Are you struggling with inaccurate or inconsistent configurations, quoting, or pricing, slow quote turnaround time, personnel bottlenecks, sales downtime, inaccurate sales forecasting, poor results from upselling and cross-selling initiatives, complicated spreadsheets, or customer dissatisfaction? Have you been wondering what the meaning of CPQ is for your business and if you could benefit from a configure, price and quote (CPQ) solution? If so, read on to see what a configure-price-quote (CPQ) solution can do for your business.
What is CPQ?
In many organizations, sales, finance, legal, manufacturing, and development are separate business units, working as siloed entities. This not only hinders productivity but is inefficient, resulting in errors, delayed fulfillment, slow payment, and poor customer experiences.
CPQ is a powerful tool that streamlines the sales process. This is done by automating and optimizing the configuration, pricing, and quoting of products and services. By working in tandem with other platforms like customer relationship management CRM), enterprise resource planning (ERP), and other business systems, you can create a seamless workflow.
It starts with the configuration of products and services and concludes with the delivery of the proposal – reducing errors and speeding the process every step of the way. There’s a difference between CPQ processes and how order-to-cash (O2C) functions though. Check out our blog here for a deeper dive.
Which Industries Can Benefit from CPQ?
Before discussing which industries gain the most advantages from CPQ, let’s first look at a few simple questions.
- Do you sell less than four distinct products, only offer a few options or features, and have limited product configurations?
- Can sales reps create quotes and proposals in less than an hour – without the assistance of sales operations personnel or managers?
- Are your servicing agreements the same, regardless of the products or services purchased?
Unless you answered ‘no’ to one or more of the above, your business – regardless of the industry – is missing out on the advantages and opportunities of CPQ.
Businesses across virtually all verticals are reaping the benefits of CPQ software. The following is a representation of various industries (in alphabetical order) and how they are capitalizing on CPQ.
Globally, eCommerce sales are estimated to reach a whopping $58.74 trillion by 2028. With many of these purchases being placed by consumers, eCommerce businesses need a simple way for customers to configure their products, be advised if inventory is available, and calculate the price.
CPQ delivers on these needs and more, making it easy for customers to fill their shopping carts with the right configurations of the products they desire.
Insurance and finance
Services industries such as insurance and finance typically need to customize their offerings to meet fluctuating customer requirements. Both verticals require the ability to quickly and accurately create quotes based on customer-specific products. When narrowing down the vertical to insurance only, bundles, cross-sell and upsell policy options complicate the proposal process even further.
These complexities make CPQ a must to reduce manual effort, eliminate costly errors, and deliver a timely and accurate quote.
Given the variety within this sector, we’ve highlighted just the top four types of manufacturing organizations.
An industry term for the manufacturing of finished products of distinct items such as appliances, automobiles, furniture, toys, smartphones, airplanes, etc., discrete manufacturing companies have been long-time users of CPQ. Regardless of whether they are producing high volume/low complexity products or low volume/high complexity products, discrete manufacturing organizations need the ability to manage the inherent complexities associated with this industry. CPQ software solutions help with their myriad of business rules and data, eliminate order and manufacturing errors, and speed time to market.
This segment includes companies such as telecommunications, data storage, storage networking, electronics, computing and automation, network equipment, semiconductors, etc. Complex product configuration, competitive pressure, the need to support partner and customer configurations, and the ongoing demand for more innovative capabilities and functionality are just a few reasons this industry gravitates towards CPQ solutions. Consisting of numerous components and subcomponents, configuring high-tech products is riddled with complexities. CPQ provides users with the accurate, up-to-date data needed for precise configurations. Additionally, high-tech manufacturing companies are increasingly adopting CPQ solutions that either provide 2D or 3D visualization functionality or have the ability to integrate with visualization tools.
Medical device manufacturing
Also known as life sciences, this manufacturing segment is highly regulated. This further complicates the production, distribution, sales, and servicing of these complex products and services. Medical device manufacturers rely on CPQ to capture and manage large amounts of data, provide immediate and accurate pricing in a variety of currencies, manage contracts, and help to protect against noncompliance violations.
Whether vehicles or yachts, personalization and customization have become the norm for luxury transportation products. This, of course, offers some unique challenges. These companies need to design and produce opulent products that meet individual wants, needs and requirements. From managing hundreds to thousands of options, features, and configurations, to the materials and manufacturing processes, these manufacturers require a fool-proof way to deliver high-quality vehicles and watercraft. A CPQ solution takes the guesswork out of configurations and pricing, so they can deliver a quote that turns high-end shoppers into loyal customers.
In an industry where goods move fast and the needs and wants of customers fluctuate even faster, profit margins are remaining status quo or declining. To rise above the competition in a crowded marketplace, retailers need the ability to quickly turnover stock through seasonal sales, upselling, cross-selling, bundling, etc.
Doing this manually is not only time-consuming but error-prone and could negatively affect your profitability. CPQ takes the manual effort, guesswork, and human element out of the equation, enabling retailers to improve profit margins.
With an ever-increasing number of subscription-based companies, this business model continues to flourish. Most subscription-based companies, whether B2C or B2B, offer customers the ability to make purchases online – eliminating traditional back-office proposal creation.
While not specific to a certain industry, this sales model requires CPQ software to guide customers on their shopping journey – 1) select the appropriate products or services, 2) determine the right options or features, 3) create accurate configurations and pricing.
These businesses sell their products in bulk to retailers, who then sell the product to end customers. To be successful in this fast-paced environment, wholesalers need rapid data results and immediate query responses. Typically, CPQ is implemented on the back end of a B2B eCommerce site so that wholesale suppliers can provide accurate and immediate pricing.
Although we covered some of the key industries, there are countless others that could benefit from CPQ software. If your industry isn’t on the list, here’s a few questions to determine if you could benefit from a CPQ software solution.
- Do your offerings include options such as complementary products, features, services, maintenance, or training?
- Can these add-ons change depending on the products/services sold?
- Does the configuration of products or services affect option/feature selection?
If you answered ‘yes’ to any of the above, then CPQ is the right choice for you.
Close the Gap on CPQ Processes
As the products and services sold become increasingly complex, manually handling the configuration, pricing, and quoting of your offerings isn’t sustainable. With the right CPQ software solution, you’ll have the tools needed to:
- reduce errors
- increase sales process efficiency
- improve pricing accuracy and consistency
- enhance collaboration between sales and other departments
- maximize upsell and cross-sell revenue
- quickly respond to market shifts
- lessen administrative tasks
- increase customer satisfaction and loyalty
As part of our unified quote-to-cash platform, BillingPlatform’s CPQ solution enables organizations to offer a fast and seamless experience – from configuration through to customization, discounts, bundles, etc. – ensuring that your customers receive the products and services that best meet their needs.