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
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.
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
Integration capabilities
CPQ is a powerful standalone solution, but, like all quoting 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.
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.
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 operations team, 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
Choose a term to learn more
- 3D Configuration
- B2B eCommerce
- B2B Manufacturing
- B2B2C
- CAD Automation
- Complex Product Configurator
- CPQ Cloud
- CPQ Implementation
- CPQ Product Rules
- CPQ Software
- Design Automation
- Digital Transformation
- Dynamic Pricing
- Engineer to Order
- Industry 4.0 and the 4th Industrial Revolution
- Lead to Cash
- Make-to-Order (MTO) Manufacturing
- Manufacturing Automation
- Omnichannel Retailing
- Order to Cash
- Product Configuration
- Product Visualization and 3D Product Visualization
- Proposal Software
- Quote to Cash
- Sales Automation Software
- Salesforce CPQ
- Visual Configuration