How to apply CPQ?
The term CPQ (Configure, Price, Quote) is increasingly finding its way into the marketing landscape. But the correct application of CPQ is an issue that many entrepreneurs, marketing and sales departments struggle with. We strongly believe in the power of CPQ, so it’s no wonder we made it our company name. In this blog we will discuss what CPQ exactly means and of course how you can apply CPQ within your own organization. And as our overview of possible applications in various industries shows, CPQ can be used practically anywhere.
What is CPQ and when is it relevant?
CPQ stands for Configure, Price, Quote and aims to streamline your sales process. Or even more precisely automate your quotation and order entry process. It guides the customer during the quotation and takes them through all the steps from preparing the quotation to the final invoice. For us, CPQ is therefore closely linked to Guided Selling and aims to increase sales and revenue. But we’ll get to that later, first the full explanation from CPQ:
- Configure (configure): the internal employees, dealer and/or customer can put together his or her product and/or service according to their own preferences. During configuration, only producible combinations can be chosen.
- Price (pricing): the user immediately sees the effect on the price of the chosen options during configuration. The internal user can play with discounts and still have a good margin. The customer can therefore configure the ideal pricing.
- Quote (offer): after successfully configuring the product and/or service, it can be immediately quoted in dazzling documents. But the follow-up documents such as a manual, Bill of Material, sales order and product information for what has been configured can also be created automatically.
CPQ is certainly not relevant for every company. CPQ comes into its own especially when you have different product combinations. It enables your customer to draw up quotations themselves, but for complex products it can also be a guideline for your sales team with which they can start the sales conversation. CPQ enables the user to easily select the right products and product combinations, in fact CPQ uses it to prepare the quotation itself. And the big advantage? It prevents impossibilities in the production process or unsupported product combinations while making optimal use of all up- and cross-sell opportunities.
Look at the sales process differently via CPQ
The sales process in many organizations is a process of habits, because it has been done that way for years. That it takes a lot of time seems to be taken for granted. That’s how it always goes. With Excel sheets (sometimes very extensive) products are compiled manually to arrive at a calculation, then the quotation document is then formatted again with Word. It is precisely for these types of organizations that an automated CPQ can take a different look at the sales process. That is why CPQ can also be used perfectly as quotation tool.
CPQing Solutions works with a CPQ-configurator which prevents incorrect combinations from being put together. In this configurator you set the variations and restrictions of the products or combinations to be formed. All this is done via a rules engine in which knowledge rules (configuration and calculation rules) are recorded – without programming knowledge– which always compile the product 100% correctly.
We are therefore convinced that every sales process can be optimized thanks to the implementation of CPQ, which increases and accelerates sales effectiveness. If only because errors in quotations are eliminated, quotations can be issued immediately and even customer or region-specific prices (or combinations) can be used via the knowledge rules. In this way, an overview is always maintained and own margins can be protected, even when working with customer-specific discounts. With CPQ you ensure the right product, for the right customer, at the desired time, without a long personal process.
Examples of CPQ applications
If you are convinced of CPQ, but still have doubts about its application within your organization, we would like to give you some examples of how our customers have used CPQ.
Van Zelst Automaten makes an average of 1,000 quotations per year for installing coffee machines and supplying coffee. The quotations differ according to the type of device, different types of services and peripheral assortment to be supplied (coffee, soup, cups, sugar, etc.). In addition to a lot of machine-specific information, financial knowledge was also required to prepare the quotations, because amounts quoted at van Zelst Automaten depend on the contract type of the machines (including rent, purchase or loan). By recording all this with knowledge rules of the CPQ software, the lead time per quotation has been reduced from one and a half days to fifteen minutes.
Roelofsen supplies various types of unique horse transport solutions. The range ranges from a basic Parados model for two horses to luxury horse trucks with a kitchen, living room and more facilities than the average hotel room. Thanks to the implementation of CPQ, sales representatives and dealers can easily go through the configuration process and immediately prepare a suitable quote. These are then shot directly into Isah. For example, there is a direct link to the ERP system.
You can read more customer stories here, but even if your sales process is different from these companies, we can probably help you optimize it. It is not for nothing that we use the motto: “We already have solutions for problems that you have never thought about”. We can handle all your complexity of product and pricing rules. Contact contact, or request a demo right away.