What exactly is CPQ (Configure, Price, Quote)? Is your business in need of it? -
Finding the right methods to simplify your sales procedures can be key to running an effective and profitable sales operation. A popular method of managing and automating parts of the sales process is using CPQ (Configure, Price, Quote) Software. What exactly is CPQ and what are the primary advantages? Most importantly, do your business need it?
What exactly is what is a CPQ? What are its benefits?
CQ (Configure Price Quote) is a form of software used to sell that allows sales reps to quickly and effortlessly configure their products and services, generate accurate pricing, and create estimates to email to the customers.
Here are a few of the key advantages of using a CPQ:
- Accurate Product Configuration:It's simpler for sales representatives to build a customized package of goods and services based on a prospect's specific demands and needs. Because they are integrated into the system, CPQs are also less likely to cause chances for errors or misunderstandings.
- Professionally designed quotes for prospective customers:CPQs often have customizable templates that can standardize the look of quotations and make them simple to read for prospective customers. It increases your odds of closing deals more quickly.
When is it time to utilize the CPQ?
Companies typically think about a CPQ system when they want to do the following after hitting a certain point in growth
- Price compliance and consistency between sales reps
- Streamlining quote creation and management
- Shortening overall sales cycle
They are especially crucial to consider when your sales department is sucked into many administrative duties that they are able to handle as well as those who want to establish an organization-wide process that is scalable. Also, price compliance and consistency is important for when you want to ensure that your sales personnel aren't making unauthorized changes to pricing to meet targets.
What most don't know is that CPQs can be costly, complex, and difficult to implement and maintain.
What are the advantages and advantages of using an CPQ?
Below are some of the disadvantages that can be encountered in using CPQ systems:
- It can be expensive. There is a cost upfront when choosing to implement a CPQ and the ongoing fees for subscriptions and can end up with it being a major expense for companies.
- It can take months to implement. Due to the complexity of CPQ software, it may take months to implement it and usually requires specific consultants to help get it off of the ground.
- The system is complex to operate and maintain. They can be rigid and are difficult to alter, and often requires a really solid RevOps/Operations team to ensure it is maintained. They often require a massive overhaul whenever packaging or pricing needs to be updated.
While CPQs could be beneficial especially in enforcing price conformity as well as consistency challenges in implementing and maintaining the tool might be detrimental to your operational and sales reps teams' productivity.
Also, do you really need it?
Generally, CPQs are designed for big companies with a extensive product catalogue. There are however a couple of things to take into consideration in particular for small and medium-sized businesses.
- Dimensions and Complexity of Sales and Operations Teams
- If you have a small sales team, implementing a CPQ isn't required. It could be too much for what you're trying do, even more so if don't have a strong operations team to back up the sales staff. The effectiveness of CPQ software is heavily dependent on the implementation and upkeep which is usually handled by the Revenue Operations / Sales Operations team. A strong RevOps / Operations team is key in maximizing the benefits of a software similar to CPQ.
- If you do have a large sales team as well as a strong RevOps team in place to manage the integrity of your CPQ solution, then this could be a good idea.
- Product and Service Catalog
- If you offer standard products or services, then a CPQ might not be essential. An instrument like CPQ is ideal to create complex services or products which require customisation and configuration per account. But, there are other tools that can offer this advantage without having to go through the entire process of setting up a CPQ.
What's your alternative? (Especially for SMBs)
Based on the purpose depending on the use case, there's a variety different tools are suitable for use in your business.
Most often, small businesses will benefit from using a dedicated quoting software, which can help in generating quotations quickly and precisely. A lot of these softwares provide a variety of features, including product and pricing templates that can be customized, as well as the capability to manage difficult configurations. They are typically the most important features you'd expect from the CPQ software. It is oftentimes a more powerful and scalable tool in comparison to a spreadsheet software. If you're looking for a complete list of quoting tools, you can look up HubSpot's list below.
However, one tool which offers most of the core benefits from a CPQ tool is IQ.
IQ (which means Interactive Quotes) is a light CPQ option that's designed to be used by small-medium-sized companies.
For RevOps and Operations teams, it's a more flexible solution to implement price compliance and consistency among reps. It also provides a good approval workflow for the quoting process.
It also gives real-time analysis in the form of eSignatures, payments, and eSignatures that make for a faster and faster quote-to-cash procedure.
