Configure, Price, Quote: Three Words That Can Transform Your Business
August 25, 2020
Configure, price, quote (CPQ) software lets you sell more and manufacture faster. It’s been around for decades, but the latest wave of cloud-based CPQ solutions provide such a potent competitive advantage, particularly in the B2B space, that adoption has skyrocketed in recent years.
In 2018, the CPQ market grew by 12% to $1.2 billion. And in October 2019, Gartner predicted it would continue to rise at about 15% annually through 2020. But this is already beginning to look like an underestimate.
Today’s commercial landscape is almost unrecognizable from what it looked like just six months ago. Amid the COVID-19 pandemic, when business travel and face-to-face sales meetings have dropped to zero in many countries, remote sales have never been more critical. CPQ will play a pivotal role in adapting to the new normal.
Most of us know that CPQ is a sales tool for quickly and accurately generating quotes for orders. But, what exactly does configure, price, quote allow you to do that you can’t do already? That’s precisely what I outline below.
Companies that implement CPQ software witness the following improvements to their configure, price, quote operations, on average.
*KBMax stats // **Salesforce CPQ stats
Learn how manufacturers are gaining a competitive advantage by introducing CPQ to complex product ordering and manufacturing.
Your sales reps are struggling. You’ve got a vast catalog of products, many of which are highly complex, with complicated rules governing how they can be put together. It’s unrealistic to expect your sales reps (especially new hires) to configure perfectly optimized customer-specific selections every time without clear guidance and plenty of input from the engineering department.
As a result of this complexity, your reps are frequently configuring products that are non-viable from a technical standpoint—and failing to maximize profits too. Mistakes are creating tension between the sales team and engineering. And a seemingly endless back-and-forth between the two parties is slowing everything down to a snail’s pace. Sales cycles are getting stretched to breaking point leaving customers exasperated. If you’re an engineer-to-order company that’s subject to hefty fines for lateness, penalties soon start to stack up.
The answer to your configuration woes is a product configurator, which you’ll find rolled up in your CPQ software. The best configurators are visual because we’re visual animals – the brain processes an image 60,000 times faster than it does text. But, more on that in a bit.
Sales reps using product configurators can build-out perfect products every time, super-fast, and here’s how: Product configurators are built on top of a CPQ rules engine (ours is called Snap) that combines complex mathematical functions, product rules, and manufacturing data to intelligently determine exactly which product your customer needs while ensuring it’s technically viable. All without any input from the engineering team.
KBMax offers a 3D product configurator which combines the benefits listed above with a fully immersive shopping experience for your customers. Reps can configure products by pointing and clicking or dragging and dropping within a 3D scene. Add in VR and AR capabilities, and you have a powerful differentiator that sets you apart from the competition.
You can even embed your visual product configurator on your website, enabling your end-customers to “play around” and purchase your products anywhere on any device. Users can resize sections, add or remove parts, upgrade features, and change colors and dimensions with prices updating automatically in real-time.
CPQ software with visual configuration capabilities gives customers a crystal-clear understanding of your products and connects them to your brand on a deeper level – conversion rates jump by 40% and returns, refunds, and chargebacks decline markedly.
Pricing is the next challenge your sales reps face once they’ve configured a product. With CPQ, you can harness machine learning to identify patterns in your data and customize offerings in line with your pricing strategy, whether it be to increase profit, grow market share, or improve retention. It’s the antithesis of the age-old cost-plus pricing model, which has held many manufacturers back for decades.
With CPQ, collaboration within the sales team is vastly improved. When Sales Operations make changes to list prices, they filter down immediately to sales reps through the CPQ software, so no more missed emails and lengthy exchanges over each price adjustment.
Conversely, when a sales rep enters a discount on a quote, the CPQ software automatically sends an approval request to the appropriate person. A 10% discount approval might go to a line manager, for example, while a 25% discount might be sent to a VP. Wherever the request goes, it can be approved with the touch of a button. Everybody operates on the same platform, enhancing transparency and accountability. Approvals are carried out 95% faster as a result.
Enhanced collaboration and workflows combine with machine learning capabilities to supercharge your responsiveness to quote requests. In a world of instant gratification, where the company that quotes first often wins, greasing the wheels of your pricing infrastructure can be invaluable. One of our KBMax customers managed to slash their average proposal time from 10 days to 10 minutes! Just think what a cumulative difference that makes.
You’ve got your configuration sorted, and your pricing, now you have to provide a selection of compelling documents to get the deal over the line. CPQ software generates quotes instantly and automatically, generally as PDFs, and sends them out from inside the admin – everything’s stored in one centralized hub, maximizing visibility.
Automatic quote generation represents a huge win for sales reps – they can spend less time formatting and number-crunching, and more time courting new customers and engaging with existing ones – tasks that actually generate revenue for your business.
But KBMax’s CPQ takes the generation of documents a giant leap further offering CAD and design automation. Once a configuration has been submitted, KBMax users can create a wealth of additional documents, such as technical drawings, Bills of Materials (BOM), CAD data and CNC cut sheets, all of which serve to reduce the engineering burden, streamline manufacturing and dramatically shorten sales cycles.
Tyler earned a degree in Mechanical Engineering from Oklahoma State University and has accrued over 15 years of experience in the design and manufacturing space. As a Solutions Engineer at KBMax, Tyler solves problems for customers, so they can achieve their bigger goals. Tyler lives in Salt Lake City with his wife and three young children. He loves back country skiing, hiking peaks and building Legos with his kids.