementing and maintaining this tool could come in the way of sales representatives' and your operations teams' performance.
So, do you require it?
The majority of the time, CPQs are designed for large enterprises with a more extensive product catalogue. But, there are number of factors to be considered, especially for small-medium businesses.
- Size and Complexity of Sales and Operations Teams
- If you're working with a smaller sales team, implementing an CPQ isn't necessary. The software may not be suited to the task you're trying to accomplish; especially if you don't have a strong operations team to back up the sales staff. The performance of CPQ software heavily relies on its maintenance and implementation, often done by the Revenue Operations / Sales Operations team. Building a solid RevOps or Operations team is essential in maximizing the benefits of an application like CPQ.
- But, if you've got huge sales staff and a strong RevOps team to maintain the integrity of your CPQ solution, then it could potentially make sense.
- Product and Service Catalog
- If you sell standard products or services using a CPQ might not be necessary. The tool CPQ is best utilized for complex products or services that need customization and configuration per account. However, there are other options that could offer this advantage without having to go through the entire process of setting up the CPQ.
What's your alternative? (Especially for SMBs)
In accordance with the application, there are a lot of other tools that could be used for your company.
Most often, small businesses will gain from utilizing a quotation software that helps in creating estimates quickly and efficiently. Many of these quoting softwares already offer many features such as price and product databases, customizing templates and the ability to deal with complicated configurations. These are mostly the key things you'd want from the CPQ software. This is typically a more scalable and efficient tool compared to a spreadsheet application. To find a comprehensive list of quotes tools, check out HubSpot's list here.
But, one instrument specifically that offers most of the core advantages of an CPQ tool is IQ.
"IQ" (which means Interactive Quotes) is a lighter CPQ alternative that's specifically designed to be used by small-medium-sized companies.
For RevOps and Operations teams this is a better method to establish price compliance and consistency between reps. It also provides an effective approval workflow to your quoting procedure.
It also gives real-time analysis as well as eSignatures and payment to make it a much simpler and quicker quote-to-cash.
