What exactly is CPQ (Configure Price Quote)? Do you need it for your company? -
The right methods to simplify the sales process could be the key to running an effective and profitable sales operation. One of the most popular methods for managing and automating parts of sales processes is by using CPQ (Configure, Price quote) Software. But, what exactly is CPQ in terms of its main benefits? In addition, is your company require it?
What exactly is a CPQ? What are the benefits of a CPQ?
The CPQ (Configure Price Quote) is a kind of sales software that allows sales representatives to swiftly and effortlessly configure their items and services, calculate exact pricing, and then create quotes to be sent to the customers.
Here are the major benefits from using a CPQ:
- Accurate Product Configuration:It's easier for sales reps to design a customized set of services and products based on a prospect's specific needs and requirements. Since these are configured into the system, CPQs can also minimize the possibility of mistakes or misinterpretations.
- Professionally designed quotes for prospective customers:CPQs often have customizable templates, which can be used to standardize the style of the quotes, making them easy to read for prospective clients. It increases your odds to close deals quicker.
When is it time to utilize an CPQ?
The majority of businesses think about the possibility of implementing a CPQ approach when they are trying to achieve the following, after hitting a certain point of growth:
- Consistency and price compliance within sales reps
- The process of creating and managing quotes is streamlining.
- Shortening overall sales cycle
They are especially crucial for when your sales team gets caught up in more administrative tasks than they're able to take on as well as when you want to implement efficient processes that can be scaled within your organization. Additionally, price conformity and consistent pricing is essential those who want to make sure that your sales team isn't making unauthorized changes to pricing to meet targets.
What most aren't aware of is that CPQs can be costly complicated, difficult, and time-consuming to maintain and implement.
What are the negatives to using an CPQ?
Here are some disadvantages in using CPQ systems:
- The cost can be high. There are upfront costs when choosing to implement the CPQ and annual subscription costs that can result in the cost being an cost for businesses to invest in.
- It can take months to implement. Due to the complex nature of CPQ program, it could be a long time to get it implemented and typically requires specialized consultants to get it off the starting point.
- The system is complex to operate and maintain. The CPQs are inflexible and are difficult to alter as well, and usually require a robust RevOps/Operations department to ensure it is maintained. The process often calls for a major overhaul whenever packaging or pricing needs to be changed.
Although CPQs could be beneficial especially in enforcing price conformity with consistency and conformity, difficulties in the implementation and maintenance of this tool could come in the way of sales reps' and operations teams' performance.
So, do you really need it?
In general, CPQs are designed for larger companies that have a complex product catalog. However, there are a few factors to consider in particular for small and medium-sized businesses.
- Size and Complexity of Sales and Operations Teams
- If you've got a tiny sales force, then implementing a CPQ may not be necessary. The system might be too much for what you're trying to accomplish; even more so if do not have an experienced operations team to back up your sales team. The success of CPQ software is heavily dependent on the implementation and upkeep which is usually handled by the Revenue Operations / Sales Operations team. Building a solid RevOps / Operations team is crucial for getting the best value of an application such as CPQ.
- If you do have an extensive sales force and a strong RevOps team to maintain the integrity of your CPQ solution, it could potentially make sense.
- Product and Service Catalog
- If you are selling simple, standardized items or services, the use of a CPQ may not be essential. The tool CPQ can be used when you are selling complex products or services which require customisation and configuration for each account. There are other options that could provide this benefit without going to the whole process of creating an CPQ.
What's the best alternative? (Especially for SMBs)
Based on the purpose depending on the use case, there's a variety of other tools that could be used for your business.
Typically, SMBs can greatly advantage from using a specific quotation software that can help in generating quotations quickly and precisely. A lot of these quoting programs already provide a variety of features, including product and pricing databases, customizable templates, and the ability to deal with complicated configurations. These are mostly the key elements you'd need from a CPQ software. This is typically a more powerful and scalable tool in comparison with a spreadsheet manual application. For a list of comprehensive quotation tools, check out HubSpot's list here.
But, one instrument which offers most of the core benefits from the CPQ instrument is IQ.
IQ (which stands for Interactive Quotes) is a lightweight CPQ option that's designed to be used by small-medium-sized companies.
For RevOps and Operations teams It's a flexible option to ensure price conformance and consistency between your reps, and provides an efficient approval process for your quote process.
The platform also provides real-time analytics as well as eSignatures and payment, for a simpler and faster quote-to-cash procedure.
