The ABCs of CPQ, Part I: What is CPQ?
Accelerating your sales cycles can be difficult, but it doesn’t have to be. Implementing CPQ software can help you improve your sales velocity, accelerate your deal velocity while enabling you to deliver on your sales revenue and profitability goals.
So what exactly is this magical software and how does it work? In this first video of the ABCs of CPQ series, we’ll help you understand the basics of CPQ technology. We’ll answer what exactly is CPQ and highlight how this technology can help you close deals faster.
Welcome to the ABCs of CPQ. My name is Loretta Faluade, and today I'm gonna help you understand the basics of CPQ.
So, what is CPQ?
CPQ is a technology or a tool that can help to improve your sales productivity. What it does is that it automates common quoting tasks. It can be used by your direct sales teams, your resellers, or partners, and it can also integrate into an e-commerce portal. What this does is that it helps your customers to self-serve.
Well, what does exactly does CPQ do?
Let's start with the acronym. CPQ stands for configure, price, quote. Configure, price, quote describes the steps that a salesperson needs to take during a quoting process. To help you understand this better, let's break this down. C, configure. Configuration is a process of putting different elements together to create a final product.
Let's look deeper at a more personal example. Let's say you wanna purchase a car. But you don't want a car off the lot, you actually want a customized car. You can go on an auto manufacturer's website and create a car that fits your preferences. You can do different things like select the color of the car, what types of external package options do you want, what types of internal package you want, what color do you want the seats to be, do you want your seatbelt to be red, do you want it to be black? All these are different configuration options that you can put together to fully customize your car. At the end of the day, you have a car that now fits your preferences. That's a B2C use case.
In a B2B example, you can have a catalog that includes products which require configuration, such as an excavator or an MRI machine. A CPQ solution will help a salesperson put together the different configuration options to fit the needs of that buyer. P stands for price. This is the next step in the quoting process, but one that can cause a lot of headache for salespeople. Many organizations have list price for their products, and they also have pricing curves, which are guidelines. But they rely on the salesperson to provide that final discount to the customer. For a salesperson, they've got to figure out, how do I price this product? If they price too high, they could lose the business. If they price to low, they've got to go through several rounds of approvals and provide a price to that customer that could inadvertently leave money on the table, causing margin leakage.
A CPQ solution can help to solve this by providing the salesperson with a type of guidance, so that they know to price the products. They can actually take this one step further and leverage AI pricing solutions that uses science to figure out what the right price for that customer, for that product, at that time. All of this can be consolidated in a CPQ solution. All right, C for configure, P for price, now Q for quote. This is the final step in the quoting process. Getting the information to the customer. They've configured the product, they've priced the product. How do they deliver the information? A lot of salespeople actually rely on manual tools such as Excel. They use a cut-and-paste function to provide the product and also the prices. Some salespeople might actually even go a step further, in creating their own proposals. This can be very, very time-consuming. But a CPQ solution can help to solve this challenge. With one click, a salesperson can include all the products and all the prices in a PDF document or in a Word-based document, and provide it, send it to the customer. To add that personal touch, they can put in a customized greeting and also include things like a logo, or add different drawings to the final proposal for that customer.
All right, to wrap up, CPQ stands for configure, price, quote. And this tool can help to increase your sales productivity, and also accelerate your deal velocity. If you think about it, the final goal is improving your customer experience. CPQ solutions can get you there. For those of you guys who are thinking, "I don't have products that require configuration, "can CPQ still work for me?" In the next video, I will tell you about different additional benefits that you can get with CPQ solutions.
Thanks for watching.