CPQ – More Speed to Quote
Post by Steve Sassi – Part 2 of a two-part blog series
We’ve established that you don’t want Sales to be caught flat-footed when the customer calls. In the B2B world, quoting a customer quickly, accurately and at a competitive price that doesn’t give away the business becomes a complex beast very quickly. And unless you’re with a company that has a complete corner on the market, which is as rare as a meteor strike and likely involves government in some way, you have competitors who are also quoting for your customer’s business. If they are doing it faster, while your sales rep goes through a cumbersome process to configure a quote, you could lose that customer.
In a recent study, McKinsey concluded that, with the right collaborative social technology, productivity could increase by 20% to 25%. CPQ (Configure, Price, Quote) software solutions address this directly by automating configuration validation and pricing approval processes. The fear of lost business should inspire any executive to seek a new way to improve critical customer-facing sales processes. Here are the 4 ways CPQ solutions can improve the way your sales reps configure and deliver quotes, and help keep your company from losing out on competitive deals:
- Reduce lead and sales cycle times
- Reduce response time to customer
- Improve margin
- Grow revenue
In Part 1 of this series, we showed how CPQ reduces lead and sales cycle times, giving your talented sales consultants up to a whole extra day a week to sell! And reducing the stress of sales reps who hit the wall of a cumbersome quoting process reduces the churn and burn of those reps, a costly consequence in itself.
We also discussed how quicker quoting processes for the changing face of B2B customers, spoiled by Amazon in their off hours, have higher expectations of a quicker quote turn-around time. And there is no need to quote an analyst about how giving the customer what they want and need, faster, is just good business that keeps them coming back for more.
We’ll now take a look at the next 2 reasons for the need to speed to quote, the reasons nearest to any executive’s heart: improving margins and growing revenues.
When a rep configures a product or service and bundles the price, an automated process takes out the guess work, or ‘gut feel’ of pricing competitively while holding margin. If reps are pricing on gut feel, it’s because they don’t have the data to make a more informed decision. And gut feel too often leads to giving away the business out of fear of losing the deal.
The right CPQ tool gives pricing guidance based on data sales reps can see and trust. It also should provide a faster, more accurate quote, and eliminate the errors that can lead to credit memos, or worse, lost business. Add to all this the automated enforcement of pricing policies, and Sales can expect to see a double digit margin increase according to Gartner.
There are dozens of case studies where customers have seen double digit revenue growth and margin improvement, especially early adopters in an industry niche who catch their competitors flat-footed. Data shows B2B customers today are more in control of their buying process than you are of the sales cycle, and they are not going to go through a buying process defined by your predecessor back in the 90’s. But all these statistics still only define B2B customers on average. You still have to know your customers and what they want, and bring that knowledge to the project of improving sales processes. If you’re a little late to be an early adopter in your industry, it’s never too late to improve sales performance and operational efficiencies that drive top line and bottom line growth.
The idea that CPQ can give back your sales reps time when they could be selling should be enough to sell you on taking the leap to install a digital, web-based CPQ process. Sales no longer wants to go through the hassle of manually configuring a quote, chasing down configuration validation from engineers and pricing approvals from sales admins. They want to be talking to customers, the best part of the job, and you should want them talking to customers, too.
The Math: CPQ = Speed = $$
When you start to count up the benefits your company receives from speeding up the quoting process with the right CPQ solution, the math becomes a simple addition and subtraction theorem: productivity gains plus reduced response times minus margin erosion equals revenue growth in double digits.
Or, algebraically, PG + RRT – ME = RG2.
CPQ is the right formula to grow sales. It’s the kind of math your Sales team, the corner office and the Board will appreciate.
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.com 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.com