Configure, Price, and Quote (CPQ) software can be a critical tool for increasing efficiency on a complex B2B sales team. But, like any software solution, whether it actually improves the effectiveness of your sales team (or not) depends on how it’s used. Here’s what leaders of complex B2B sales need to know about CPQ to make the best of it–and avoid the worst pitfalls.
Configure, Price, and Quote (CPQ) refers to software systems that help salespeople or end customers produce price quotes and means to sign agreements. Examples of CPQ products include QuoteWerks, vloxq, Tacton, Proposify, and OneFlow (which integrates natively with Membrain). These vendors offer a range from simpler capabilities, focused more on template design and the signing of agreements, to complex calculation engines that were traditionally conducted manually in spreadsheets.
The more advanced CPQ platforms guide salespeople and customers through a configuration workflow that allows them to input complex configuration parameters for a product or service, and receive a product design and price quote as the output. In a B2C environment, you’ve probably engaged with a self-service CPQ when playing around with “Build Your Car” wizards online.
To illustrate how a CPQ can be used and how it helps simplify complex tasks, Wikipedia uses the manufacturer of a heavy truck as an example:
“If the customer chooses a certain chassis, the choice of engines may be limited. Given a certain choice of engine, the choice of trailer may be limited, and so on. If the product is highly configurable… (it can lead to) rapid growth of the complexity of the problem. Thus a configuration engine is employed to alleviate this problem.”
This example illustrates some reasons why a CPQ is necessary in many types of complex B2B sales. Traditionally, salespeople would create price quotes from spreadsheets that could be extremely complex and require hours of time to generate a single quote. Because of the many dependencies and enormous potential complexity of this work, it was subject to human error and mistakes that could be costly to the company. A CPQ can reduce the likelihood of human error, while substantially speeding up the process of providing a quote.
But creating this efficiency doesn’t always translate to making more sales. Here’s why.
The biggest mistake that sales teams make in regard to CPQ is thinking that efficiency = effectiveness. This shows up in a variety of ways:
When leadership sets “number of quotes sent” as a leading indicator, they assume that a higher number of quotes will necessarily convert to a higher number of sales. But this is a false equivalence. Quotes that are sent to the wrong customers, for the wrong reasons, and without a value-added sales conversation, will close at a much lower rate than quotes that are sent to well qualified buyers for the right reasons after a valuable conversation with a salesperson.
By focusing on the “number of quotes sent” and incentivizing that metric, teams might be led into a trap of focusing on getting quotes out as fast as they can rather than taking the time to ensure they’re sending the right quotes to the right people for the right reasons.
In the end, this can create a downward spiral in which prices and discounts are offered in an attempt to “compete” on price against other companies following exactly the same process.
For many sales teams operating in a complex B2B environment, a CPQ is a necessity of doing business. It can make the process of obtaining an accurate quote for the customer much faster and easier, saving time for the salespeople to spend on value-added activities.
But in order to use the CPQ to actually win more business, sales teams must (still) focus on having valuable sales conversations before providing a quote.
Wikipedia’s example of the manufacturer of heavy trucks provides an excellent illustration. We worked with a Swedish company that makes heavy equipment including trucks for transporting heavy materials.
When potential customers contact them to request a quote, very often the buyer thinks that they want the heaviest truck they can get, and that is what they request a quote on.
To win more business using CPQ software, teams must have value conversations before providing a quote.
However, this company does not make a truck as heavy as its competitors, and when their salespeople send out quotes for this request without having a conversation, they would lose the bid.
The way this manufacturer wins is by engaging customers in a value conversation and helping them understand more clearly what they actually need and how to structure their purchase to get the job done effectively.
In this case, the salespeople ask a number of strategic questions to understand the Jobs To Be Done by the customer. This helps the buyer think not in terms of “size of the truck” but “how to get heavy materials from the mine to the ferry in the most efficient way possible.”
Once the lens is shifted, the salesperson can guide the customer to understand that their job is better served by a larger fleet of smaller trucks. They can help them calculate the value of:
When salespeople switch from focusing on getting quotes out the door as fast as possible to having more valuable sales conversations in this way, their quote numbers go down - but their sales go up.
The CPQ is still an integral part of the process, but it becomes a tool that is used at the tail end of the sales process, not at the start. It’s used to quote a configuration that is collaboratively designed with the customer to provide the most valuable and effective solution possible.
By the time the quote is sent, the sale has a high probability of closing.
In an effective complex B2B sales process, the CPQ will get less use than in one where the quote is the central feature of the sales process. That doesn’t mean it’s not important or that you shouldn’t choose carefully.
In the end, you’ll have a CPQ that serves your business, rather than a business that serves the CPQ. And that will translate to more and better sales for your complex B2B sales team.
George is the founder & CEO of Membrain, the Sales Enablement CRM that makes it easy to execute your sales strategy. A life-long entrepreneur with 20 years of experience in the software space and a passion for sales and marketing. With the life motto "Don't settle for mainstream", he is always looking for new ways to achieve improved business results using innovative software, skills, and processes. George is also the author of the book Stop Killing Deals and the host of the Stop Killing Deals webinar and podcast series.
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