What is CPQ?
Chances are if you’re in the B2B eCommerce space, you’re familiar with CPQ (which stands for Configure Price Quote) software.
CPQ is a kind of software that B2B businesses use to help them quote complicated and configurable products. While CPQ software has been around for decades, recent technological developments have resulted in more innovative CPQ for B2B tools for sales optimization.
With the proper CPQ eCommerce software in place, companies can quickly and accurately create quotes for highly customized orders. Quotes are automated via preset rules, and account for complicated pricing that includes discounts, bulk ordering, optional features, multiple revenue types, and more.
Why Does it Matter?
CPQ’s automation saves sales reps significant amounts of time, which can make-or-break an enterprise’s bottom line. Sales reps without access to CPQ solutions indicate that they spend just 34% of their time actually selling, per a recent Salesforce report. That same report discovered that proper CPQ implementation and utilization leads sales reps to experience:
- 10x faster quote generation
- 95% reduction in approval time
- 2x faster moving from quote to cash
In short: CPQ saves B2B businesses time by delivering quicker quotes, ensures accuracy by automating configurations, provides a customized experience for buyers, and empowers sales reps to sell more successfully. All of this adds up to a superior, customer-centric experience.
How Does CPQ Work?
CPQ solutions typically integrate with CRM platforms, ERP programs, and other business operations technology, ensuring that data is updated and accurate. So, whenever a custom order is placed, the CPQ would update the ERP program matching the items in the order.
Essentially, the backend of the CPQ supports the many complex processes B2B eCommerce demands. When companies have complex, configurable products (ex. specific pricing agreements per customer, or location-specific pricing laws), the CPQ pulls all the available product variants and displays them in an eCommerce platform.
On the frontend, customers can browse the eCommerce platform to select the variant that works best for them, and the CPQ will generate the customized pricing based on their selections.
This frontend experience is critical, as the typical B2B buyer is 90% ready to purchase by the time they contact a business.
Challenges of Implementing CPQ
Yet while CPQ software can be a game-changer for B2B businesses, it can also be difficult to implement and adopt.
The major challenges of CPQ typically fall into one of these areas:
- Re-Implementing Legacy Systems - Stay away from “We have always done it this way.” A new CPQ implementation is your chance to improve your current processes and flow.
- Integration Issues - Your CPQ needs to work alongside your CRM and ERP. If the three systems don’t integrate, you’ll have to turn to a third-party solution to connect them. Before selecting CPQ software, determine how it integrates to your already existing systems.
- Big-Bang Implementation - Don’t try to implement everything at once. First focus on adoption - define what you need to do to be a win. Make sure the scope isn’t too large to delay launch or too complex for your customers to easily adopt it!
- Poor Transition Planning - Migrating to a CPQ requires a comprehensive plan and a testing phase to identify as many problems as possible before launch. This includes ensuring that rules are clearly defined, among other key steps. Don’t underestimate the complexity of proper migration planning.
- Lack of Training - Any new system comes with a learning curve. In order for CPQ to be properly utilized, team members will need extensive training. A solid change management plan is critical in getting users to adopt the new solution.
- Lack of Business Ownership - Proper ownership of the CPQ platform needs to be defined from day one of implementation kickoff.
Fortunately, these pitfalls can be avoided by embracing some best practices instead.
Best Practices for CPQ
Have a Solid Change Management Plan
It’s no secret that change management is the key to successful digital transformation. Yet all too often, businesses rush or overlook the importance of change management, and sales teams don’t fully adopt the solution. Without team members on board, CPQ is useless.
Appropriate change management equips teams to understand the tools they’re tasked with using, and build in time to discover issues along the way, rather than days from launch. It also means assessing current teams to see if they’re adequately staffed and have the skills necessary to adopt CPQ. Afterall, if you can’t get your teams on board, it will be even more challenging to get customers to adopt the new system.
Take the time to train your staff well, and to test the CPQ solution thoroughly. Investing upfront will save significant hassle after launch, when it’s much harder to make necessary adjustments.
Don’t Underestimate CPQ Complexity
CPQ is a worthy investment, but as mentioned previously, it requires significant integration. This integration isn’t just limited to ERP and CRM systems, though. It also involves numerous business processes, like finance, sales, product management, legal, and more.
It’s critical to examine early on how each of these areas of the business intersect, and identify how CPQ implementation will impact workflow, and what requirements the solution must meet for each area of the business.
Equally important is establishing accurate data for the CPQ processes. You’ve likely heard the phrase, “garbage in, garbage out.” Important data points, like discounts, packages, tax rates, contracted pricing, and other information needs to be reliably captured, verified, and imported.
This entails understanding your customer base and designing product models to create configurations best suited to your customers’ needs.
Focus on the Needs Versus Wants
In the same vein, Instead of focusing on iterating from your existing system, look at defining what you need combined with what works well with the new system.
It’s all too easy to get caught up in a “wishlist” of wants, and lose track of what you ultimately need your CPQ to be able to do. By staying focused on the true needs of the system, you’ll ensure that your CPQ delivers for both your business system and user experience needs.
Take a Multiphase Approach to Launch
Rather than trying to do it all at once and rushing the process, approach the launch of your CPQ in phases.
Perhaps you’d begin by launching one product line that has a medium-level complexity and go live with that. See how it performs, what tweaks it needs, and make adjustments prior to launching the next phase.
Or, consider starting with your sales reps, then rolling it out to your partner channel, and then B2C.
By doing it in phases, you can learn from each phase and apply those learnings to the next phase, rather than having to backtrack through all phases to make adjustments.
Set Measurable Targets
As with any implementation, you want to make sure the ROI is worthwhile. This means setting specific objectives and assessing whether or not CPQ is delivering.
Perhaps initially, your focus will be on increasing the processing time for quotes by 20%, or cutting down on time spent selling by 15%. These targets will change over time as you improve performance.
Frequently review your targets, optimize based upon your findings, and ensure that CPQ is paying off.
Clear Practice Ownership
Just as you need to clearly articulate your targets, you also need to clearly identify ownership structure.
A sample ownership structure might include identifying the person responsible for migration to production (likely the IT team); the person responsible for change management (this could involve leadership and IT); and the person responsible for business rules (this would likely require collaboration between your business, sales, and operations teams).
Wrapping it Up
CPQ is a powerful tool with major benefits for enterprises, B2B manufacturers, and other eCommerce brands. While complex to implement, properly launched and maintained it can be a game-changer for businesses, saving time, increasing sales, and streamlining business processes.
Interested in learning more about CPQ, or looking for a reputable and experienced implementation partner? Reach out to the team of experts at Object Edge today.