Sales is a dynamic and ever-changing niche, subject to constant evolution as new technologies enter the market. Most recently, modern AI tools have been making waves in the space, used to predict prospect behaviour and streamline customer journeys from outreach to conversion. However, one tool that has remained a constant within any salesperson’s arsenal for decades is CPQ — or ‘Configure, Price, Quote’ software.
But what exactly is CPQ and how can you harness it? With so much information out there, it can be hard for fledgling businesses to know where to start — but if you’re scaling your trade, it might be time to get acquainted with the software.
Here, we’ll provide a simple overview of CPQ and take a closer look at how your business could benefit from it.
What is CPQ?
CPQ is a category of software used by businesses to generate complex, customised pricing quotes for a sold good or service. CPQ systems are typically based on a number of pre-programmed ‘rules’ that outline the compatibility of different components and combine each part into a viable product.
For example, CPQ has use cases within the healthcare industry in order to sell or lease medical equipment to hospitals. In the sale of an MRI machine, for instance, a seller can use CPQ to automate the configuration of complex components — such as chassis type, magnetic strength, and uprightness — and generate a tailored quote based on the customer’s needs.
CPQ can also be integrated with other systems such as CRM and ERP to verify that pricing is consistent with previous quotes or tailored to customer data. Ultimately, CPQ takes into account a wide-reaching range of variables that would be time-consuming and impractical to manually consider when generating quotes, such as:
- Sale quantities
- Customisations
- Compatibilities
- Bulk pricing
- Discounting
- Currency exchange rate
Why is CPQ important for businesses?
According to a recent report from Salesforce, salespeople spend just 28% of their working time actually making sales — leaving “the majority of their time consumed by other tasks like deal management and data entry.” By introducing a CPQ, a business stands to revolutionise its sales efforts, making the process more time-effective by trimming the downtime spent researching and manually calculating profit margins.
Research from SuperOffice finds that, as a result of these productivity benefits, companies using a CPQ experience a 105% larger average deal size and a 28% shorter sales cycle, with an expedited customer journey from quote to cash. CPQ also ensures that the most accurate pricing information is passed onto leads, by minimising the chance of human error in quoting calculations and streamlining approval from all relevant company departments — be it finance, legal, or sales.
In essence, CPQ eliminates many of the sales hurdles that businesses face, especially in their infancy. Salespeople are able to spend their time productively, accurate and reliable pricing information can be relayed to expedite prospective customers, and ultimately, revenue can be more fastly accrued.
How do you get the right CPQ software?
There are a range of different tools available, many of which can be integrated directly into a CRM like Salesforce. However, this has created a saturated market that is only set to grow, with the global CPQ industry expected to climb by $1.5 billion in value from 2021 to 2025. As a result, it can be challenging to find the perfect tool to suit your business needs.
Avoid using Excel alone
Many companies simply use Excel to produce their pricing calculations, as a familiar system that many already subscribe to. However, using Excel for CPQ is not without its limitations. Specialists from software provider EASA explain that, while Excel is “powerful, agile and familiar, sharing spreadsheets containing critical business logic creates many problems that can lead to chaos, including version confusion and potential IP exposure.”
This means that companies that distribute their CPQ spreadsheets directly, for example via email, might inadvertently expose their sensitive pricing information. This may also encourage version confusion, wherein users each work out of different iterations of the spreadsheet that could contain incorrect or outdated data.
Instead, it’s recommended that you research and opt for a dedicated CPQ that can streamline your workflow without requiring spreadsheets to be directly shared. EASA’s system, for example, converts tailored CPQ spreadsheets into accessible web applications that can be distributed externally without these liabilities, ensuring IP protection and minimising confusion.
If your sales process is being slowed by the speed of your quote generation, your prospects are drying up, or your current quoting is insecure, it may be time to invest in a dedicated CPQ tool.
