Configure, Price, Quote (CPQ) Software Explained

No one likes wasting time. And sales reps want to spend theirs selling, not crunching numbers. The latest State of Sales report found that most reps spend just 28% of their time actually selling. Instead, they're busy generating quotes and proposals, and spending hours (or days) waiting for approval. Accelerating this process is one way your sales team can make more deals happen faster. Enter: CPQ software.

Configure, Price, Quote (CPQ) software can simplify the process of building complex quotes, pricing them accurately, and routing them for approvals so reps can spend more time on high-value customer interactions and closing deals. Read on to learn how CPQ can optimize your reps' time - and generate more revenue for your business.

What you'll learn:

What is CPQ?

CPQ - configure, price, quote - is a tool that helps sales reps streamline the process of configuring quotes for products and services. CPQ software helps salespeople to quickly and accurately generate quotes, considering variables such as features, volume discounts, and customization. It works with customer relationship management (CRM) software so customer data - contact information, account history, and preferred forms of payment - can be populated into the quote.

Here's a breakdown of the three components that make up CPQ:

• Configure: Just like outfitting a new car with select features, you can customize your products or services to meet the needs of your customer. Think: product features, options, and add-ons. You can also add rules to ensure options are compatible with one another. By choosing from a list of pre-programmed specifications within the software, you can configure quotes to give customers exactly what they want. This eliminates the need for manual quote configuration and saves reps a ton of time.
• Price: Once things like bundles, volume discounts, and promotions are factored in, CPQ software gives you a price. As configuration is changed, the price will update as additional (discretionary) discounts are applied.
• Quote: The quote is the detailed proposal generated by the software for the customer. It includes all line items for the total cost of products or services and can be sent for electronic signature.

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What can CPQ do?

Anyone selling a product or service needs to have a system in place to create quotes for their customers. CPQ software helps make generating these quotes much easier than in the days of pencil and paper - and there's less room for human error.

Some features to look for in CPQ software include:

• Product catalog and pricing rules: Create dynamic pricing strategies directly from your CRM with rules that trigger changes when specified products are on a quote. When your business needs change, you can apply different product field rules, conditions, and actions to deliver new pricing strategies.
• Guided selling: Targeted questions for sellers help narrow down product options for customers. Reps are offered a more limited set of products and options based on customer responses to questions - this is especially helpful when companies have extensive product catalogs.
• Bundles: CPQ software makes it simple to create product bundles. You can provide pre-packaged groupings of popular products and configure them to meet a customer's needs in fewer steps. If every product comes with a warranty and training, just bundle those together instead of adding them separately. You can still output them as separate line items on the quote and invoice for the customer.
• Discount controls: Sellers have more wiggle room with negotiations when they can offer customers discounts - and instantly see the new price quoted on the proposal. With this quick calculation, sellers can easily offer volume-based, customer specific (negotiated), and promotional discounts.
• Advanced approvals: Speed up the approval process, even with long chains of decision-makers. The entire approval process is automated, so even complex deals can close fast.
• Proposal document generator: Once your buyer decides on a purchase, instantly send them a proposal directly from your CRM.

When implementing CPQ software, you can expect to spend some time configuring data up front. This is because you must manually account for variables such as the added cost of different product styles, volume discounts, and other factors. But that investment quickly pays off with a platform that computes fast, accurate quotes with the click of a button.

It's easy and quick to add, remove, and change options when creating a quote using CPQ. For example, say you have a customer who wants to buy five leather chairs with armrests and no wheels, and five black swivel chairs with wheels and no armrests. Once you input the products and then update the options in the system, you will quickly have an accurate price for those products.

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CPQ key benefits

CPQ can help reps create product configurations - including options and discounts - for numerous scenarios. This makes building multiple quotes straightforward. Using a predefined framework, CPQ walks reps through the process and helps them create a complete and accurate quote in minutes. It can then be routed to the appropriate parties for approval, sequentially or in parallel, cutting down the wait time even more. Overall, this simplifies the quote-generation process, making things easier and more efficient for your sales team and your customer.

You can simplify complex calculations, reduce the potential for errors, and create personalized quotes quickly and accurately with automation. And, you can adjust pricing rules within the software for a customized pricing process.

Here are other benefits to using CPQ:

• Consistent pricing and discounting control: Use CPQ to eliminate pricing errors and unintended discounts.
• Multi-currency support: You can offer quotes in U.S. dollars or any other major currency.
• Subscription pricing: Quickly set up recurring billing for customers to improve your monthly recurring revenue.
• Contract pricing: Once a price is negotiated for a product, you can replicate that quote for the same product for that customer in the future.
• Approval workflows: Set conditions that require quotes to be reviewed and approved by various teams - sales, finance, and legal - so you don't sell ill-advised configurations.
• Increased revenue: By speeding up the quote-generation process, you can move customers through the sales pipeline quicker. Your entire organization can also use sales analytics to look at CPQ data, identify trends, and gauge demand for your products or services.
• CRM and ERP integration: By integrating CPQ with your CRM and enterprise resource planning (ERP) systems, you can connect your sales and operations and ensure end-to-end data accuracy.

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Do you need CPQ?

If you're not sure whether a CPQ system is necessary for your business, you should take a closer look at the efficacy of your current process. If reps are spending significant time on manual configurations, you're noticing errors, or deals are getting delayed because of inefficiencies, CPQ may be worth the investment.

CPQ helps reps build price quotes quickly. This straightforward process not only helps you close more deals but it leads to better customer experiences.

If you use subscription pricing or recurring billing, CPQ software can manage the tasks associated with repeat orders and subscriptions, generating renewal quotes. The software can also easily integrate mid-term amendments to subscriptions into renewal quotes, speeding up your sales process.

With successful implementation, you eliminate the need for manual quote writing - so your reps can get back to selling and nurturing your high-value accounts.

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Use CPQ for faster, more accurate quotes

If you're spending more time preparing quotes than you are selling, CPQ can offer the support you need. With the automation that CPQ brings into the sales process, generating quotes quickly and accurately is one less thing on your reps' plates. And once you integrate CPQ with your CRM and ERP, you'll not only have better customer insights - you'll have more time in the day for building relationships and closing deals.

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