This blog is the last in a series which started with Avoiding Failure In Your Sales Acceleration Project and whilst past blogs focused on Incentive Compensation and Call Technology, this blog will focus specifically on CPQ (configure, price, quote) functionality.
CPQ is by far one of the most, if not the most, complex sales acceleration technology project. Its probably also one that should come quite early in your technology roadmap as the data generated will affect a number of your other processes and systems. However, its also one that has one of the biggest returns and can be quite transformative for businesses to be more accurate, more professional and most importantly, more efficient!
What is CPQ?
CPQ stands for ‘Configure Price Quote’. As you can see in the graphic there are a number of different process components captured by a CPQ system. Most people when they embark on such an initiative are not fully aware of how much this project touches and often gets bigger before it gets smaller. This is the reason why this is a complex project, but also has some of the biggest results.
Project Preparation
Salesconfiguration.org has some fantastic tips to avoid project failure which I thoroughly recommend checking their site out in you are considering a CPQ project. It is critical to point out that the technology of a CPQ project is perhaps just the very final last step, and the more important is really getting the strategy, process and data correct. Aleksander Jarosz from Simon-Kucher & Partners stresses this point in his recent blog ‘Ask the right questions! A basic framework for CPQ success‘
ROI
According to one of the large vendors, one of the most common metrics to measure CPQ success are:
- Quote Cycle Time: Total elapsed time from Quote-to-Order-to-Cash
- Quote Conversion: Number of quotes won divided by number of quotes produced
- Resource Time to Produce a Finished Quote: Actual time it takes a sales team and their support teams to research products, create a quote, approve the price, generate any supporting paperwork, and send it to the customer. This time also includes any updates or revisions needed before the final paperwork is sent.
- Order Failure Rate: Percent of orders which are entered correctly the first time without needing any re-work, updates, or clarification before they are successfully entered into the ERP or accounting systems.
- Headcount to Support the Quoting Process: Total headcount of any sales support or order entry functions needed to quote and order products.
Benefits
CPQ is a unique project as there are a number of diverse stakeholders to manage. While this can be seen as a challenge, its hugely useful when working to build a business case as there are SO many audiences to benefit.
PRODUCT
Some areas of interest for a product organisation include:
- Maintaining a product catalog and item master
- The ability to introduce new products easily (and quickly!)
- Analysis on which product and which product combinations are selling best
- Provide input for complimentary products to be added to guided selling programming
- Ability to adjust the pricing of the existing product catalogue
- Managing the retirement of products
MANAGEMENT
On of the major concerns of sales management is the control of pricing and margin.
The ability to implement complex rules to address both can easily be done by a CPQ system. By setting complex rules you can also zone in exactly on those areas that need appropriate intervention. For example you could program the following:
- It is possible to sell product X with a 20% discount with no management approval
- Any sales of product Y with discount over 5% requires approval
By limiting management intervention you can free up loads of time to focus on coaching activities. It also makes approvals much more meaningful then simply an administrative activity.
SALES
Sales want a way to both be self sufficient and empowered. The goal here is to enable sales to produce professional, high quality quotes, approved in a fraction of the time. The ability to automatically attach collateral to make your proposal come alive really make you stand out. Finding and developing content is often one of the activities that takes up loads of sales time. Your sales org will thank you.
Technology Evaluation
The best way to get a feel for what’s out there is to get a demo. In the early stages of thinking about a CPQ project considering what is out there can really help you shape what you need to do. I recommend seeing some generic demos very early with a small audience (perhaps just a couple people from sales ops). After this starts to take shape you can work with a vendor to develop some more customised presentation to your major stakeholders.
Next Steps
If you would like some help building a incentive compensation plan, evaluating vendors or project managing an implementation or even just have a no-fee chat, please contact Sales Ops Help.