June 24, 2020
What is CPQ software? How will it increase our sales? And can it handle our incredibly complex, customizable products? We hear the same questions all the time, so we’ve rounded up the answers. If you’d like to discuss any of them in more detail, get in touch. We’d love to hear from you.
Let’s start at the beginning: “What is CPQ?” Our answer has been distilled down to nutshell perfection:
“CPQ is software that guides your customer towards their optimal product selection (configure), calculates how much that selection will cost (price), and generates a quote (quote).”
Let’s crack that nutshell open and dig a little deeper.
Your customers come to you with a problem. And you try to solve their problem with one or more of your products. But if your sales rep isn’t au fait with your product range or your catalog is so vast and complicated that no one person could digest it all, how can you be sure your customer is getting the optimal product or bundle to suit their needs?
The “Configure” part of CPQ is designed to address this challenge in several ways, depending on your software. Salesforce CPQ, for example, asks reps a series of questions about each customer and, depending on the answers given, picks out the ideal SKUs. With KBMax, sales reps or end-users can configure customizable products or bundles using an immersive and visual interface (more on that later).
It’s not just customers that benefit from CPQ, though; you do too! Order values and margins increase as the software makes intelligent suggestions for upgrades, upsells and add-ons. As the user plays around with different configurations, the prices change in real-time according to smart price rules. And once a product or bundle has been configured, CPQ automatically generates a personalized and compelling PDF quote.
Intelligent algorithms built into your CPQ maximize profitability and customer satisfaction from every transaction. Sub-optimal configurations and human errors are entirely eradicated, which means fewer delays, returns, and chargebacks, and considerably happier, more loyal customers.
The sales process is simplified and automated, shortening sales cycles, freeing up your sales force to spend more time bringing in new business and strengthening profitable relationships. Reps get a comprehensive knowledge of your products at their fingertips, becoming trusted advisors to your customers.
Reps can configure the most sophisticated products without ever having to call on the expertise of the engineering department, and every configuration is viable from a technical standpoint. There’s no more back-of-a-napkin sketches, no more back-and-forths between customers, sales and engineering, and each party communicates in a language they intuitively understand.
KBMax offers CAD and design automation for engineer-to-order products, and this takes engineering efficiency to another level. Once the user has finalized their configuration, KBMax automatically generates all the renderings or technical drawings required through SolidWorks, AutoCAD, Autodesk Inventor or PTC Creo. This automation reduces the engineering burden, giving engineers more time to spend on innovation and R&D.
The KBMax Snap rules engine builds algorithms with sophisticated language features for the most complex configurable products. Variables, custom types, loops and arrays, queries (SQL, Table, Array), functions and subroutines – it’s Turing complete. Fortunately, you don’t need to be able to understand any technical terminology to benefit from Snap. Users build rules by dragging blocks around and snapping them together to form logic statements. Dropdowns, color-pickers and buttons are there to make the job even more accessible. Anyone can do it.
You can layer any number of pricing rules and tools on top of your standard price list (or lists) to adjust them according to your pricing strategy. Three examples include:
CPQ eliminates pricing errors, but if putting so much trust in a set of algorithms sounds scary, you can combine these tools with manual overrides and custom approval loops to keep tabs on things.
Visual product configuration lets users configure products with an intuitive visual interface. This interface can vary in complexity, depending on the needs of each business. It could be a straightforward, 2D configurator with an Amazon-style filtering system on the more basic end of the spectrum. Or a 3D configurator with AR (augmented reality) and VR (virtual reality) capabilities on the more technically advanced. Customers can “play around” with your products virtually – resizing sections, adding or removing parts, upgrading features, and changing colors and dimensions. As they experiment, prices change in real-time.
A visual configurator is a marked differentiator that gives customers a fully immersive shopping experience and a deeper understanding of the products they’re buying. Average deal sizes increase, and return rates decrease as a result. Buyers take ownership of their configurations, understand all the options, and feel emotionally invested in their purchase decisions.
There are several steps we advise all our clients to take to ensure a smooth CPQ rollout. First, companies have to assemble a strong, cross-functional team made up of both technical and non-technical members. The team should be led by an executive sponsor who serves as the linchpin, responsible for championing the project, securing cross-departmental support, and providing business context to the project manager and team.
Second, your team needs to work together to identify your critical business drivers (what are you trying to achieve?) as these will inform your choice of CPQ provider and your setup. Do you want to reduce time-to-quote, increase deal sizes, improve order accuracy, grow customer retention, or all of the above? Design for outcomes, not features.
Thirdly, post-implementation, you have to provide practical, role-specific training, broken down into digestible chunks, to give employees the confidence they need (both in their abilities and the proficiency of the software) to stick with the process as they come up against the inevitable challenges.
DJ is a long-time marketing consultant and technologist, helping companies with marketing strategy and marketing technology. He loves telling stories about applied technologies and the impacts it has on buyers.