What Is CPQ (Configure, Price, Quote)?

CPQ (or configure, price, quote) software is a sales tool for companies to quickly and accurately generate quotes for orders. CPQ applications often work in tandem with CRM platforms, ERP programs, and other business technology, which helps ensure integrated data and accuracy. Quotes produced with CPQ software are automated according to a preprogrammed set of rules, ensuring error-free pricing that takes into account quantities, discounts, customisations, optional features of products, multiple revenue types, and incompatibilities.

Sales reps spend just 34% of their time actually selling, and research shows that part of a sales team’s non-selling time is spent generating quotes, proposals, and gaining approvals. When CPQ is deployed and used correctly, users have reported:

• 10 times faster quote generation
• 95% reduction in approval time
• Two times faster moving from quote to cash
• 30% quicker ramp for new reps

With its functionality and potential for excellent return on investment (ROI), CPQ software is on the horizon for many companies. CPQ adoption will continue to grow as companies see the real benefits of using it in conjunction with their CRM and ERP systems.

As mentioned previously, CPQ stands for ‘configure, price, quote’ and is generally used to describe software tools designed to help organisations create and share accurate price quotes quickly. The best CPQ solutions take it further, by streamlining the entire contract process.

Even when you see the benefits of CPQ solutions, you may think your current process still fits the bill. But even if your current sales quote generation seems to be enough, be on the lookout for these six signs that you need CPQ:

• You’re using legacy quote configurators.
• Revenue growth is outpacing your ability to operate.
• You’re building a recurring revenue stream.
• You need practical ways to implement more advanced business solutions, such as software with artificial intelligence built in.
• You’re sending inaccurate sales quotes to prospects.
• Someone manually reviews all your sales quotes.

Most companies that don’t use CPQ software have a sales process that’s slowed by the time it takes sales to deliver accurate quotes. However, these organisations rightfully don’t want to speed up the process if it means giving incorrect prices or unapproved discounts, or promising customers configurations that are unavailable. Thanks to a slew of variables that can change rapidly, the sales quote review process can become a bottleneck to closing sales. This means many companies struggle to get quotes to customers in a timely manner.

Pricing can be a major pain point for sales teams. For example, in an effort to make the sale, a salesperson may offer too large of a discount to a customer, and that reduced price ends up costing the company more than it was worth. It could also make future negotiations with the customer difficult as the salesperson tries to secure a fair price for both the customer and the company.

One barrier to delivering timely quotes occurs when sales reps want to offer the customer options, configurations, or prices but have to go digging through spreadsheets to find the right pricing rules to create the quote. CPQ avoids this conflict — with the customer and within the organisation — by clearly establishing preprogrammed rules. With a CPQ application, every conceivable configuration, price, discount, and scenario can be specified, making the product configurations and options straightforward based on company capability. Then, when the rep builds the quote, CPQ walks them through the process to create a complete, accurate quote using a customised template, all within minutes. It’s automatically routed to the correct parties for approval, shortening the wait time even more.

Giving reps the power to build a price quote that they know is preapproved and won’t be delayed waiting for reviews empowers them to drive their own deals.

CPQ software allows sales to deliver quotes quickly thanks to a streamlined quoting process — the result of the customised rules and pricing CPQ automation allows. This is true for companies with one-off sales, subscription pricing, recurring billing, and other revenue models.

With CPQ software, companies can reap the benefits of a standardised process:

• Consistent pricing and discounting control
• Multi-currency support
• Contract pricing, subscription pricing (also known as recurring billing or usage-based pricing), and channel and partner pricing
• Advanced discounting and approval workflows

CPQ software also manages the tasks associated with repeat orders and subscriptions, automatically generating renewal quotes and applying existing contracted terms and conditions to add-ons.

Taking into account complex options and configurations, bulk pricing and discount rules, CPQ’s automation allows for personalised quotes that were once complex to build and deliver quickly to the customer. A fast sales quote process makes your company more efficient and knowledgeable and allows the deal to coast through the sales pipeline. This helps customers view your company as a partner that’s interested in helping them succeed.

While this solution certainly helps salespeople create accurate quotes quickly, CPQ’s effects on efficiency are more far-reaching. One of the biggest advantages of CPQ software is that the entire company can be involved. CPQ deployments, done right, allow sales, renewals, finance, and legal to each seamlessly have a hand in the different configurations. That means you won’t have salespeople selling configurations that aren’t possible financially or legally.

With CPQ, you can also create sensible configurations and bundles. Instead of salespeople determining configurations independently, you can have the product's subject matter expert (SME) determine the best options and configurations for your customers. These are entered into the CPQ system as rules so salespeople can offer the best possible options for your customers. When cross-functional teams work together, everyone wins. Your product becomes more solution-oriented and customer-centric than ever before.

The sales department may be the primary user, but CPQ software isn’t just for them to use. You can also optimise CPQ applications to benefit the entire organisation. In successful deployments, your teams can use CPQ sales analytics to find demand and product trends.

Often sales, finance, legal, manufacturing, and development are very separate entities and are siloed within an organisation. CPQ software has proven to be a link between departments, allowing communication and standards to be firmly set in place.

A signed quote is the start of a series of events that brings the entire company into play. In fact, “every detail required by downstream teams resides within the quote.” That’s a tall order, which is why a CPQ solution needs to be used. It reduces errors and makes sure the subsequent steps can take place. Once a quote has been signed by the customer:

1. An order is generated.
2. An invoice is sent.
3. Payment is received.
4. Revenue is recognised.
5. Audit trails are analysed.
6. Orders are fulfilled.

The accuracy of your quote affects every department. CPQ software integrates with your existing business technology to make the entire process smoother.

Your CPQ program can be integrated with enterprise resource planning (ERP) systems, and when such integrations are established, entire processes are streamlined. CPQ and ERP integration offers a connection between sales and operations and becomes a major benefit of adopting a CPQ solution. Sales can monitor the status of deliveries, executives can monitor the sales process, and operations can monitor trends to plan for new deals. Sales can work with product design. Better, data-driven decisions can be made to meet customer needs. Combining CPQ with ERP leads to a reduction in operating costs, and on-time production is greater because operations and materials and manufacturing departments are in the loop.

According to Salesforce Research’s “State of Sales” report, only 34% of a salesperson’s time is actually spent selling: meeting customers in person, connecting with customers virtually, and prospecting. This number leads to three important concepts:

• The more your processes can be streamlined, the more time salespeople have to meet with customers and make sales.
• Any time that can be freed up for sales to talk with customers is a plus.
• Your salespeople need to be able to make effective, informed sales calls.

Making great calls is possible through CRM applications that allow in-depth research and note-taking capabilities for users. Furthermore, when you have access to sales enablement documents and information, you can help lead the customer through their sales journey while showcasing your company as a thought leader and trusted advisor in the field.

When it comes time to complete the transaction and close the sale, CPQ software helps make the seamless transition from sales journey to decision. Your CPQ program lets you accurately configure products, apply pricing and quantity discounts, and have approvals already programmed into the system. This automation makes you look like a true sales professional, giving customers confidence in your processes and your company.

While business software applications like your CRM platform, knowledge management system, and web conferencing tools have increased the possibility of more efficient sales processes, CPQ applications have widespread effects on efficiency and revenue for the company.

Using CPQ applications allows sales organisations to focus on selling and replicating best sales practices rather than constantly retraining sales staff. When delivering quotes and closing sales becomes an effortless process, sales professionals see a growth in success — and with it, a growth in the company’s bottom line.

With these advantages in mind, it’s easy to see why so many companies are investing in CPQ solutions. It’s also easy to see why so many different vendors have decided to start offering CPQ services. With such a range of possibilities to choose from, you might be having trouble finding the best CPQ for your business.

To help get you started, we’ve identified the eight most important things to look for when selecting a CPQ solutions product.

Getting contracts created and quotes delivered means keeping communication channels with your customers open. However, unless you’re the only person in your organisation dealing with those customers, it also means communicating with members of your team. Superior CPQ solutions provide a unified central hub, where you can easily coordinate not only with clients, but also with any of your colleagues who are involved in the process.

The point of any CPQ tool is to make things easier for all parties involved. In order to do this, it needs to be accessible and usable without large amounts of training. A simple interface, coupled with intuitive controls, can help ensure that you are providing your customers with the best cash-to-quote service, even if you aren’t an IT professional.

Your customers aren’t the only ones who should be demanding personalisation. In order for your business to get the most out of your CPQ solution, it should be flexible enough to align with your existing processes and systems. Customisation and configuration options are a must, and will help you get the most out of your investment.

Finding a CPQ solution that benefits your business today is only part of the issue. As your business continues to grow and change, it won’t do you much good if your CPQ tool can’t grow along with it. When choosing a CPQ solution, be sure to look for something that can handle your workload, whether that load is small or large.

Just as the best customer relationship management (CRM) systems are based in the cloud, the most effective CPQ tools likewise take advantage of cloud technology. Cloud-based CPQ requires no in-house hardware to run; instead, it can be accessed remotely over any internet connection. This makes it possible for users to access the CPQ from any platform, and coordinate with others regardless of operating system.

Even the most user-friendly, intuitive CPQ solutions might throw you for a loop now and then. When that happens, you’ll want more than some online troubleshooting guide to help get everything back on track. Multichannel support options, including web chat and telephone options, help keep you in control at all times.

When opportunity strikes, the last thing you want to do is have to rush to the office. Modern business professionals don’t confine themselves to their cubicles. CPQ solutions that are fully mobile compatible give you the power to share product information, send out contracts, create quotes, and finalise deals, all while on the go. And thanks to cloud technology, your CPQ solution will be updated in real time to reflect any changes you may have made to the data — no matter where you are when you make those changes.

When it comes to CPQ pricing, cheaper isn’t always better. As the adage suggests, you get what you pay for. Of course, that’s not to say that the most expensive option is necessarily the best one either. When considering a CPQ solution, research all of the advantages and disadvantages for each option before you consider the price. Read online reviews, take advantage of any free trials that might be available, and be willing to make an investment if it looks like it will pay for itself.

How much does CPQ software cost? There is a broad range of CPQ pricing, so as long as you shop around, you should be able to find what you want.

Now that you know eight things to look for, here are a few red flags to be aware of.

1. It can’t handle multiple sales channels. Remember that each sales channel (retailers, ecommerce sellers, dealers, and distributors) will have unique pricing and product selections, so your CPQ needs to handle different user experiences.
2. It won’t scale with your business. If you want your business to grow, don’t let your software hold you back. You want your systems to be able to grow with your business.
3. It won’t integrate with your other software. Your CPQ should play nicely with your other systems, including CRM and ERP.

Make sure the CPQ software vendor you choose can deliver.

In a word – yes. Advanced CPQ software lets you tailor contracts and sales quotes to individual customers, implementing discounts, special offers, or other modifications to the standard price. Additionally, by drawing from reliable data sources to autopopulate fields, CPQ eliminates the potential for user error. Because of CPQ’s capabilities, the market for it is growing at a rapid pace.

The benefits of CPQ software include formalising rules and pricing, establishing standardisation across the company, increasing company wide efficiency, and more. The most important benefits of CPQ software, however, are the proven increase in revenues and decrease in costs.

Successful CPQ deployment depends on providing careful training and support to your sales staff and implementing CPQ in tandem with other departments. When done right, investing in CPQ software helps your company lead the way to a more effective — and, importantly, profitable — sales process.

No business is able to turn every one of its leads into clients. However, with Salesforce CPQ, there’s no reason why you should ever have to worry about those leads calling it quits at the finish line.

Salesforce CPQ is the most trusted CPQ solution available. In fact, in a CPQ software comparison performed by G2 Crowd and based on customer satisfaction and scale, Salesforce scored higher than any of the other CPQ providers on the list.

Yes, the final steps of the sales process can be complex, but with a Salesforce CPQ solution, turning leads into customers is as easy as pushing a button.