Introduction
According to Gartner research, the global CPQ market in 2015 was valued at $570 million, a figure that was just a fraction of the CRM market at that time. Things have changed since then with a large number of companies investing in CPQ solutions. Gartner also predicts that the CPQ market is expanding at a year-on-year rate of 20 percent, which means it might already have passed the billion-dollar-mark.
CPQ (Configure/Custom, Price, Quote) solutions are primarily meant for businesses that deal with configurable or complex products and B2B quotes. Building a B2B quote involves a lot of variables and getting them wrong can cost a lot of business. CPQ and Quote-to-Cash solutions might look like the same thing but there are some differences. CPQ solutions are focused on generating and automating quotes, while Quote-to-Cash solutions are more like end-to-end solutions that also cover things like contract lifecycle management, order management, invoicing and payment receipt.
CPQ solutions work particularly well for businesses that struggle to generate timely and accurate quotes, resulting in the customer losing interest in their product. Product dependencies, long approval processes and complex pricing models make things difficult for sales teams and result in inefficiency and loss of productivity. A CPQ software automates most of these processes, allowing sales reps to focus on what matters the most i.e. delivering great customer experiences.
What is a CPQ System?
A CPQ solution allows sales teams to produce accurate quotes in minutes without having to switch between different systems and spreadsheets. Configure/Custom, Price and Quote are the key components of a CPQ system and although features can vary from one solution to another, the basics remain the same.
Configure
Today’s customers have come to expect products and services tailored and personalized according to their individual preferences. Businesses need to keep up with that, which is very difficult with traditional methods such as use of spreadsheets and other manual methods.
Things such as configuring custom packages can take up a lot of time and effort of sales teams. They have to keep track of products to bundle, approvals and quote delivery. The Configure component of a CPQ system takes care of these things and allows team members to focus more on their product and services instead of administrative work.
Price
The one-size-fits pricing is becoming outdated and businesses are shifting to customized pricing and discounts, which varies from one customer to another. Pricing products, especially digital products require the management to consider a lot of facts and figures and misquoting any one of these numbers can cost businesses valuable customers. The Price component of a CPQ system helps them keep an overwhelming number of variables straight for consistent and accurate quotes.
Quote
Although quote-only systems can also perform most of the tasks the Quote component of a CPQ solution can, they are usually not as tightly integrated with other components. Quotes not only have to be accurate, they also have to be easy to understand and clearly tell things like contract terms.
How Does a CPQ Solution Work?
CPQ solutions are designed to help sales teams deal with the challenges related to all stages of the sales cycle by automating processes, efficient quote management and guided selling. A CPQ system is not just about generating quotes and also covers a lot of different areas. Having a compelling product catalogue is one thing, but managing it effectively is another.
A CPQ system allows businesses to automate their quote-to-cash process using custom rules for approvals, bulk discounts and other customizations. This means that sales teams don’t have to deal with every single task manually. A CPQ system also ensures that sales teams are generating quotes that comply with rules established for pricing, approvals, discounts etc. You can also think of a CPQ solution as the bridge between back-office finance and sales at the front-end. A CPQ is more closely related to an ERP solution as it also involves billing and contract terms and fills the CRM-ERP gap.
Who Should Consider a CPQ System?
A business might want to consider investing in a CPQ solution if the answer to some or all of the following questions is yes.
- Looking for usage-based billing capabilities?
- Complicated product/service pricing models
- Outdated product/service pricing info
- Sales teams take a lot of time to generate quotes
- Sales people are struggling with identifying cross-selling and up-selling opportunities
- Lack of clear visibility into the sales process
- Manual errors are a common place
- The functionality of the current quote management system does not meet business requirements
SaaS vs. On-Premises CPQ
The differences between SaaS and on-premises CPQs is almost the same as other solutions as covered in detail here. SaaS CPQ solutions are cloud-based and can be accessed from anywhere, anytime. Although on-premises solutions provide more control over data and processes, SaaS solutions are flexible and easily scalable, and ideal for businesses with limited IT resources.
Ongoing maintenance, updates and upgrades are also the responsibility of the SaaS vendor, saving businesses from a lot of hassle and time down the road. Businesses, especially SMBs can get started quickly with a SaaS CPQ solution and can upgrade or terminate the service at any time. On the other hand, on-premises solutions can take a lot of time to set up and moving between different solutions can cause interruptions and loss of business.
Benefits of CPQ Systems
Using manual and old-school quote management systems can result in lost deals because of bad intel and digging through spreadsheets. CPQs make creating the right product configuration a lot easier through product configurators and shorten the whole quoting process significantly. Sending a quote before your competitor does can mean the difference between a lost and closed deal.
Guided selling capabilities give sales reps the confidence and ensure that they don’t commit anything to the customer that might not get approved. Automated rules and business logic can help prevent misquoting and notify the sales reps in advance if a bundle is possible or not.
Sales reps need to ask the right questions in order to make a connection with the customer. Guided selling allows them to ask the right questions and evaluate their unique requirements. Once they have the required information, the CPQ system takes care of the rest and generates a quote that’s customized according to the specifications. Guided selling also helps reps identify cross-selling/up-selling opportunities, resulting in an increase in revenue and productivity.
Our Picks for Top 5 SaaS CPQ Solutions
All CPQ solutions are not created equal. Some are specifically tailored according to the requirements of large enterprises, while others are made for small and medium businesses. Choosing the right solution depends on the business size, individual requirements and business strategy. However, there are some features and functionality businesses need to consider in order to pick the right solution including:
- Support for complex pricing models and a validation engine
- Dynamic product visualization functionality
- Guided selling
- Instant proposals and automated generation of proposals
- Support for manufacturing data. Businesses dealing with configurable, complex products/services should consider a CPQ that includes support for routings and BOMs
IBM Sterling CPQ
The powerful solution by IBM is designed to transform how businesses handle complex pricing models and configurable products. It allows eCommerce customers, call center and sales team reps and business partners to get accurate and fast quotes and helps automate the online sales process. The multi-channel engagement solution supports customer self-service, direct sales as well as partner sales.
Its powerful capabilities make it a suitable solution for large enterprises that have distributed teams. It saves users from having to carry out a bulk of preliminary activities, manually localizing the pricing engine and adjusting things according to different geographies. The solution is particularly popular in the e-commerce industry that requires multi-level control and a dynamic and powerful pricing engine.
Salesforce CPQ and Quote-to-Cash Solutions
Formerly SteelBrick CPQ and acquired in 2015 by Salesforce, its Quote-to-cash is a comprehensive solution that has a strong presence in the CPQ market. It works especially well for businesses that are already using Salesforce CRM or its Service Cloud. The CPQ solution also benefits from the Einstein AI capabilities.
Salesforce CPQ solutions along with its CRM technology help automate quotes/proposals, vital documents and contracts, which usually take a lot of time. Guided selling makes it easier for sales reps to determine the products/services according to customer requirements. This shortens the client turnaround time significantly, while automated contracts and one-click access to product and client data eliminates speed bumps in the Quote-to-cash process.
Apttus
With its robust core functionalities, Apttus CPQ solutions are designed to drive transformation and help businesses optimize their processes. It’s built on force.com platform (Salesforce) and also leverages AI capabilities from the MS Azure Learning service. It works well with MS Office tools and makes the process simpler for sales reps who are already familiar with the software.
Conga CPQ minimizes complexity in the quoting process for seamless digital commerce and allows businesses to close more deals faster. It comes with some powerful features, including TurboEngines that can process complex data sets up to 10 times faster than traditional methods and advanced pricing. The solution enables sales teams to generate accurate quotes in a few clicks and increase the bottom line.
Oracle CPQ Cloud
Formerly BigMachines, Oracle CPQ Cloud provides strong core capabilities and is designed for enterprises that want to deliver a great customer experience. The solution works equally well for sales teams and as a self-service solution, and can be seamlessly integrated with Oracle Commerce Cloud.
Automated configurations, guided selling, intuitive configuration and easily configurable subscription contracts make Oracle CPQ Cloud an excellent choice for enterprises, especially the ones that are already using other Oracle Cloud solutions.
Cincom CPQ
The agile and flexible CPQ solution works well for businesses of all sizes, including small and medium businesses and is also able to handle complex sectors such as manufacturing. SMBs can take advantage of its advanced configurator and sales automation tool if they are not afraid of doing some coding. Its BI capabilities can be deployed in-house as well as through the cloud.
The solution is suitable for businesses that use Microsoft Dynamics. Seamless integration with Dynamics 365 CRM bridges the gap between the CRM and CPQ and extends the core functionality of the CRM system, resulting in improved user adoption, quote accuracy and an enhanced customer experience.
Conclusion
A large number of businesses are moving away from single-product pricing model and have to deal with configurable products/services, which results in complex pricing models. A CPQ solution helps such businesses sell products/services based on customer requirements and reduces wastage of time.
A mobile-compatible SaaS CPQ that can seamlessly integrate with the existing CRM and leverage the power of Data Analytics /AI helps sales teams focus more on what’s more important instead of spending most of their time in administrative things such as data collection and approval. As a result, they can spend more time on delivering great customer experiences and closing more deals faster.