What is CPQ?

CPQ Configure, Price, and Quote 

CPQ software streamlines the sales-to-manufacturing process, from product configuration to quote generation and beyond. With CPQ, you can deliver exceptional customer experiences and achieve unprecedented efficiency.

What is the CPQ Process?

CPQ stands for Configure, Price, and Quote. It’s a three-step process central to most manufacturing companies. It involves configuring a product for a customer, calculating a price for the product, and generating a quote so the customer can place an order.

CPQ software is a tool widely adopted in the manufacturing sector for automating and streamlining the CPQ process. Businesses dealing with complex configurable products find it particularly valuable, as it has the capability to transform their operational efficiency.

CPQ software empowers users to make swift, error-free decisions about which configurations to offer their customers. It prices the configuration in real-time according to advanced pricing strategies, ensuring maximum profitability. And it automatically generates quote documents, accelerating the sales cycle, reducing errors, and improving customer relationships.

Configure

Product configuration is the first stage in the CPQ process. Instead of configuring products manually, which is slow and error-prone, sales reps and customers use an interactive product configurator.

The configurator automates the configuration process. It contains predefined product rules that determine viable product assemblies. It optimizes every configuration for engineering efficiency, profitability, and customer satisfaction, without checking with the engineering department.

Price

CPQ’s Pricing feature revolutionizes pricing calculations by replacing manual methods, such as Excel spreadsheets, with a dynamic, automated system. As users explore product configurations, CPQ recalculates prices in real-time. It considers factors like raw material costs, promotional offers, stock levels, and even competitor pricing, maximizing accuracy, responsiveness, and margins from each sale.

While CPQ automates much of the pricing process, it also accommodates sales representatives’ input. They can suggest discounts or adjust prices within predefined limits and permissions, requiring only a single-click approval from the leadership team.

Quote

The CPQ Quoting feature automates sales document generation, creating quotes for different configurations with a click. This efficiency enhances accuracy and speeds up delivery to clients, eliminating traditional wait times.

With Epicor CPQ, quotes automatically incorporate 3D models, tech specs, and CAD files. This seamless integration reduces reliance on manual engineering inputs, ensuring customers receive detailed, prompt quotes for informed purchase decisions, elevating the overall customer experience.

How Does CPQ Work?

CPQ (Configure, Price, Quote) software is fundamentally built upon a system of rules that provide logic and structure to your company’s sales, engineering, and production processes.

These rules fall broadly into three categories: product, pricing, and workflow. Together, they streamline the sales process, eliminate potential errors, and increase overall efficiency.

  • Product rules contain your company’s engineering knowledge, ensuring consistency and reliability in product design and configuration.
  • Pricing rules direct the pricing mechanisms within the CPQ system.
  • Workflow rules govern the coordination between different systems and personnel. They automate workflows, improving coordination between sales, engineering, and production.

Creating and implementing rules within CPQ software transforms the sales process into a swift, error-free, and efficient operation. It allows companies to respond promptly to customer inquiries, reduce manual workload, ensure technical and pricing accuracy, and, ultimately, maximize sales opportunities.

How Epicor CPQ Works Across the Configure-to-Order (CTO) Lifecycle

CPQ software equips sales teams with powerful tools that simplify their tasks, enhance their productivity, and enable them to respond confidently to customer inquiries. It frees sales reps from the burden of complex configurations and calculations, allowing them to focus on engaging with customers, understanding their needs, and closing deals.

Product Configuration

CPQ guides sales reps and customers through the configuration process using built-in product rules. An intuitive 3D interface lets users make changes on-the-fly and view the product as it evolves on-screen.

Dynamic Pricing

CPQ automatically calculates accurate pricing as users configure products, reducing errors and time spent on calculations. It can also automate pricing approvals and discounts, providing sales managers 360 visibility.

Quote Generation

CPQ software generates quotes, proposals, and other documentation at the touch of a button. .

Engineering Automation

CPQ automatically generates CAD drawings for engineering and production teams, compatible with any CAD software. This eliminates sales-to-manufacturing complexity and frees engineers to focus on research and development.

Shop Floor Automation

CPQ auto-generates everything needed for production, such as Bills of Materials (BOMs), CNC cut sheets, parts lists, and additive manufacturing files. This speeds lead times and reduces the need for manual labor in the factory.

The Final Product

The finished product is optimized for the customer’s unique needs. It’s free from errors and shipped on time, every time.

More Profit with Less Complexity

168% increase in annual sales

38% faster sales cycle

35% increase in production

Why Is CPQ Important?

In a fiercely competitive, high-tech business environment, CPQ is a vital tool. It addresses several challenges your company face, such as meeting rising customer expectations, improving efficiency, enabling sales teams, and empowering customers.

Customer Expectations

B2B buyers want to buy personalized products. CPQ tailors offerings to their unique needs, boosting satisfaction and loyalty

Efficiency and Accuracy

CPQ automates slow, manual processes, ensuring quicker, more accurate configurations and quotes.

Dynamic Pricing

CPQ offers dynamic pricing, adjusting prices in real-time for a competitive edge and profit maximization.

Sales Enablement

CPQ empowers sales teams with tools to simplify tasks and boost productivity. It lets them focus on customer engagement and closing deals.

Engineering Automation

CPQ streamlines engineering, auto-generating CAD files, bills of materials, and 3D product renderings.

Data Analysis and Forecasting

CPQ collects data on customer behavior trends and product performance, aiding in strategic decision-making and sales forecasting.

Customer Expectations

Today’s B2B buyers demand and expect personalized products. CPQ enables you to customize offerings according to their unique needs and preferences, increasing satisfaction and loyalty.

Efficiency and Accuracy

Traditional methods of configuring, pricing, and quoting products are time-consuming and prone to human error. CPQ software automates these processes, dramatically reducing the time and effort required to generate accurate quotes.

Sales Enablement

CPQ software equips sales teams with powerful tools that simplify their tasks, enhance their productivity, and enable them to respond confidently to customer inquiries. It frees sales reps from the burden of complex configurations and calculations, allowing them to focus on engaging with customers, understanding their needs, and closing deals.

Dynamic Pricing

The business environment is increasingly dynamic, with fluctuating market conditions and rapidly evolving competitive scenarios. CPQ allows businesses to implement dynamic pricing and tweak prices in real-time. This agility helps businesses remain competitive and maximize their profitability.

Engineering Automation

The engineering process can be intricate and time-consuming for companies selling complex and highly configurable products. CPQ software can streamline this process by automatically generating CAD drawings and files, bills of materials, assembly instructions, parts lists, and product renderings.

Data Analysis and Forecasting

CPQ software collects a wealth of data that can provide valuable insights into customer preferences, sales trends, and product performance. This data can be used to inform strategic decisions, refine pricing strategies, and forecast future sales and revenue.

CPQ Overcomes 3 Key Sales Challenges

The Challenge: Long and unpredictable sales cycles

CPQ speeds up responses to inquiries, simplifies tasks, and automates approval workflows, resulting in increased customer retention and higher win rates.

The Challenge: Underperforming sales teams

CPQ provides sales reps with tools to focus on customer relationships and active selling rather than administrative tasks.

The Challenge: Errors and Bottlenecks

Product rules and 3D visuals transform overwhelmed and inexperienced reps into product experts and trusted advisors.

What Is The Main Advantage of CPQ?

The main advantage of Configure, Price, Quote (CPQ) software is its ability to simplify and expedite your sales process. Traditional sales environments involve numerous manual tasks prone to human error, especially with customizable products or complicated pricing models.

CPQ software automates these tasks, reducing inefficiencies and enhancing accuracy. It enables businesses to respond to customer inquiries swiftly, generate accurate quotes faster, and, thus, win more deals. Improved efficiency strengthens competitive standing and paves the way for sustainable business growth.

Other CPQ Benefits

Financial Performance

  • Pricing Accuracy
  • Margin Protection
  • Up-Selling and Cross-Selling

Operational Excellence

  • Sales Cycle Acceleration
  • Cross-Functional Collaboration
  • Regulatory Compliance

Customer Engagement

  • Immersive Experience
  • Consistent Interactions
  • Personalization

CPQ Applications: Must-Have Features

While CPQ solutions may seem similar at a glance, the richness of their features sets them apart—especially for businesses dealing with intricate product portfolios that span into the thousands.

The following are vital functionalities to prioritize to efficiently manage complex product configurations and ensure a streamlined, high-quality user experience.

Immersive Configuration with 3D, VR, and AR

3D visualization, Virtual Reality (VR), and Augmented Reality (AR) features provide an engaging, lifelike configuration experience. They wow customers, increase product understanding and boost sales.

No-Code Rules Engine

A no-code rules engine empowers non-technical users to set the CPQ’s logic and constraints. It makes launching new products, changing pricing, or adjusting workflows faster and independent of vendors or external agencies, boosting agility to market trends.

Automated CAD Models and BOM Generation

The ability to auto-generate CAD models and BOMs for each product configuration streamlines the engineering process, reducing the time and effort needed, and improves sales-to-engineering collaboration.

Seamless Integration with Existing Systems

The ability to integrate your CPQ tool seamlessly with existing business software like ERP, CRM, eCommerce platforms, and PLM ensures consistent data flow between systems and eliminates manual data entry.

Cloud Deployment

Cloud-based CPQs offer anytime, anywhere access and seamless scalability to support growth. They also have a lower TCO (total cost of ownership) than on-premise alternatives.

B2B eCommerce

Integrating your CPQ solution with your eCommerce platform allows customers to self-serve, speeding up the buying process and reducing the sales team’s workload..

End-to-End Automation

A leading CPQ solution should provide complete digitization and automation from customer interaction to final manufacturing. This connectivity minimizes manual handoffs, enables real-time visibility into manufacturing processes, and improves operational efficiency.

Guided Selling

Guided selling helps customers navigate a complex configuration process. It also streamlines the learning curve for sales reps, enforcing consistency and getting new hires up to speed more quickly.

“Before Epicor CPQ, our sales team would create quotes that didn’t reflect accurate pricing or engineering rules. They needed to submit them to the engineering team multiple times with multiple reworks until they were correct.”

Merck Millipore

“We are making it easier for our customers to accurately configure several of our most customized products in a virtual and self-service way.”

NanaWall Systems

“We have dramatically increased the accuracy of our quoting process. This speeds up our workflows, lowers our lead times, and ultimately improves the customer experience.”

The Prestwick Companies

Integration Capabilities

CPQ is a powerful standalone solution, but, like all software, its effectiveness multiplies when you integrate it with other back-office systems. Epicor CPQ, being platform-agnostic, seamlessly integrates with any third-party software.

Integration bridges the gap between various departments within your organization, reduces manual data entry, and drives cross-functional workflows. It also provides a single source of truth for your product and pricing data, helping to break down silos and enhance strategic decision-making.

CRM

CPQ’s integration with your CRM allows access to customer data to personalize experiences. It leverages purchase histories for intelligent product recommendations and tracks customer interactions for more effective follow-ups.

PLM

CPQ’s integration with Product Lifecycle Management (PLM) systems ensures that the product configurations offered to customers are always up-to-date and feasible, effectively managing complex product information throughout their lifecycle.

eCommerce

The integration of CPQ with your eCommerce platforms enables you to embed your visual product configurator into your website, allowing customers to research and interact with your products from anywhere and place orders anytime.

CAD

When integrated with CAD solutions like AutoCAD or Solidworks, CPQ automates the most time-consuming and transactional engineering tasks, supercharging engineering efficiency and removing common bottlenecks in the sales cycle.

AR and VR

CPQ’s integration with Augmented Reality (AR) and Virtual Reality (VR) takes visual product configurators to the next level, offering customers a captivating and interactive configuration experience that sets your business apart from the competition.

Business Intelligence Tools

By integrating with BI tools, CPQ provides insights into sales performance, product trends, and pricing strategies, allowing for fully-informed business decisions.

ERP

When CPQ integrates with your ERP system, it ensures consistent data sharing across various departments, including product, inventory, customer data, supply chain, and financials. Configurators are always equipped with the most current data. When a purchase is made through the CPQ system, the relevant data gets updated in the ERP system for consistency and accuracy.

Document Management Systems

When CPQ integrates with Document Management Systems, it enhances the management and storage of critical documents such as quotes, proposals, and contracts. This can improve the efficiency of document retrieval and ensure secure storage.

CRM

CPQ’s integration with your CRM allows access to customer data to personalize experiences. It leverages purchase histories for intelligent product recommendations and tracks customer interactions for more effective follow-ups.

PLM

CPQ’s integration with Product Lifecycle Management (PLM) systems ensures that the product configurations offered to customers are always up-to-date and feasible, effectively managing complex product information throughout their lifecycle.

CAD

When integrated with CAD solutions like AutoCAD or Solidworks, CPQ automates the most time-consuming and transactional engineering tasks, supercharging engineering efficiency and removing common bottlenecks in the sales cycle.

eCommerce

The integration of CPQ with your eCommerce platforms enables you to embed your visual product configurator into your website, allowing customers to research and interact with your products from anywhere and place orders anytime.

AR and VR

CPQ’s integration with Augmented Reality (AR) and Virtual Reality (VR) takes visual product configurators to the next level, offering customers a captivating and interactive configuration experience that sets your business apart from the competition.

Business Intelligence Tools

By integrating with BI tools, CPQ provides insights into sales performance, product trends, and pricing strategies, allowing for fully-informed business decisions.

ERP

When CPQ integrates with your ERP system, it ensures consistent data sharing across various departments, including product, inventory, customer data, supply chain, and financials. Configurators are always equipped with the most current data. When a purchase is made through the CPQ system, the relevant data gets updated in the ERP system for consistency and accuracy.

Document Management Systems

When CPQ integrates with Document Management Systems, it enhances the management and storage of critical documents such as quotes, proposals, and contracts. This can improve the efficiency of document retrieval and ensure secure storage.

Implementation and Support: 5 Steps to Success

The CPQ implementation phase is crucial. It directly impacts the functionality, efficiency, and user adoption of the system. The following step-by-step approach ensures a smooth implementation and lasting results by focusing on both the technical and human elements of the process.

Step #1. Build a Strong Cross-Functional Implementation Team

A successful implementation team blends operational and technical skills. The team should be inclusive, drawing members from every corner of your company–from sales and customer support to design engineers and manufacturing leads. This inclusive approach ensures diverse skills, perspectives, and objectives, guaranteeing the CPQ rollout benefits every department.

Assembling a proficient CPQ implementation team is truly an art. The PIKES model–Purpose (personal motivation), Integration (a shared vision), Knowledge (core skills), Ecosystem (integration into the broader company), and Self (stress reduction)–offers a valuable framework for this task.

Step #2. Pinpoint Your Business Drivers and Develop a Project Brief

The next step is to list all the critical business drivers fuelling CPQ implementation. For example, Is the aim to shorten sales cycles? Increase margins from every sale? Improve customer retention? Or something else?

Your key drivers then inform your Project Brief, which provides a structured view of what CPQ implementation aims to achieve and the steps that will be taken to get there.

Step #3. Develop a Strong Business Case to Secure Early Buy-In

Successful implementation needs buy-in from regular employees and senior management. The implementation team should collaborate with all staff to identify pain points and opportunities. They must also be transparent about job role changes and the implementation timeline.

The team needs to make a business case demonstrating why implementing CPQ is better than the current ‘Do Nothing’ approach. The business case must be consistent with high-level strategy and present clear outcomes and funding requirements.

Step #4. Carry Out Your CPQ Project: Execution is Key

With approval in hand, it’s time to execute your plans.

The execution phase can be broken down into three stages:

  • Documentation: Gather all relevant documents, audit them for accuracy, and format them to be readable by the CPQ tool.
  • Setup: Integrate your CPQ with your other business systems and test thoroughly.
  • Outputs: Design quotes, proposals, drawings, and CAD templates according to your brand guidelines. Once designed, these will be auto-generated by CPQ.

Step #5. Overcome Resistance to Change

The primary obstacle to CPQ implementation is usually human, not technical. Many large-scale changes falter due to employee resistance.

Listening to your team’s insights and concerns is essential, ensuring that every step of the process is transparent. Setting clear timelines and achievable milestones can cultivate a supportive and positive environment. Prioritizing training and support ensures everyone understands the importance of CPQ and feels equipped to tackle challenges.

Why the Time to Adopt CPQ Is Now

The current business environment demands bold moves, despite prevailing economic uncertainties. Now is the prime moment to advance with digital transformation, and implementing CPQ opens up a host of significant opportunities:

Adapting To Remote Work and Reduced Business Travel

Visual CPQ offers a comprehensive buying experience to buyers wherever they may be, underscoring its importance in our increasingly remote world.

Transitioning from Relationship Selling to B2B eCommerce

The B2B landscape is shifting to eCommerce. CPQ enables this transition, allowing buyers to research, configure, and purchase products online.

 

Navigating Rapid Market Changes

In an era of fast-changing market conditions and fierce global competition, CPQ enhances operational agility, empowering your team to focus on its core responsibilities. At the same time, the software efficiently takes care of the heavy lifting.

Maintaining Customer Relationships Amidst Low Loyalty

In a market where customer loyalty is increasingly fragile, CPQ provides a competitive edge. By streamlining processes and reducing errors, it helps safeguard valuable customer relationships.

Keeping Pace with Digital Leaders

CPQ is a crucial component of digital transformation. It allows your business to stay at the cutting edge of the digital revolution, optimizing operations and delivering superior customer experiences.

Meeting Rising Customer Expectations

Today’s customers demand speed, convenience, and flexibility. With CPQ, you can provide instant, accurate, customizable quotes aligning perfectly with these expectations.

Controlling Escalating Costs

As operational costs rise, CPQ can help mitigate their impact by automating manual tasks, enhancing resource allocation, and reducing errors.

Tackling Talent Scarcity

In an industry grappling with a talent shortage, CPQ systems alleviate the reliance on specialized staff. By automating complex tasks, CPQ systems enable broader workforce participation in intricate operations, while senior team members can focus more on strategic tasks and value creation.

Featured Resource

Unify Manufacturing Sales Using CPQ Technology

This buyer’s guide was put together to help manufacturers define the base set of requirements to succeed with their digital transformation project, and identify the ‘features to look for’ in best-in-class CPQ solutions.

Frequently Asked Questions

What Is a Visual Product Configuration?

Leading CPQ solutions let users configure products visually by interacting with 2D, 3D, augmented reality, or virtual reality renderings. Users can modify components, colors, dimensions, and features with a simple drag-and-drop interface. As they select different options, their product updates on-screen in real-time.

The strength of visual product configuration lies in three key areas. Firstly, it offers buyers an interactive preview of configurable products, which makes the buying process less complex. Secondly, it enables self-serve–the buying model preferred by most of today’s B2B buyers. Thirdly, it provides a fully immersive and highly-engaging buying experience.

Visual configurators use the CPQ system’s rule engine to guide users to their ideal product, ensuring accuracy and enabling autonomous decision-making. The visual experience empowers buyers to progress further in the sales process with complete confidence. Epicor CPQ users report a conversion rate increase of up to 40% and a doubling in average deal size.

What does having a correctly implemented CPQ do for your business?

A correctly implemented CPQ improves your business by simplifying product configuration, enabling dynamic pricing, automating the quoting process, and enhancing sales efficiency and customer satisfaction. Best-in-class CPQ solutions further enhance business operations with features like 3D and augmented reality product configuration, integrations with other software, and CAD/design automation. These capabilities streamline the configure-to-order lifecycle, saving significant time and cost.

Should your company select a traditional or cloud-based configure price quote solution?

We strongly recommend cloud-based configure price quote solutions. They have a lower total cost of ownership and a manageable cost structure and offer long-term benefits through cloud economics, enabling an efficient shift from CapEx to OpEx. Cloud-based systems provide robust security, disaster recovery, and reliable services, often with uptime rate guarantees. They allow universal access, ensuring flexibility and seamless collaboration for remote work. Upgrades and updates are automatic, keeping you ahead technologically.

CPQ software–what is it, and why do you need it to grow sales?

CPQ software, short for Configure, Price, Quote, enhances sales growth by automating product customization, pricing, and quote generation. It ensures product configuration accuracy, enables dynamic pricing based on various factors, and instantly generates professional quotes. Minimizing errors and improving efficiency strengthens customer relationships, making it vital for sales growth.

How does a company decide whether it needs CPQ software?

A company may need CPQ (Configure, Price, Quote) software if it’s facing issues such as overwhelmed sales teams, complex product configurations, slow sales cycles, communication gaps between departments, manual product configurations, lack of live pricing, poor e-commerce performance, or if it’s considered a digital laggard in its industry. 

By automating tasks, reducing errors, speeding up processes, and providing a single source of truth, a CPQ platform can transform sales, boost efficiency, improve customer experience, and enhance profitability.

What does CPQ stand for?

CPQ stands for Configure, Price, Quote. It’s a vital step-by-step process salespeople follow when serving customers. It can be automated using CPQ software.

CPQ Terms

Start today on your configure, price, quote journey


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