The Pipeline Moves When Sales Meets CPQ
Organizations that use configure-price-quote (CPQ) software during their sales processes see significant benefits, including shorter buying cycles and larger deals, Constellation Research reported recently.
At a time when selling cycles are becoming increasingly longer and more complicated by the day, CPQ automation tools can help reps streamline the process of giving customers price estimates and information regarding their products and services, the report concludes.
“The process of formulating a quote manually can take upward of 10 business days, lengthening the sales cycle and introducing new risks to the deal,” writes Cindy Zhou, vice president and principal analyst at Constellation, in the report. Such delays are typically caused by a broken process that forces salespeople to coordinate with multiple technologies and people just to configure product bundles, determine their availability and pricing, and apply discounts and commercial terms.
With CPQ, the research house finds, companies can reduce what could take days to minutes. “Organizations that do not use technology to automate the quote and pricing process are at a significant disadvantage,” Zhou writes.
Organizations that rely on manual quoting processes encounter more errors, yet many are slow to adjust. “What surprised me after speaking with many CPQ users was how much pain they tolerated with manual quotes before they decided to look for a software solution,” Zhou says.
In most cases, it took one substantial mistake or several smaller ones to finally push them to seek a technology solution, Zhou says, noting that one company she encountered had grown its sales team to 150 people and experienced quite a bit of erroneous quotes and missed opportunities before deciding to bring in CPQ.
Fortunately, while CPQ tools were once feasible only for big firms that could foot a hefty bill, they are now more accessible and easier to implement, thanks to advancements in cloud computing and lowered costs. And because of the changes, automating the process between opportunity and cash has quickly become necessary.
“If an organization has global complexity or over 25 sellers and they are still manually processing quotes, there is no harm in considering a CPQ solution,” Zhou says.
According to Zhou, CPQ users see time savings of more than 300 percent using the tools. A global design firm told Constellation that a sales quote process that used to take three days can now be completed in less than an hour.
Users of CPQ tend to increase deal sizes and profits, too, since the tools can stimulate upsell and cross-sell opportunities.
“With manual quotes, sellers can easily overlook related products or services that could have increased the deal size or profits,” Zhou points out. “CPQ helps eliminate these situations by auto-configuring pairings of related products and services. An example is automatically attaching premium support with a product. Also, if their sellers are spending days coordinating with multiple internal departments to produce a quote, that is valuable time they could have spent with the prospect to turn that quote into a contract.”
CPQ can also help companies cater to customers with more positive experiences, as it gives end users a holistic view of a customers’ prior activity and engagements via CRM integrations. It can also help reduce the amount of time sellers spend carrying out repetitive administrative tasks, such as entering data and negotiating for pricing.
And while CPQ solutions have clear and numerous benefits, companies must put in their due diligence when evaluating the technologies. Zhou recommends asking the following questions:
• Is the software built into your CRM system, and if not, how tight is the integration?
• How long will it take users to learn and adopt the system?
• Do organizations like yours use the software?
• How do the vendor’s customers feel about them? Do they tend to renew their licenses?
• What investments are required to maintain the software?
It’s probably not a good idea to make a commitment and implement any technology until these questions have been asked and answered, she says.