What exactly is CPQ (Configure, Price, Quote)? Do you need it for your company? -
The right methods to simplify the sales process is essential to run an effective and profitable business. One of the most popular methods for organizing and automating aspects of sales processes is to use CPQ (Configure Price quote) Software. However, what is a CPQ and what are the primary advantages? Most importantly, do your business need it?
What is an CPQ? What are its benefits?
CPQ (Configure Price Quote) is a type of sales software that allows sales reps to quickly and easily configure the products and services they sell, create exact pricing, and then create quotes to be sent to the customers.
Here are a few of the most important benefits from using a CPQ:
- Accurate Product Configuration:It's simpler for sales representatives to build a customized package of services and products based upon a prospective customer's demands and needs. Since these are configured into the system, CPQs also reduce the chances for errors or misunderstandings.
- Professionally designed quotes for prospective customers:CPQs often have customizable templates that can standardize the style of the quotes and make them simple to understand for prospects and customers. This improves your chances to close deals quicker.
What is the best time to make use of a CPQ?
The majority of businesses think about a CPQ method when they wish to do the following at a specific point of growth:
- Cost compliance and uniformity between sales reps
- The process of creating and managing quotes is streamlining.
- The sales cycle is being shortened overall.
They are especially crucial to consider when your sales department is sucked into numerous administrative tasks that they are able to handle as well as those who want to establish scalable processes within the organization. Additionally, price conformity and consistency is important for those who want to make sure that your sales team isn't performing price adjustments that aren't legal to meet targets.
What most do not know is that CPQs are costly complicated, difficult, and time-consuming to maintain and implement.
Are there the advantages and disadvantages of using the CPQ?
There are a few disadvantages to consider with CPQ systems: CPQ methods:
- The cost can be high. There are initial costs to consider for implementing a CPQ and ongoing subscription fees that can result in it being a major investment for organizations.
- The process can be lengthy. Because of the complexities surrounding CPQ software, it may take months to implement it and often requires the help of specialized experts to help get it off of the foundation.
- The system is complex to operate and maintain. CPQs can be inflexible and hard to modify as well, and usually requires a really robust RevOps/Operations department to maintain it. It often requires dramatic rework anytime pricing or packaging needs to be changed.
While CPQs can be advantageous especially when enforcing price compliance with consistency and conformity, difficulties in the implementation and maintenance of the system could be in the way of operational and sales reps teams' efficiency.
So, do you need it?
The majority of the time, CPQs are designed for large enterprises with a more extensive product catalogue. However, there are a couple of things to take into consideration in particular for small and medium-sized businesses.
- The size and complexity of Sales and Operations Teams
- If you have a small sales staff, the implementation of an CPQ may not be required. The system might be too much for what you're trying do, all the more if you don't have a solid operational team that can support the sales staff. The performance of CPQ software heavily relies on its maintenance and implementation, often done by your Revenue Operations / Sales Operations team. Having a strong RevOps / Operations team is key to making the most out of a solution like CPQ.
- But, if you've got a large sales team and an experienced RevOps team that can maintain the integrity of your CPQ solution, then it could potentially make sense.
- Product and Service Catalog
- If you offer standard products or services the use of a CPQ may not be necessary. A tool like CPQ is best utilized to create complex services or products that require customization and configuration for each account. However, there are other tools that can give this benefit, but without through the entire process of setting up an CPQ.
What's the alternative? (Especially specifically for SMBs)
Based on the purpose depending on the use case, there's a variety of alternative tools that you can use for your business.
In general, small and mid-sized businesses can advantage from using a specific quoting software, which helps in creating quotations quickly and precisely. A lot of these softwares have a number of functions, such as product and pricing databases, customizing templates and the ability to deal with complicated configurations. These are typically the most important elements you'd need from the CPQ software anyway. This is typically a more flexible and effective tool when compared with a spreadsheet manual program. To find a comprehensive list of quotes tools, browse HubSpot's selection here.
However, one tool specifically that offers most of the core advantages from the CPQ tool is called IQ.
The IQ (which stands for Interactive Quotes) is a lightweight CPQ alternative specifically made specifically for small and medium-sized businesses.
For RevOps as well as Operations teams this is a better option to ensure price conformance and consistency between your reps, and provides an efficient approval process for the quoting procedure.
The platform also provides real-time analytics, eSignatures, and payments to make it a much simpler and faster quote-to-cash procedure.
