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CPQ software can truly change the daily work of sales teams and simultaneously create more transparency for customers.
What is CPQ?
CPQ is the term for "Configure, Price, Quote" which is usually used in sales to describe software that helps with offerings, especially when it comes to highly variable and complex products and services.
As such, CPQ can evaluate and combine different variables to generate the perfect offer:
- Quantity
- Discounts
- Individual customization
- Optional Functions
- Subscription Types
- User count
- etc.
Why do you need CPQ?
It can be incredibly difficult to stay transparent with expensive, complex, and often individual/customized offers. If done manual, it's fairly easy to have widely differing offers based on 1:1 conversations with the customers, special agreements, and changes which might not be wholly transparent or based on objective rules.
Additionally, faulty offers, spontaneous changes, or lack of transparency could slow down or completely halt buying cycles which would be frustrating for customers and resource-intensive for the sales team. Every return of an offer might result in a cancellation or additional work.
Specifically, products and services that are highly individualized on different levels (discounts, subscription types, user numbers, customizations, etc.) can create incredibly complex equations for the sales team. The wrong result can give customers the feeling that they are being cheated or undersell the product due to too many discounts.
CPQ software helps to set up all products, services and their many variables and combinations. If done correctly, a proper CPQ tool makes it easy to combine all agreed upon terms and features and automatically create a clean and transparent offer that can be easily adjusted in case the customers change their minds.
Even individual contractual agreements can be included if the CPQ is connected to a CRM or ERP system and therefore has access to all relevant customer data.
CPQ Advantages
According to a report by the Aberdeen Group (via Salesforce), the use of CPQ software:
- reduces sales cycles by 28%
- increases proposal volume by 49% per sales rep each month
- increases the average deal size by up to 105%
- increases the lead conversion rate by 5%
- reduces the amount of people involved in the buying cycle twice as often
Other advantages:
- Offer management processes can be standardized and are easier to scale (e.g., for distributors)
- Errors can be reduced massively
- Customers and vendors gain more transparency over every single part of the offer
- Discounts can be determined much easier which helps sales to create attractive offers without hurting the bottom line
- The product team can collaborate better with sales when it comes to pricing and product design
Read, how the internet services provider completely transformed their offer management with a CPQ solution and therefore helped their sales team to be more efficient, faster, and flexible.
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