Are you looking to upscale your business, but are unsure about which measures to take? The most common means of upscaling typically center the adoption of software and automation to cater to a larger number of clientele. This article will aid your consideration of a CPQ solution, starting with an explanation of what it achieves.
What is CPQ
CPQ software automates the configuration, pricing and quoting processes. Its primary goal is to maximize the time efficiency of businesses to ensure that sales teams can be freed from administrative tasks. In turn, this enables them to dedicate more time towards finalizing deals, thus directly impacting lead conversion rates and revenue generation.
Signs CPQ is needed by your business
The first indication that your business will benefit from implementing CPQ software is if your products and services are accompanied by additional products, training, or service and maintenance options which vary in accordance to the product at hand. Other indicators include options which are significantly unintuitive, and may change depending on factors such as the client’s current configuration or the model number of the product being sold.
Beyond these core indicators are other factors such as the elements your organization struggles with and the sector it is a part of.
Your business has difficulty with the following areas
- Discounting and approval rules
- Complex pricing
- Navigating multiple templates
- Navigating multiple price books
- Long sales cycle
- Meeting revenue targets
- Sending accurate quotes
- Low sales efficiency
- Your organization are dependent upon one person to review all quotes for configuration approval
You work in the following industries
- Health insurance
- Computer software
- Computer hardware
- Medical devices
If you have read the above information but you are still unsure about whether CPQ software will benefit your organization, there are additional steps which you can take. Reviewing your bundle options, product catalog, and sales process is the best place to start. The preceding step is to utilize the information you gather about your business’s functioning to test out a customized CPQ solution. This form of trial is referred to as ‘proof of concept’ (POC). However, formulating a POC can take anywhere between 4-6 weeks, so this method consumes time and resources despite being effective. Once the POC has been formulated you need to designate a handful of sales reps to trial it, and a member from sales operations to assess the efficiency of CPQ. This assessment normally takes an additional few weeks and feedback materialized through video conferencing. Due to the nature of this trial, it is only recommended if the verdict on CPQ adoption is genuinely blurred. This can be tested further by reading the points below which outline the signs that CPQ is not a requirement for your business.
Signs that CPQ isn’t needed by your business
Now that the signs you need CPQ have been established, it is important to look at signs that you do not need it. This is to ensure further clarity and avoid wasting resources such as time and money.
You have a limited product catalog
The first sign that CPQ is not a requirement for the cohesive running of your organization is if you have a limited product catalog. By limited we mean that you offer between 1-5 products which are accompanied by minimal additions. Examples of such additions may be training, maintenance options or other add ons. If this is the case, then it is extremely likely that the configuration for such products will also be simplistic and will not largely differ based on factors like customer assets, requirements, and the product at hand.
You follow standardized SLAs and legal terms
If your company’s clients interact with you based on the same SLAs (service level agreements) which do not vary depending upon the product at hand, CPQ will not be needed for simplification. The same point can be made if the majority of your clientele ask for minimal changes and agree to standard legal language/vernacular.
You do not struggle with quote or contract generation
If sales representatives can successfully generate a quote quickly and efficiently without the help of the sales operations team or manager, then this is a significant indicator that CPQ software is not required. It also indicates the simplicity of your product bundle options and product catalog.
You implement custom contracts
In this scenario, the majority of your clientele will purchase fully customized solutions and services. Therefore, most of your interactions will be in adherence to an individualized need. The general advice is that if “widgets being sold” cannot be repeated across multiple contracts, then CPQ solutions will not be of great use to you.
You operate in a high volume industry
High volume industries operate with the aim of attaining a price quote quickly and efficiently. Normally, the intention is to secure this quote during the first screening. Because of the fact that CPQ offers guided selling tools with multiple screens, CPQ will merely increase the time it takes to secure a quote. Therefore if your business forms part of a high volume industry, CPQ will only decrease the efficiency you require.
CPQ software centers the configuration, quotation, and pricing processes. The aim of the software is to be time efficient, thus shortening the length of the sales cycle. This time efficiency is of great importance to the retention of customers, whilst also allowing for more time to be spent on sales and thus the generation of revenue. If your business offers services which are accompanied by additional products or training then it is likely to be eligible for needing CPQ. Other indicators include struggling with sales efficiency and creating accurate quotes. However, if you utilize a limited product catalog or follow standardized SLAs then the software is not required. Beyond this, operating in a high volume industry and implementing custom contracts also indicate that CPQ is something you can avoid.