What is CPQ software?
CPQ is the acronym for “ Configure, Price, Quote ” in French. The CPQ software therefore allows you to configure a product or a service before establishing a price which will be used to issue the quote.
CPQ software should allow you to more easily issue quotes (and therefore save time) on complex and configurable projects.
Configure a machine or service (CONFIGURE)
The software will make it possible to configure a complex product (such as an industrial machine) or even a service including material and labor (such as the installation of an air conditioning or video surveillance system).
Step by step, it offers the salesperson the opportunity to choose the different product options , to arrive at a technically valid solution.
Calculate the sales price (PRICE)
Depending on the defined configuration, the CPQ software will calculate the price of the solution :
- Starting from the cost of the different sub-assemblies , based on the parts, materials required, the labor assigned (and its hourly rate), any needs for specific materials to enable manufacturing or delivery
- By applying desired margin levels individually to each element or sub-assembly, or globally.
Generate a commercial offer (QUOTE):
Once the selling price of each set/subassembly of the solution has been defined, a quote can be established to which commercial conditions will be applied.
The CPQ solution makes it possible to establish a detailed quote (sometimes in the format desired by the client, such as in the context of a public call for tenders) and to manage the application of discounts .
Some solutions go even further and do “ proposal management ” by constituting a complete commercial offer including the quote and technical and legal documentation.
What are the differences compared to Quotation software?
If CPQ software can also make quotes, the main difference lies in the ability of this type of software to facilitate the creation of complex quotes .
Where most quotation software allows you to establish articles and composite articles, CPQ allows you to go into detail on the sub-elements of the quotation via configurators or preconfigured models .
Why would my company need CPQ software?
Using CPQ software is useful when you have complex and highly configurable product catalogs .
In general, the more complex the products are with numerous references, the more salespeople struggle to manage this complexity and the associated prices. This leads to delays in quote requests (and therefore customer dissatisfaction).
This can lead to manual validation processes in which a second department (for example the design office) is involved, when their time would be better spent on other missions.
“Only 36% of a salesperson’s time is spent on sales. What if you speed up other tasks? »
As a result, your salespeople spend more time managing quotes and internal interactions than selling. A study showed that on average, a salesperson spends only a third of their time selling. Installing a CPQ means above all saving time for your salespeople , so that they can devote more time to selling... And therefore generating more revenue !
Finally, having to process everything manually can lead to inconsistent pricing or unregulated discounts that reduce the company's margins.
Top 7 Signs You Need a CPQ Solution:
- Your sales team still uses Excel to make quotes.
- Responding to a quote or call for tenders takes your sales team several days or even weeks.
- The products you sell are complex and require configuration. Most of the time, only the most experienced salespeople can quickly create accurate configurations of your products.
- Only the salesperson in charge of the case has access to the source file of the customer's quote, generally stored on his laptop.
- Quotes sent to customers contain product or costing errors.
- Your profitability isn't where it should be because your sales team discounts your products too much when they sell.
- If a customer speaks to two different salespeople, they will get two different recommendations with two different quotes.
What are the advantages of CPQ software?
Accelerate your sales cycle
Thanks to CPQ software, your salespeople can very quickly establish a commercial offer in the colors of your company .
The latter, based on predefined models, contains the quote as well as any other necessary element (legal information, contractual documents, general conditions of sale, product sheets, etc.).
Limit human errors
CPQ software centralizes the data. Thanks to the configurators, you can define possible combinations and prices according to multiple criteria (cost of materials, labor time, necessary machines, desired margin level on each item). The price calculation is done automatically.
So your salespeople don't waste time searching for information or checking prices, at the risk of making a mistake. They no longer encrypt combinations of options that cannot be realized .
Finally, they can act on the discount level, with automatic validation according to predefined rules. You thus guarantee consistency and relevance in pricing and discounts , with approvals if necessary.
Analyze your figures and control your margin
Thanks to CPQ software, you have better visibility on what is encrypted and sold .
control via the configurator and the limited discount level allow you to control your margins.
How to choose CPQ software?
Choosing the right CPQ solution is not easy, as there are so many solutions on the market. Not all of them are equal depending on your challenges and constraints. In our opinion, here are the points of attention to observe.
Architecture of the configuration engine: Rules or constraints
The configuration engine of CPQ software can be based on rules or constraints.
In the case of simple products, a rules-based engine is ideal : it is easy and quick to write the rules in the software administration interface.
If you have (or plan to offer in the future) advanced configuration will choose a constraint-based engine. This will simplify administration (while also allowing simple products to be managed).
Example of the benefit of a constraint-based engine
To illustrate how a constraint-based configuration engine works, consider the example of a company that sells “nut + bolt + washer” assemblies. For each set you want the sizes to match (an 8mm nut with an 8mm bolt and an 8mm washer).
In a rules based engine you would have to write the following rules for all dimensions of your products: 8MM nut = 8MM bolt = 8mm washer, 10mm nut = 10mm bolt = 10MM washer, etc…
Now imagine that this company has 100 nut references, 100 bolt references and 100 washer references and that some references are added and others deleted with different materials... You have a potential of 1 million combinations to manage. Suffice to say that by simple rules, it will be a nightmare to maintain.
A constraint-based system will describe logical conditions that must be met, for example… “The diameter of the bolt must match the diameter of the washer”, “The material of the bolt must match the material of the nut”. The rules management nightmare mentioned above is resolved in a few steps of constraint configuration.
Opening the software for integration
While some CPQs are native to CRM solutions (and cannot be used with other CRMs or ERPs), there are hybrid solutions that can connect to any CRP or ERP solution .
In multinational companies, it is common for regional sales teams to use different CRM or ERP tools. Your sales teams in Europe may use Salesforce CRM while your Americas team uses Microsoft Dynamics 365. Choose the wrong CPQ and you'll be in trouble.
By choosing an independent and open solution, you can implement a global solution, regardless of the CRM or ERP used by your teams . These types of solutions eliminate the risk of having to reinvest and reimplement different platforms in different regions.
Performance in quote management
Many CPQ tools suffer from performance issues that get worse as you add more products and services to an overall quote. This is often the case with CPQ tools native to CRM solutions which cannot manage quotes of more than 2500 lines .
Other solutions will cause slowdown problems once a hundred lines have been added to the estimate.
Invest in a solution that can accommodate the growth, speed and flexibility your sales teams need to establish and manage large quotes and tenders.
A CPQ is above all a sales productivity tool... Make sure it does not limit the productivity of your sales team!
Provision to the customer: usefulness and omnichannel collaboration
If CPQ software can be used internally, it can also be used directly by your customers: whether it is the end customer through integration on a website or one of your distributors within a specific application (online or as a heavy client on a computer).
This seemed like an excellent idea. However, before getting started, we advise you to ask your questions about the usefulness of such a tool .
In many cases, the usefulness is not justified and the solution is not accepted by the user ... In other cases, even with a well-designed tool, the client will not be able to be autonomous because it requires a level of knowledge of your products which necessarily involves the assistance of a member of your sales team.
If all the lights are green and your customers are interested in such a solution, then make sure to choose a solution that will allow “ omnichannel” collaboration and integrate with third-party/outsourced solutions .
QDV: office software from CPQ
As an expert in pre-sales solutions QDV solution to meet CPQ needs.
This open software allows integration with various ERPs and CRMs as well as third-party pricing bases . It allows the creation of advanced configurators and can manage complex quotes with several thousand lines.
Find out how it can meet your needs through a free videoconference demonstration .
