Welcome to Part One of our two-part “Definitive Guide to CPQ Sales,” in which we show you how to make CPQ your ticket to shorter sales cycles and a simpler, faster, more productive sales process.
In Part One, we go back to basics, breaking down precisely what CPQ means, how CPQ product rules work, and why the best CPQ sales solutions have to be visual.
In Part Two, we dig a little deeper, exploring how CPQ solves the four biggest challenges facing VP’s of Sales and how to implement CPQ inside your organization.
Now’s the ideal time to embrace CPQ sales (as you’ll also find out in Part Two,) so buckle up and enjoy the ride!
What is CPQ?
CPQ is software designed to help companies configure, price, and quote products. By automating many of the most time-consuming and error-prone sales processes, CPQ shortens the sales cycle and eliminates engineering and manufacturing bottlenecks.
We can break down the integrated CPQ process into three stages:
Stage #1: Configure – Quick and easy configuration of complex products.
Stage #2: Price – Instant calculation of dynamic prices.
Stage #3: Quote – Automatic generation of sales and technical documents.
Let’s crack those nutshells and take a look inside…
Stage #1: Configuration (and CPQ Sales Configurators)
Buyers are demanding customization, and manufacturers are heeding the call. But offering an escalating number of custom options increases sales complexity, and sales reps can’t keep up.
When product options number in the hundreds or thousands, manual configuration processes break down. Human error rapidly creeps in, and technically nonviable configurations become commonplace.
With CPQ, sales reps configure products using a “product configurator” rather than picking part numbers out of a catalog. Programmed into the configurator’s backend are “product rules”–chunks of code that determine how products can be assembled, making nonviable configurations impossible.
With a product configurator, sales reps don’t need to worry whether one product option will be compatible with another. They answer a series of calibrated questions, and the software guides them towards perfect customer-specific selections in a fraction of the standard time.
Stage #2: Pricing
CPQ calculates prices for products and bundles in real-time as reps and customers play around with different product options. Rather than simply extracting prices from static price lists, CPQ uses dynamic pricing–adjusting prices automatically according to fluctuating market conditions and your pricing strategy.
Sales reps are freed from the burden of unwieldy Excel spreadsheets and legacy processes. Instead, they can focus on actively selling and leave the number-crunching to the machines.
CPQ does all the heavy-lifting, but reps aren’t bound by CPQ prices–they can override them by applying discounts, which can be approved with a single click. Everyone has access to workflows and approval loops, keeping the whole sales team accountable.
Stage #3: Quoting
Sales reps can instantly generate quotes, proposals, estimates, Ts and Cs, and marketing collateral without any of the usual formatting headaches. Responsiveness is supercharged, leaving buyers delighted with the speed of service.
Robust configure price quote solutions like KBMax can generate much more than mere PDFs. CAD and design automation means reps can generate 3D product renderings and technical drawings. They can append them to quotes without any input from the engineering department, clearing engineering bottlenecks and shortening sales cycles.
In summary, a CPQ quote is more likely to convert because…
Reason 1: Products and bundles are configured to perfection and optimized for each customer’s technical needs.
Reason 2: Prices are tweaked in line with fluctuating market conditions to increase win rate and revenue without eroding margins.
Reason 3: The document is automatically generated, reducing time to quote and shortening sales cycles.
How Do Product Rules Drive CPQ Sales?
A product configurator is nothing without “product rules”–the little bits of logic that govern the configuration process, ensuring consistency and design reliability. When cleverly structured, CPQ product rules will:
- Eliminate human error. This means fewer delays, returns, chargebacks, and increased customer retention and satisfaction.
- Simplify the sales process. Reps don’t need in-depth technical knowledge of your product catalog to make optimal customer-specific selections.
- Make onboarding easy. New hires can be bought up-to-speed in days–they simply follow the rules.
- Shorten the sales cycle. Product configuration is supercharged, prices are calculated in real-time, and quotes are generated automatically.
- Clear engineering and manufacturing bottlenecks. No more napkin sketches, communication breakdowns, and endless back-and-forths. All relevant product information is captured by reps up-front and disseminated in a language everyone understands.
- Increase order values: “Guided selling” prompts sales rep to push for upsells, cross-sells, and more profitable deals
Making CPQ Sales “Visual” Supercharges Win Rate and Deal Size
Uncertainty, ambiguity, and information-overload–these factors create cognitive dissonance in buyers’ minds that stops them from spending.
90% of all information transmitted to the brain is visual, and images are processed 60,000 times faster than text. So, if you really want to inspire buyers’ confidence and reduce purchase anxiety, don’t explain why your products are right for them; show them!
KBMax has a visual product configurator rather than a run-of-the-mill text-based alternative. Instead of checking boxes and filtering options, sales reps are presented with a 3D product image that they can interact with in real-time.
A visual product configurator can be used as a gated tool, side-by-side with a buyer, or (as discussed later) by the end-customer themselves. Users simply drag, drop, point, and click to change colors, dimensions, parts, and more, with changes updated on-screen in real-time.
Visual product configuration provides a fully immersive experience that connects buyers to brands on a more profound, emotional level and gives reps a full visual understanding of the products they’re selling. It’s a marked differentiator in a crowded marketplace that elevates customer experiences to new heights.
Self-service CPQ sales and the case for “embedding.”
The B2B buyer has changed. Both demographically and psychologically.
A new generation of Millennial B2B buyers has replaced the old guard. These digital natives have never known an internetless world and have grown up with services like Amazon, Netflix, and Uber setting the digital standard.
Millennials, the Zoomers hot on their heels, and everyone else, for that matter, are so used to dealing with the tech giants that they now expect Amazon-level customer experience whether they’re buying for themselves or for work.
Today’s buyer wants everything to be quick and easy. They don’t have time to build an emotional connection with a sales rep during regular working hours. They want to research products independently and walk the path to purchase at their own pace, on any device, from anywhere.
With CPQ, companies can give buyers that self-serve option.
Sales directors can embed a visual product configurator into their B2B eCommerce site. Buyers can configure even the most technical products themselves. A process that used to take 20+ calls and emails can now be completed without any human interaction at all.
But what does CPQ automation mean for sales reps?
Most sales reps would agree that many of their day-to-day responsibilities are ripe for automation. Much of their busywork is eminently replicable, and reps would welcome the opportunity to shift their attention to more meaningful, revenue-generating work.
CPQ can indeed perform many sales tasks faster, better, and cheaper than any human sales rep ever could. But that doesn’t mean “fire the sales team.” Instead, let your reps focus on revenue-generating activities while software carries out the time-sapping, error-prone tasks that most reps hate doing anyway.
In the future, some sales jobs will be lost to automation. But these will be jobs at the lower end of the pay scale. Technology will create plenty of well-paid, highly-skilled sales roles too.
The most effective reps will be those that combine a firm grasp of advanced technology with their innate interpersonal skills to produce results neither man nor machine could achieve independently.
Join us in Part Two of “The Definitive Guide to CPQ Sales,” where, among other fascinating insights, we’ll uncover the four biggest challenges facing VP’s of Sales today and how CPQ sales provide the solution.