CPQ – The Need for Speed to Quote
Post by Steve Sassi – Part 1 of a two-part blog series
When a customer calls your rep for a quote, they want a quote, not excuses, delays and an “I’ll get back to you.” They’re calling your rep for 3 reasons:
- You’re a known expert with a solid reputation in your industry.
- The product, or project, is complex and needs a smart, knowledgeable sales consultant to help them configure the options.
- Your customer can’t get the price anywhere else, because if they could, they would.
For all 3 reasons, the ability to configure and price a quote (CPQ) quickly and accurately, at a competitive price that doesn’t give away the business, is critical for winning new business in the B2B world. If your rep doesn’t have the right tools to do it, your competitor will. While your rep is spending hours scrambling through catalogs to piece together and price a configured product (not to mention manually shepherding it through configuration validation and pricing approvals), your competitor is delivering the same validated and approved price quote in minutes, and placing the order before your rep is halfway through the first catalog.
A quick Google search brings up dozens of CPQ solutions, but not all are created equal, and the solutions listed on the first page may not necessarily be the right fit for your company. If you’re tasked with the cumbersome chore of researching the best, most cost-effective solution for your sales team, you’re going to have to walk the wire between what Sales needs, and what the Corner Office wants (which is something for next to nothing that increases business by double digits}. Here is a short list of why Sales needs a CPQ solution, and why the corner office should want it. We’ll take a close look at each of them in a 2-part series on the need for speed to quote:
- Reduce lead and sales cycle times
- Reduce response time to customer
- Improve margin
- Grow revenue (remember, by double digits for next to nothing)
Reduce Lead and Sales Cycle
If your core business model requires your reps to give quotes for configured products or projects to B2B customers, then anything you can do to reduce this time is mission critical. According to McKinsey, only about 39% of a sales rep’s time is spent selling. Doing the quick math on a 40 hour week, your reps are spending only 15.6 hours selling – less than 2 days! The rest is spent in emailing, collaborating and tracking down the right internal resources they need to sell.
Of course, this is not the reality. If a sales rep spent only 2 days selling a week, that rep would starve. Which is why the reps who survive put in 60+ hours a week to make it work, and that kind of sustained effort is a Top 5 cause of burnout for sales reps, even for top performers, according to Psychology Today. It’s why so many reps churn and burn.
McKinsey concludes that, with the right collaborative social technology, productivity could increase by 20% to 25%. CPQ solutions address this directly by automating configuration validation and pricing approval processes. So, the question the corner office needs to ask: if each sales rep could find an extra day a week to sell instead of scrambling to put together a quote, how much more growth would there be? And how much less turnover would there be? Put in those terms, the cost of a software project is a small investment.
Reduce Response Time to Customers
The example of the sales rep thumbing through catalogs while the competitor turns around a quote in minutes is what happens when early adopters in an “old school” industry start to use “new school” tools. The most common objection heard for investing in collaborative tools that change customer-facing B2B sales processes, such as CPQ, is, “Our industry is old school. Our customers have always done business this way and it’s never been a problem.” The problem with the “no problem” attitude is the changing face of the B2B customer and their expectations.
B2B customers today, in every industry, have been struck by the “Amazon effect,” and have been spoiled by it. Add to that a new generation of B2B buyers who have never known a world without instant access to internet, and can scarcely remember it without smart phones, and you can quickly see why your “old, loyal” customers are no longer going to wait a day for a quote when they can get a quote and place an order with your competitor for the same product or service in a 5 to 10 minute phone call.
A prompt response to a customer’s wants and needs is always good business, and there is no need to cite an analyst for that basic business principle. It’s the foundation of customer retention and new business growth. And with the rising expectations of customers brought on by living and working in a digital world, this is one struggling part of the sales process the corner office can’t afford to ignore.
Coming up in the next article in this series are the 2 arguments for speed to quote that will win the hearts and minds of the executive board: margin improvement and revenue growth. We will wrap up the series with an equation proving the theorem of how CPQ = Speed = $$.
Steve Sassi is a Sales Executive and Digital Commerce Consultant and has over 12 years’ experience in all areas of digital commerce, including Pricing, CPQ, E-commerce, Payments, Marketing, Cloud and Mobile solutions.
This blog entry was sponsored by Model N and the blogger received compensation for his/her time from Model N for sharing their views in this post. The views expressed here are solely the blogger’s, not Model N’s. Visit modeln.test to take a look at more blogs and related information on CPQ products. For additional tips and advice, and information about Model N’s business solutions, follow @ModelN and visit modeln.test