Learn More About CPQ Software
What is CPQ Software?
Configure, price, quote (CPQ) software automates the quoting process by helping produce efficient, error-free quotes for vendors that have personalized, customizable offerings. Ideally, salespeople can deliver the proper proposal to each customer based on their specific wants and needs.
CPQ software facilitates many different pricing options, including special pricing, bundle pricing, or volume pricing. When managing salespeople, it’s likely that sales reps may apply extra discounts that may or may not be realistic. It can certainly be embarrassing when one misquotes prices to a customer, which can even result in a lost deal. As a result, keeping track of current pricing, discount rules, and bundle pricing can be a headache. More importantly, it can be catastrophic to the bottom line when discounts are applied incorrectly or inconsistently.
CPQ software aids in managing pricing for all of the user’s products and services. It enables sales teams to create custom quotes with consistent pricing, including available discounts. Advanced pricing rules can be configured to handle volume discounts, percent-of-total subscriptions, pre-negotiated contract pricing, and channel and partner pricing. With CPQ systems, users can ensure their pricing is accurate and optimized.
With just a few clicks, sales reps can create quotes, send them in an email, and include an e-signature or integrate with e-signature software to close the deal. CPQ software automatically pulls in the configured products and pricing, tying the whole process together and ensuring consistency throughout the customer experience.
What Types of CPQ Software Exist?
There are two main types of CPQ software, and they center on the system’s method of deployment. Depending on one’s business needs, an on-premises CPQ or cloud-based SaaS CPQ tool can be selected.
Cloud-based CPQ
This type of quote software falls under the category of SaaS. Cloud-based CPQ systems allow teams to work within the program from anywhere on multiple devices. The subscription-based pricing model of cloud-based CPQ software is often appealing to companies expecting rapid growth or that have salespeople who are frequently traveling.
On-premises CPQ
An on-premises CPQ software can only be accessed on a computer where the hardware is installed. This type of CPQ system offers more security and can be used with an internet connection. It also allows for greater customer configuration of the software.
What are Common Features of CPQ Software?
The following are some of the core features within CPQ software:
CRM compatibility: Most configuration and quotation products are built to work with at least one existing customer relationship management (CRM) tool. Some are native to specific CRM systems, while others are designed to integrate with multiple CRM products. If a company uses CRM software, it is vital to choose a CPQ platform that operates seamlessly with it.
Customization: Every company will have its own set of needs for its CPQ software—different products, discounts, bundles, and more. The product a user selects must be able to fit all the needs of their sales team and the products they offer.
Mobile: The ability for sales reps to create quotes in the field via their smartphones or tablets can cut down the time of a sales cycle. It is essential to understand the functionality of a configuration and quotation software’s mobile offering and the different platforms on which it is available.
Branded contracts: Small details, like branding on sales documents, go a long way in impressing customers and closing deals. Through a CPQ solution, users may be able to produce contracts and proposals with the added touch of logos or other brand signifiers.
Other features of CPQ software: Commercial Rules, Configuration Ease of Admin, Document Admin, E-Commerce, Grouping, Internationalization, Offline Support, Pricing Administration, Terms and Conditions, Version Control, and Visual Configuration.
What are the top CPQ software for streamlining sales processes?
When streamlining sales processes, these are some of the CPQ software based on G2 user reviews:
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Salesforce Revenue Cloud: Fully integrated with Salesforce CRM, it offers guided selling, automated renewals, and dynamic pricing rules, making it ideal for businesses already using Salesforce.
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Oracle CPQ: Designed for large enterprises, it provides advanced configuration, global pricing support, and AI-driven insights, ensuring scalability and performance.
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Dealhub.io: Offers a zero-code platform with integrated CPQ, CLM, and billing solutions, featuring a Sales Playbook and digital DealRoom for streamlined sales processes.
What are the Benefits of CPQ Software?
CPQ software have a host of benefits, as mentioned below.
Simplify the quoting process: Many businesses require extremely complex quoting processes due to different contract types and business rules. With CQM software, users can create a quote that automatically abides by any existing limiting parameters. By configuring the tool to a user’s quoting needs, they can eliminate errors and allow new sales reps to get up and running faster.
Reduce quote reduction time: Users of CPQ cloud tools consistently say that the software provides a huge benefit during the quoting process. The software stores pricing and sales data, sales representatives can create accurate quotes consistently. Since all sales data is housed in one central location, users can eliminate the piles and piles of Excel spreadsheets from their quote generation process. This significantly reduces quote reduction time, enabling sales reps to spend more time selling.
Streamline approval process: Sales approval processes can be tedious and disorganized. CPQ software can automate this process so that the moment a quote is created, it is automatically distributed to all employees involved in the approval process. Additionally, once a quote is approved by all hands, it can automatically be electronically delivered to the customer. CPQ software also allows the user to configure the process to their needs. So if a sales rep wants to generate a common quote with no special pricing or details, that quote can go directly to a customer. Users can also configure the software to trigger approval if a certain discount is quoted. Since CPQ tools support so many different pricing scenarios, approvers don’t need to waste their time on every quote but, rather, the ones that call for a closer look.
Increase average deal size via cross-selling and upselling: In the final stage of the sales cycle, buyers are often open to additional deals presented through cross-selling and upselling. CPQ software automates the process of identifying extra offerings by providing recommendations based on order history.
Gain sales insights: Since all sales data is available in one central location, sales teams can gain valuable insights into what is working and what’s not. This data is useful in determining things like how often products are being discounted and how long a sales approval takes. Users can also search previous sales transactions, which can be useful for copying, revising, and clarifying orders. CPQ systems offer real-time analytics for users to have an up-to-date view of market trends. This kind of information can lead to bigger deals being closed quicker.
Increase the effectiveness of your sales team: Salespeople only spend about one-third of their time selling and interacting with potential customers. The rest of the time is spent filling out spreadsheets, developing quotes, and attending to various administrative tasks that keep the business running. However, implementing a CPQ tool into a company’s workplace decreases time spent handling logistics and increases opportunities for building relationships with buyers. Automation, thus, allows salespeople to work more efficiently and allocate more time to the most crucial task in selling: working directly with leads.
Who Uses CPQ Software?
Although CPQ tools can be advantageous toward a business’ bottom line, they are generally only employed by sales departments within large and mid-sized businesses. Small businesses often don’t invest in this tool because of its perceived cost and complexity. However, many vendors have begun offering CPQ solutions with a price point more attractive to small businesses. As more small businesses decide to invest in CPQ systems, it’s becoming clear that the software can be used as a platform for both growth and risk mitigation.
Enterprise and mid-size businesses: Risk mitigation comes into play when companies have long and multifaceted sales processes. Enterprise businesses often have to deal with complex sales processes, making them prone to errors. Given the size of a potential deal, an error in quoting or pricing could result in a considerable loss in revenue. Also, these types of business processes are lengthy, often causing customers to become frustrated, which could result in a lost deal. By implementing a CPQ tool, enterprise businesses can shorten the lead time to prevent losing a customer along the way.
Small businesses: These organizations often don’t have intricate sales processes, which means there is often less risk regarding revenue losses during the sales process. Because there’s less risk to mitigate, small business owners may not see the value CPQ tools add. However, more of these companies are learning CPQ software can be the impetus for a growth spurt. A small business usually requires its employees to be utility players. A salesperson may spend several hours a week doing tasks unrelated to pursuing new sales, such as helping the operations team coordinate shipping schedules. In addition, one of the tasks that can take up a substantial amount of a salesperson’s time is pricing and quoting. Small companies with ambitions to grow should consider investing in a CPQ tool to enable their sales teams to spend less time creating quotes and more time selling.
Software Related to CPQ Software
CPQ software is used in conjunction with several other tools to enhance the efficiency and accuracy of the CPQ process. Below are categories that operate in tandem with CPQ systems:
CRM software: Customer relationship management (CRM) software is perhaps the most well-known type of the sales acceleration category, as it is a central repository for client information and sales activities. For this reason, CPQ software often integrate with CRM tools to access customer information to assist with the quoting process. For example, CRMs store the geographic location of the client, and this may in part influence the final quote.
ERP systems: Enterprise resource planning (ERP) systems are responsible for managing all steps of the production and distribution process. Synching ERP systems up with CPQ tools effectively bridges the gap between sales and operations. By integrating the two, the CPQ tool can monitor the product’s manufacturing and distribution trends and offer more accurate and timely quotes. For businesses that rely heavily on e-commerce, effective integration between ERP systems and this sales tool is vital.
Challenges with CPQ Software
CPQ software can come with its own set of challenges. A few of them are mentioned below.
Inaccurate quotes from utilizing the wrong data: A common issue some may report with their CPQ system is the production of quotes that miss the mark. This is almost always due to importing outdated or inappropriate data sources into the software. Thus, business leaders must be wise in the data they choose to import into the tool.
Long implementation time and change management: For sales departments that have been doing manual quoting, switching to using an automated tool can result in significant growing pains. Because adopting CPQ software uproots the traditional way of producing quotes, the process entails revising existing protocols and forcing salespeople to endure substantial changes to operating procedures.
Over or under configuration: Many businesses make the mistake of viewing CPQ software in black and white terms. They may think they either need to use out-of-the-box solutions or create highly customized product configurations. In reality, every deal is different and may need one over the other. Since some sales leaders fail to see this nuance, their departments may produce over-or under-configured quotes.
How to Buy CPQ Software
Requirements Gathering (RFI/RFP) for CPQ Software
When searching for the right CPQ tool, it’s essential to create a long list based on products that meet the core requirements of one’s business needs. After the total list of products has been segmented based on crucial features, one can then develop a short list based on nice-to-haves, bells and whistles, and industry-specific software requirements.
Compare CPQ Software Products
Create a long list
In order to create a long list, buyers must keep in mind the following considerations:
- Whether the tool uses a hybrid of native architecture. A hybrid CPQ system will be necessary for businesses that sync it with multiple CRM and ERP tools.
- Whether the system uses a rules-based or constraints-based configuration engine. If one’s products require a significant amount of configuration, a constraints-based engine will be ideal.
- Whether the tool can be accessed via cloud or only on the computer where the hardware is installed. If a business’ salespeople are often on the road to meet with clients, a cloud-based solution will be more suitable.
Create a short list
Once a long list based on core CPQ features is created, a short list should be further narrowed based on nice-to-haves and bells and whistles like:
- Artificial intelligence and machine learning
- Branded contract features
Conduct demos
Buyers must schedule calls with CPQ vendors on the short list to ensure their product is the right fit. The most foolproof way to make the right decision is to test the software. It is important to ask vendors about how their product addresses the business’ most pressing needs.
Selection of CPQ Software
Choose a selection team
The selection team should include the CEO and other finance, sales, and IT executives. The CEO will represent the whole company and its business objectives. Finance will be able to determine the financial costs and benefits of various tools to determine which product best optimizes revenue. In addition, IT leaders will determine if the product fits well into existing tech stacks and company technology. Most importantly, representatives from the sales team will be able to determine which CPQ product best integrates with the daily responsibilities of salespeople and the business needs of the department.
Negotiation
Vendors will be bringing their strongest team to seal the deal with a potential client. Therefore, it’s important to come to the negotiation process with questions on certain key features. Buyers must ask questions about the total costs and fees associated with purchasing, implementing, and using a CPQ tool. They should ensure the terms and conditions are read in full and discussed to avoid any surprises later.
Final decision
It could be useful to create a scoring template that measures the various features mentioned in the long and short list, as well as notes from calls between the client and vendor.
CPQ Software Trends
Machine learning
Artificial intelligence is increasingly becoming common in the CPQ space, especially with products that are new to the market. The algorithms are trained based on the input salespeople provide from a series of preprogrammed questions. Once the system is trained, it provides guided selling, which may entail suggesting certain accessory additions to product orders, developing pricing models, and predicting outcomes based on different configurations and product combinations.
