What is CPQ software?

CPQ stands for Configure Price Quote. The aim of CPQ is to improve the sales process so organizations can create and provide accurate quotes quickly.

Let’s have a closer look on each part of Configure Price Quote.

CONFIGURE

Imagine the process of buying a car. It is possible to have an almost limitless combination of options, such as seat coverings, engine, body style, stereo systems, climate control, paint colour, wheel types etc. We are individuals with different requirements, budgets and desires. This creates a challenge for a car’s sales department to cater for these specific needs. The sales person must be able to select easily the parts of the product the client wants and then provide a price for it.

Therefore, the CONFIGURE part of CPQ is the customisation of the offer e.g. the selection of the options in a car.

PRICE

If you buy a wheel for a car it has one price, in case you buy 10 wheels then it is probable that the price of a wheel goes down as the seller will provide a discount based on the larger order.

In Business to Business (B2B) sales the size of the client, their order history, the scope of the order, if there is a special offer available, current price of raw materials, discount rules etc all these and other factors influence the price. In B2B sales, each client is treated differently and will get a different price.

In B2B sales the multiple factors mentioned previously need to be tracked and communicated to sales, so they know what they can sell and for how much.

Consequently, when the client asks for the price, sales must be able to give the right price.

CPQ software solves the problem by managing all the variables the organisation has that influence prices in real time.

QUOTE

This is the screen before the buy button or the print out or emailed PDF that lists what the client is buying. The amount of time taken to generate the quote is crucial, as it can be the difference between a sale or no sale. No one likes to wait for a quote.

The goal of CPQ software is to bring the configuration and pricing together quickly and seamlessly so a final quote can be produced in a professional and in a manner easy to understand.

Benefits of CPQ

There are multiple benefits of using CPQ. The most important is to reduce human mistakes in the pricing process.

Reduce the dependency on specialist knowledge – CPQ software can apply expert derived knowledge to the configuration process e.g. only a certain model of car can have a certain combination of features. This removes risk of the sales person selling products or services that are not compatible with each other. This also means that sales people do not have to be experts in the field the product is sold in. For example, if the product is medical or pharmaceutical supplies or machines the sales person does not need to be a doctor. Organisations can hire the best sales people rather than a hybrid person of a sales person and expert.

Control – restrictions can be put in place to only sell products at specific prices to a restricted audience. For example, a car manufacturer is having a special offer in a city or country and they do not want anyone else to be able to provide the same discount.

Get the YES faster – After the sales person has analysed and understood the needs of the client CPQ allows accurate customised quotes to be quickly produced. There is no need for the sales person to say to the client that they will “get back to them in a few days with the quote”.

Up selling / Cross selling – the CPQ can suggest other products, options or services that could be complimentary to the deal that is being made. In the example of selling a car, the sales person could present the client with the option to buy road side breakdown cover or insurance.

Increased customer satisfaction – customers will be confident and comfortable with what they have bought. When the implementation of the service or installation of the product begins the client will not be told that something, they bought is not possible or available. As in the sales processes everything is transparent and there is no room for the sales person to accidentally mislead the client.