CPQ

CPQ: A Growth Imperative for Businesses

Most enterprises are automating their Quoting process, either with a standard software vendor or custom software. My previous article “Quoting: Common Challenges” summarizes the business challenges in the quoting process and what enterprises should evaluate before adopting an industry-proven solution.

While talking to several customers, a set of fundamental  questions arise and getting answers to these questions is essential for building an effective business architecture for sales, marketing, finance, and legal teams :

  • What is CPQ and Why CPQ? 
  • What does it mean to my Organization? Who uses it?
  • How do you define a Quote, Contract, and Order?
  • Does CPQ improve Productivity or complicates my sales process?

The following document attempts to address these fundamental questions among most CEOs and Sales Leadership teams of growing companies. 

Why CPQ?

Configure Price Quote (CPQ) is a sales enablement tool designed to help companies generate extremely precise quotes with product, service, subscription offerings as requested by the customers. It also helps Finance, Sales Operations, Marketing and Legal teams with visibility, audit, governance, and approval of quote proposals, contracts, special terms, and discounts. 

CPQ software attributes to an immediate effect on revenue growth and customer experience. The following are key benefits for organizations.

  • Shorten the Sales Cycle
  • Increase Productivity across the company
  • Increase the Deal Value
  • Improve Brand Awareness
  • Ease of doing business
  • Pricing & Discounts
  • Discounting Approvals
  • Extend self-service Interface for Partners & Customers

What does it mean to my Organization? Who uses it?

CPQ for Sales

CPQ enables sales to create the best possible quotes for the most complex products, pricing and channels, hence boosting the sales effectiveness and productivity. It acts as an Omni-channel centralized location for all pricing and discounts, providing guided recommendations through user-friendly interfaces. CPQ for sales thus increases:

  • Efficiency & Productivity
  • Accuracy in Configurations and Pricing
  • Discount guidance & approvals
  • Accessibility for pricing and discounts through an omnichannel interface

CPQ for Sales Operations

CPQ is an intuitive and feature-rich application that cuts administrative tasks and makes necessary tasks a breeze. It provides accurate quotes, guided selling, and streamlines the workflow and approval management processes enabling an enhanced quote cycle time. CPQ for sales operations thus increases:

  • Funnel visibility 
  • Approval process
  • Forecasting
  • Improve Quote Cycle time

CPQ for Finance

CPQ solutions provide sophisticated product guidance and visual deal metrics, provision promotions, enforce the terms and conditions for compensation, and automated workflows for approvals. The governance rules aim to ensure that every order entering the back-end system is strategically acceptable and improve the organization’s bottom line. CPQ for finance thus enforces:

  • Terms and Conditions
  • Discount Visibility
  • Margin Analysis
  • Revenue Accounting & Assurance

CPQ for Marketing

The seamless integrations with leading CRM, ERP and Accounting systems simplifies the B2B complexities and makes it easier to deliver the right product at the right price, to every customer. CPQ for marketing improves:

  • Campaign performance
  • Promotion ROI
  • B2B ECommerce

CPQ for Legal

CPQ ensures appropriate legal terms are in place and appropriately presented with a quote prior to delivery and proper terms and conditions are adhered to close a deal with the customer. It uses the legal entity to apply billing rules, tax rules, revenue recognition rules, and their related treatments. CPQ for legal helps in:

  • Proposal review and redlining
  • Product & Pricing accuracy 
  • Terms and Conditions

CPQ for Order Operations

The integration of CPQ with CRM systems brings additional dimensions of insights and functionality thereby enhancing campaign performance and converting of system-specific opportunities into sales. CPQ for Order operations improve:

  • Quote to Order Conversions 
  • Low touch on Orders
  • Improve Order Cycle time

CPQ for Channels & Customers

Channels are one of the core go-to-market strategies for many enterprises. Irrespective of how it is termed as value-added reseller, dealer, distributor, partner etc, Channels bring incremental revenue and thus extending sales teams. Empowering your Channel Sales team with CPQ is one of the critical factors for success. Many companies have considered extending self-service to Customers which will streamline renewals, add-ons, and x-selling of products and services. CPQ for Channels & Customers improve

  • Visibility to Channel opportunities and funnel
  • Extending product and pricing rules thus providing a seamless experience to direct and indirect customers
  • Collaboration between Sales and Channels

Lastly, the difference between Quote, Contract & Order

  • Quote – a proposal with an estimate of the pricing that a supplier will submit to a potential customer. It is created based on the conditions stipulated by the customer and includes a breakdown of factors leading to the price, such as taxes/VAT, material costs, labor etc. it also includes the time frame for when a service will be completed.
  • Contract – It is a legally-binding, voluntary agreement that creates and defines the terms and obligations of the parties involved. Contract conditions are fundamental to the agreement. If the contract conditions are not met, it is possible to terminate the contract and seek compensation or damages.
  • Order – It is a commercial document issued by the customer/buyer, highlighting the requirements about the goods/services needed. It serves as a guiding document for the supplier as he gains information about the customer’s exact demand. It states all the specifications as demanded by the buyer and will be provided by the supplier.

Conclusion

To Summarize, CPQ-O is a productivity tool helping thousands of companies scale up their Sales, Finance, Marketing, and operations teams. Companies of smaller size (less than 25 employees) need a careful assessment of cost vs productivity & ROI. Anyhow, it’s always easier to enable tools and processes when you are a sapling than a giant tree. 

Get in Touch!

Having challenges in scaling your Sales? Talk to us: qtc@forsysinc.com

Forsys Inc is a leading Quote-to-Cash implementation partner for Salesforce & Conga; we have helped several companies strategize their Quote-to-Cash process that involves Quote, Contract, Order, Billing, and Revenue Management. We have successfully established business architecture to scale and enabled agile monetization platforms for productivity; empowered their channels & customers with a new collaborative tool to drive growth for successful businesses.

CPQ is still a curious acronym for many growing companies. I realized that many CEOs and Sales leaders are inquisitive about CPQ. Read this article to learn whether your sales organization needs a CPQ; if yes, what it means to other business functions in your organization.

Published by @Srinivas Vemuri, COO & SVP Cloud Solutions

 

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