Configure, price, quote (CPQ) technology has been a fundamental business driver for decades. But what once served as a humble back-office tool to address complex requests from sales personnel and customers is now experiencing explosive growth.
Per Gartner, the CPQ market is expected to grow at 20% annual growth rate through to 2020, while cloud-based CPQ solutions with a mobile-first approach are expected to drive almost all that growth.
Businesses are using CPQ across all product and solution lines to sell accessories, bundle and configure products, and service options – clearly indicating that this is no longer limited to complex deals. We are seeing much broader industry adoption, moving beyond manufacturing into high-tech, healthcare, life sciences, communications, financial services, and media & entertainment.
What can we expect from CPQ in 2017 and beyond? I see three broad areas where CPQ will continue to drive innovation and increasingly position itself as a core – and critical – business tool.
Outcome-driven customer engagement
Sales personnel will continue to benefit from CPQ in the form of guided selling, automated quoting, workflow-based approvals, deal profitability analysis, contract negotiation, and proposal generation tools. But now is the time to raise expectations and obtain deeper value from CPQ.
Manufacturers of complex equipment such as tractors may want to sell “crop yield” as opposed to heavy machinery, parts and maintenance contracts to farmers. Other examples include the high-technology sector, where “network uptime” is the expected outcome, or within the online advertising industry, where measuring ad response rates as opposed to selling ad space has become the norm. Although the practice of selling outcomes is not new and advancements in hardware and software, including smart equipment, embedded sensors, cloud technology, and analytics have all made it possible to measures these types of “value-oriented” outcomes for some time now, the role of CPQ to serve as a prescriptive tool is one that has remained relatively untapped.
Imagine if a CPQ tool could assist salespeople in translating the expected measurable outcomes and intelligently recommend the top three “solutions” or “offers” with the highest probability of successfully meeting customer expectations? Then a “sales bot” could take care of the rest, delivering quotes that were automatically created based on these offers, enabling the sales rep to propose the best offer or directly enable customers to select and add the best offer to their shopping cart independently.
Machine learning could help drive a deal based on the customer account, entitlements, asset history, competitive landscape, and deal goals. Once an offer is accepted, the various front-end (SFA, order capture) and back-end (fulfillment, finance) processes would be automatically notified to perform the linear quote-to-cash steps.
The good news here is that the above scenario has transcended imagination and is today an entirely feasible reality – one that businesses across industries are increasingly implementing as part of their overall business transformation process.
Beyond sales & revenue
CPQ tools need to sense changes in customer needs, track performance against expected outcomes on existing contracts, and proactively recommend the best options at any given point in time. This will enable sales to effectively cross-sell, upsell, upgrade, or downgrade solutions to customers, serving as insight and engagement in addition to transaction systems.
This is particularly critical for companies looking to offer subscription services for physical goods via either direct or indirect channels. Today there is gap in terms of managing order fulfillment of physical goods that are sold as subscriptions and billed on a recurring basis. So companies should look to create a reference architecture for revenue-enabling applications beyond sales execution tools if they want to grow revenue while reducing revenue leakage.
Omnichannel CPQ for a seamless experience
Companies today are very aware of the benefits of omnichannel customer engagement, in terms of both customer retention and customer lifetime value, respectively. The time is ripe for implementing a related strategy that supports the sale of complex products and services and any number of combinations thereof – this is where the value of CPQ tied to omnichannel platforms comes in. Gartner predicts that by 2018, 40% of B2B ecommerce sites will use some form of CPQ to calculate and deliver dynamic product pricing.
Companies can also use a single CPQ tool to enhance their customer engagement experience by offering a much broader range of solutions, differentiated using dynamic pricing. Companies can engage indirect channel players such as distributors, dealers, resellers, and retailers to sell “solutions” while managing price variances based on contracts, promotions, rebates, and incentives.
Product marketing and sales operations would love to model and roll out configuration and pricing options for multiple channels, reducing administrative efforts while benefiting from the flexibility to dynamically tweak their product and pricing strategy as needed. For all these reasons, it is critical that CPQ tools support omnichannel customer engagement in addition to the direct/indirect sales-driven customer engagement.
We are beginning to see CPQ tools establishing a firm position at the forefront of technology innovations implemented to address the needs of digital transformation. As the market evolves and business continue to transform, we will see such tools serving increasingly important roles of systems of engagement, insight and transaction, driving sustained growth, profitability, and customer success.
For more essential sales tools for SMBs, see Top 10 Must-Have Mobile Reports For Small Business Owners.