10 Trends That Will Dominate Manufacturing in 2023
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Many companies, particularly those in the manufacturing and retail spaces, are facing numerous challenges right now. From a dynamic market landscape to ever-changing customer expectations, many organizations are scrambling to find flexible, scalable solutions that help them meet modern demands.
Thankfully, there are innovative technologies available today that will empower organizations with the tools they need to improve the customer experience and their own internal operations. One of the most popular tools making its way into the hands of manufacturers and retailers is CPQ software.
What is CPQ?
TechTarget defines Configure, Price, Quote (CPQ) software as a program(s) that helps sales representatives and self-service customers quickly generate accurate quotes for configurable products and services. With CPQ software, you can compile all of these variables and options into one solution, which then allows you to quote and sell products or services at the best possible price in a way that delivers the most revenue.
So, why might you need CPQ? There are a number of reasons an organization would implement CPQ software, but a majority of the companies that find success with these solutions have these driving factors in common:
- Company has many customizable products with numerous possible configurations and want to provide their sales team with the tools necessary to configure and reconfigure depending on customer needs and wants. With a CPQ, the buying experience can be tailored to customer desires and made to be as seamless as possible. It can even create a customer self-service option.
- If an organization operates on a global scale, CPQs allow them to provide fast and accurate pricing data to all of their regions or divisions.
- Works with outside dealer and brokers to sell their products and want to provide a consistent experience. CPQ software can act as a guide to help salespeople better understand a product and how to sell them with the same info that brand would.
- When overall cycle and quoting time is too long and causing lost sales, CPQ software can help. It can quickly generate quotes that customers can access themselves, in real time, in a self-serviceable model.
- When CRMs fall short in terms of quoting capabilities, CPQ solutions can close the gap. CPQ allows companies to build out the quoting step in a CRM sales process by making it efficient, scalable, and consistent, which is hard to do in static quote to order process.
- They need a solution to help the sales team when they don’t have the updated information they require to provide proper and accurate quotes.
Benefits of CPQ
1. With CPQ software, you empower your sales reps and partners to spend less time quoting and more time selling. In fact, several studies and surveys have found that CPQ software can shorten the sales cycle by a third, dropping the length of the average sales from 4.68 months to 3.42 months. And when you deliver quotes faster than your competitors, you win more sales.
2. According to Aberdeen Group, CPQ software has been proven to increase quote productivity by 33%. CPQ software allows customers to customize their products and receive accurate quotes in real-time, ultimately boosting quoting productivity. And because many of these processes are automated, your company can generate more quotes, contracts, proposals, and more.
3. To put it frankly, organizations that utilize CPQ software typically generate more sales and higher revenues. Studies show that CPQ software results in 105% larger than average deal size and a 17% higher lead conversion rate. CPQ software gives sales teams a leg up on competitors and new insights they wouldn’t ordinarily have — 26% more sales reps achieve their quota with CPQ software.
4. One of the primary reasons CPQ is moving to the cloud is so that companies can utilize sales data better. With CPQ, organizations have more accurate data and can utilize pricing engines and recommendation, a capability only the cloud could support. Some of the actionable data a CPQ solution can leverage includes enhanced insight into how people are configuring products, what changes should be made to products based on order frequency, what products to discontinue or alter, and how to accurately forecast sales based on historical data.
5. Sometimes customers make changes to their orders after the sale, which can cause order errors and production confusion. With CPQ software, your company can drive into orders after the fact and make changes to complex order configurations before final production.
6. Unfortunately, more than one-third of sales reps experience common errors with their sales agreements, but CPQ solutions have been shown to reduce quote revisions by 13%. With CPQ software, the potential for human error is greatly reduced, which also reduced the number of quote revisions per customer.
Importance of CPQ Automation
As with most technologies, CPQ solutions have almost all been moved to the cloud. And with the cloud-based functionality, many initial steps in the sales process and quoting can now be automated. CPQ automation is critical for both company and customer success, for a number of reasons:
- Speed up the quoting process: With CPQ software, the traditionally slow quoting process can be automated, obviously reducing the time it takes to deliver quotes to customers. Automated quoting also minimizes errors, saving additional time in the long run.
- Earn more sales wins: Studies show that approximately 50% of sales wins go to vendors that respond first. With automated processes, sales cycles can be dramatically reduced.
- Centralize quoting and selling: With CPQ, you can have one centralized location for all product and pricing information in a singular, user-friendly interface. This interface can house guided selling recommendations that manage and break down product complexity automatically.
- Build multiple sale configurations: CPQ allows you to present customers multiple product options across different configurations and allow them to compare. In the software, customers can weigh pros and cons and be guided through the buying process.
- Create accurate pricing: CPQ solutions allow you to create accurate prices around discounting and ad hoc discounting while still ensuring you haven’t discounted below margins.
- Start utilizing self-service: CPQ allows customers to do a lot of the shopping and configuration on their own before they talk to a salesperson. Self-service options make for a better customer experience and makes your system more flexible on the backend.
CPQ Implementation Tips
If you’re considering moving to an automated CPQ solution, there are some best practices to follow to ensure positive implementation and adoption.
- Keep end users in mind – This refers to both the sales team and customers. By getting to the root of existing bottlenecks, inefficiencies, and backlogs, you can effectively solve them with CPQ.
- Keep pricing consistent – Utilize your CPQ solutions to implement pricing rules in one central system, which ensures consistent pricing across all customer touchpoints. Of course, CPQ rules can be customized, so you can control pricing rules vs. customizations and other discounts.
- Know your software – While CPQ systems can be used to fill gaps left in CRM and ERPs, you can only utilize the full capabilities of it if you are well versed in your other software. Know all of your software’s capabilities, limitations, and how to get the most out of their functionality.
- Let CPQ work for you – CPQ solutions are highly intelligent and customized to you and your operation. To get the most out of your software, utilize it to inform guided selling, cross and up-selling, and ultimately your sales margins. CPQ can make intelligent product recommendations that increase sales and help improve the overall customer experience.
- Strategize and prioritize testing – Your new solution is only as good as the implementation, which means your organization must prioritize testing to ensure widespread user adoption. Take the time to train the sales team and give them time to work with the program before it is pushed live, this will pay off in the long run.
Q: What are some questions to ask before beginning CPQ implementation?
A: Will this enable me to handle the most complex quoting requirements with ease?
Does it eliminate quote errors?
Can it ensure maximum profits?
Will this program improve quote-to-order speed times?
Does it feature trigger discount and other approval workflows?
Can I offer guided selling?
Does it create bill-of-materials?
Does this CPQ support a unified client interface?
Does it feature fast set-up and easy maintenance?
Q: Why is Configure-Price-Quote (CPQ) So Important?
A: When CPQ is added to the mix, it creates a true end-to-end automated solution ― from quote to invoice. This ushers in a new era of tighter, mutually beneficial relationships between manufacturers, dealers, and customers. CPQ also increases collaboration and value for each of those groups, creating competitive points of differentiation for the brand, driving more profitable growth for the business, and better satisfying the customer.
Q: What are some benefits of CPQ?
A: Just some of the many benefits of CPQ software include:
- Modernized platform with access to real-time data
- Enhanced data visibility and insights for more accurate planning, forecasting, and business decisions
- Reduced quote time, errors, and rework resulting in increased order accuracy and improved sales and margins
- Empowered sales force that works smarter and faster, is better able to meet sales and revenue targets, and has the ability to focus on activities that generate the most revenue
- Shorter sales cycle and quote time increase win probability, create upsell and cross sell options, and improved margins to amplify revenue
- Improved forecast and planning reduce operational and material costs
- Elevated experience strengthens customer and dealer relationships and builds loyalty
It is critical to remember that quoting is just a small part of the sales process. When implementing a CPQ solution, you need a partner who understands that and will look at the whole transaction. At Hitachi Solutions, we look at the entire process end-to-end and figure out how CPQ fits into your process, not the other way around. Through our years of experience, we have developed expertise about every step in the sales funnel — from the lead to the aftermarket sales and service — and have developed solutions to optimize those processes. To learn more about how our CPQ offerings can help you, contact us today.