What exactly is CPQ (Configure Price Quote)? Do you need it for your company? -
Finding the best methods to simplify your sales procedures can be key to running a more successful and profitable sales operation. One of the most popular methods for managing and automating parts of the sales procedure is by using CPQ (Configure, Price and Quote) Software. But, what exactly is CPQ and what are its primary benefits? Most importantly, do your company require it?
What is a CPQ? What are the advantages of it?
CPQ (Configure Price Quote) is a type of software used to sell that allows sales representatives to swiftly and efficiently configure the products and services they sell, create precise pricing and quotes to be sent to customers.
Here are some of the major advantages that come with an CPQ:
- Correct Product ConfigurationIt's simpler for sales representatives to create a custom-designed package of goods and services based on the prospect's particular wants and needs. Since they're integrated within an existing system CPQs also reduce the chance of miscommunications or errors.
- Professionally designed quotes for prospective customers:CPQs often have customizable templates that can standardize the style of the quotes, making them easy to understand for prospects and customers. It increases your odds of closing deals faster.
When is it time to utilize a CPQ?
Businesses typically consider using a CPQ method when they wish to accomplish the following when they reach a certain level in growth
- Price compliance and consistency within sales reps
- The process of creating and managing quotes is streamlining.
- The sales cycle is being shortened overall.
All of these are crucial for when your sales team gets caught up in many administrative duties that they are able to handle as well as when you want to implement scalable processes within the organization. Additionally, price conformity and consistency are crucial the time you need to be sure that your sales team isn't doing price changes that aren't authorized in order to hit targets.
However, what most people do not know is that CPQs are costly complicated, difficult, and time-consuming to set up and manage.
Which are the advantages of using a CPQ?
There are a few disadvantages to consider with CPQ systems: CPQ systems:
- It can be expensive. There is a cost upfront in the event of implementing the CPQ and the ongoing fees for subscriptions and can end up with it becoming a significant investment for organizations.
- The process can be lengthy. Due to the complex nature of CPQ software, it could take months to implement it and often requires the help of specialized experts to get it off the starting point.
- Complex to use and maintain. CPQs can be inflexible and hard to modify, and often needs a very robust RevOps/Operations department to ensure it is maintained. The process often calls for a major overhaul whenever packaging or pricing needs to be updated.
Although CPQs can be advantageous especially for ensuring price compliance and consistency, the difficulties in the implementation and maintenance of this tool could come detrimental to your sales reps' and operations teams' performance.
So, do you really need it?
In general, CPQs are designed for large enterprises with a more complicated product catalog. There are however a few factors to consider particularly for smaller-medium enterprises.
- Size and Complexity of Sales and Operations Teams
- If you've got a tiny sales staff, the implementation of a CPQ may not be necessary. It could overpower what you're trying to do; even more so if don't have a solid operations team to back up the sales staff. The success of CPQ software heavily relies on the implementation and upkeep which is usually handled by your Revenue Operations / Sales Operations team. Having a strong RevOps and Operations team is key to making the most out of an application like CPQ.
- However, if you have huge sales staff and an experienced RevOps team to maintain your CPQ system, then it could potentially make sense.
- Product and Service Catalog
- If you offer basic, standardized items or services, the use of a CPQ is not essential. An instrument like CPQ can be used to create complex services or products which require customisation and configuration per account. But, there exist other software that offer this advantage without having to go through the entire process of setting up a CPQ.
What's the alternative? (Especially especially for SMBs)
Depending on the use case depending on the use case, there's a variety different tools are suitable for use in your company.
Most often, small businesses will benefit from using a dedicated quotation software that helps in creating quotations quickly and precisely. A lot of these softwares offer many features such as product and pricing databases, customizable templates, and the ability to deal with complex configurations - which are the main features you'd expect from an CPQ software anyway. They are often a scalable and efficient tool compared with a spreadsheet manual application. If you're looking for a complete list of quoting tools, you can look up HubSpot's list here.
However, one tool specifically that offers all the advantages from a CPQ tool is IQ.
IQ (which means Interactive Quotes) is a lighter CPQ alternative that's specifically designed specifically for small and medium-sized businesses.
For RevOps as well as Operations teams, it's a more flexible solution to implement price compliance and consistency between reps. It also provides a good approval workflow for your quote procedure.
The platform also provides real-time analytics in the form of eSignatures, payments, and eSignatures, for a simpler and more effective quote-to-cash process.
