Table of contents
In this article, you will learn:
- What CPQ is and how it works
- What the main advantages and disadvantages of using CPQ are
- When it is worth considering implementing CPQ in your company
- What the best CPQ software options are
Buying a premium car is a real pleasure. You can sit back comfortably in your own chair and let your imagination run wild. On a laptop or tablet, you can select not only specific models and body types but also countless equipment packages, interior styling, safety systems, engines, and paint colors. The number of variants can make your head spin. Fortunately, the system ensures that no selected components conflict with each other and supplements your choices with the elements needed for the selected options to function. This all happens in real-time – every change in color or dashboard texture is immediately reflected in the model visualization, which can be viewed from every angle and even explored from the inside[i]. Finally, you can look at the cost summary… and return to reality. It is no different if we want to furnish our own kitchen or living room with IKEA furniture. The system will show and suggest which elements our design must consist of, what the index numbers are, which shelf and aisle the necessary packages are located on, and how much you will have to pay at the checkout[ii]. Access to such extensive functionality and product visualization is thanks to CPQ systems.
What is CPQ (Configure – Price – Quote)?
CPQ systems are a fascinating tool. They allow for the free configuration of complex products with numerous options and interdependencies. On the screen of any device, you can view a visualization of the selected version in real-time, including in 3D. You can track price changes with every modification to the selected set, and after confirming your choice, the final offer, details of the selected configuration, and information necessary for quick purchasing decisions appear in your inbox. CPQ programs also provide a lot of valuable additional information so that it is possible not only to produce a specific version of the product but also to assemble or operate it. Sticking to examples from the automotive and furniture industries – this refers to information like “this wardrobe door will conflict with the selected drawer” or, when buying a car, “selecting the safety package requires purchasing the Comfort electrical package.” Finally, the user will receive information about the car’s production date or when their packages will be sent to the specified address. They will also receive assembly plans, information about required power supply, or necessary space. Sometimes, package dimensions and weight are useful. There are really many possibilities, depending on the industry, the CPQ system, and customer requirements and purchasing habits. CPQ software is evolving toward expanding visualization modules, quickly replacing classic option selection. Thanks to this, a new category called Visual CPQ allows you to check the product and its functions based on photos or in a VR (Virtual Reality) environment. In this way, CPQ becomes a comprehensive tool supporting the entire sales process, not just facilitating configuration and pricing.Why is it worth automating the process of pricing and offering products?
Traditional pricing and quoting is a tedious and thankless task, and in the case of a multi-variant offer for a complex product, it requires high competence and a lot of time. With a larger number of customers and an extensive offer, the sales team must be sufficiently large, which already entails significant personnel costs. Therefore, any facilitation and reduction in the time required to prepare a final proposal is worth its weight in gold. Configure-Price-Quote systems eliminate numerous spreadsheets containing lists of products, sub-assemblies, and components along with price lists and discounts from the company’s workflow. The need to laboriously search through previous correspondence and reconcile the content of offers also disappears. All sales information becomes available in one place for every salesperson, which significantly improves team consistency. A few clicks are enough to prepare and send the client a PDF file with an offer tailored to their needs and expectations. It also eliminates bottlenecks in workflow and significantly reduces the number of incorrect information sent to production departments. The result? Large savings and increased production efficiency. As the experience of one of the CPQ market leaders, Epicor, which acquired KBMax in May 2021, shows, users of the Epicor CPQ system can expect an annual sales increase of approximately 168%, while simultaneously shortening the sales cycle by 38% and increasing production by 35%[iii]. These are very encouraging indicators that are dynamizing the market for CPQ solution providers. According to forecasts by the research firm TechNavio, the CPQ software market will grow from 334.5 million USD in 2020 to 416 million USD in 2024[iv].What are the main advantages of CPQ?
CPQ software integrates product catalogs, their visualizations, and price lists reflecting individual pricing and discount policies in one place. They also enable the free flow of data between CRM and ERP systems. Figuratively speaking, CPQ brings together customer needs with the company’s necessary production resources. Automation in this area means smooth sales cycle management and constant monitoring of the company’s key performance indicators. In higher-class CPQ systems, such as Epicor CPQ[v], it is possible to control the entire process from design to production, exactly according to customer demand. Thanks to integration with ERP systems and the use of artificial and augmented intelligence techniques, demand and production planning can be modified on an ongoing basis. This provides significant savings in warehousing, logistics, and production, as well as higher margins. When producing to order, you can very quickly create accurate quotes and better plan sales. The CPQ system eliminates most errors in orders, which also affects the final productivity of salespeople. Automation in the configuration – pricing – quoting process also influences increased customer loyalty. Their experiences, emotions, and the attractiveness associated with using visual methods of configuring complex products and receiving a complete set of information instantly build a new quality in customer-company relationships. This has a direct impact on sales growth – the conversion rate increases by 40%[vi]. Within the organization, managers and salespeople receive a unified interface where they can track the progress of every customer interaction from the first contact until the finished product is shipped. An archive of offers, best sales practices, or tracking and gathering all useful customer information in one place always proves very useful. The CPQ system thus becomes an excellent complement to CRM modules. The CPQ system also takes care of automatic contract renewal and management, as well as supporting up-selling, down-selling, or cross-selling sales strategies. CPQ shortens the time to full efficiency for new salespeople by 30%[vii]. They do not need to know indexes, codes, and product assembly rules – the application does it for them. During this time, they can focus on creating offers quickly and rhythmically, as well as establishing and maintaining lasting business relationships. From the IT infrastructure side, CPQ solutions can work as independent programs or be integrated with an ERP system or its selected modules. Thanks to the ability to run CPQ programs in the cloud, offers in progress can be immediately available for viewing and editing on multiple devices simultaneously, and they can be accessed by relevant employees according to their permissions. This also means full support for companies selling through a network of sales partners – they can also fully enjoy the benefits of CPQ applications.What are the disadvantages of CPQ systems?
In the case of CPQ systems, it is difficult to talk about disadvantages. The applications available on the market differ in functionality, advancement, and integration capabilities, but each of them can improve something in the company’s sales department. Instead of disadvantages, one can speak more of inconveniences in its use – a CPQ system will fulfill its task only on the condition that it is constantly fed with current, true, and complete data. Meeting this condition can be a challenge for many companies. Certain difficulties may certainly arise during the integration of CPQ modules with CRM and ERP systems, especially if they come from different manufacturers.When does a company need CPQ software?
CPQ software is popular especially where products with a complex and extensive structure with many options are offered, where the final price depends on configuration details, the customer’s purchase history, and nuances of discount policy. Implementing a CPQ system can be an element of a digital transformation strategy for the entire organization or be initiated in a situation of flagging sales. If you put the costs, time, and resources necessary to launch such a solution on one side of the scale, and additional profits, increased productivity, savings in logistics, and lower personnel costs plus better customer relationships on the other, it will be quite easy to calculate whether it is a profitable investment. Certain numbers speak for themselves – a proper CPQ implementation offers the chance for a tenfold acceleration in offer creation, a 95% reduction in the time required to obtain supervisor approval for a discount, and a 50% reduction in the time from sending the offer document to finalizing the sales service[viii]. Worth it?Best CPQ software – list
Choosing the best CPQ software, as in any “beauty contest,” must always be preceded by the question of who is choosing and what the criteria for this choice are. Fortunately, in this case, it is not so much a strict ranking that is important, but a list of leading providers in terms of both popularity and customer satisfaction with using CPQ systems. On our subjective list, supported by a report from the g2.com portal[ix], are:- Apparound
- HubSpot Sales Hub
- DealHub.io
- PandaDoc
- Proposify
- Paperless Parts
- Salesforce Revenue Cloud
- Epicor CPQ
- Configure One
- CloudSense
