To provide customers a seamless and compelling customer experience, your organization’s entire value chain must function as a single entity. Integrating configure price quote (CPQ) solutions into your business processes plays a critical role in maximizing your revenue and lies at the heart of the integrated value chain (IVC).
A successful business strategy that streamlines CPQ can enable your IVC and result in:
- Increased sales quota attainment
- Lower days sales outstanding (DSO)
- Higher return on capital employed (ROCE)
Before we examine how your CPQ process can drive these business objectives, let’s examine the critical elements in an end-to-end CPQ process.
Key components of CPQ
- A centralized platform for the data needed to complete a sales process, such as products, product catalogs, accounts, prices, discounts, and promotions.
- A methodology to harmonize the data with advanced business logic. These can include pricing logic, discount strategy, margin health, sales proposals, and approval workflows.
- Artificial intelligence and sales strategy drivers to design and provide an automated, easy-to-use, and centralized platform for guided selling, upselling, and cross-selling.
- An upstream user experience that connects the powerhouse inside CPQ to end users, including customers, direct sales, channel partners, inside sales team, and e-commerce platforms.
- Downstream integration to various sales operations interfaces (such as manufacturing, finance, billing, revenue recognition, and sales commissions) to complete the quote-to-cash cycle.
Given the power of what CPQ can on its own, let’s examine how it can become the heart of your IVC.
CPQ and sales (increased sales quota attainment)
In a lead-to-cash cycle, CPQ plays a critical role in giving your sales representatives (direct, indirect, and channel) the ability to seamlessly transition the opportunity phase to a sales order. Equipping the sales force with the advanced intelligence of what to sell to whom at what price can accelerate the deal cycle. The salesperson can be more effective and efficient in selling more in less time because creating the quote via the CPQ solution is easy, fast, and accurate.
Running simulations on a quote can lead to higher sales commissions, forecast accuracy, and probabilities of quote closure. By being able to transition automatically from the quote stage into proposal and contract generation can produce higher sales in less time and increase the sales quota attainment of your entire sales organization.
CPQ, supply chain, and finance (decreasing DSO)
As your CPQ is integrated into your supply chain, quotes can configure a bundle of products and services that are available in inventory and ready to ship to customers, reducing the bullwhip effect. Pricing bundled services can result in the convergence of subscription-based billing for recurring revenue.
With this integration, quote configuration triggers a sales order and generates a production order compatible with your manufacturing design. This increases your accounts receivable while significantly reducing your quote-to-cash cycle time and therefor your DSO.
CPQ and omnichannel commerce (higher return on capital employed)
Omnichannel commerce goes beyond e-commerce. It’s a business strategy that recognizes that your customer can buy from you across many channels: website, direct sales, telesales, electronic data exchange, digital channels, etc. This is possible with a centralized commerce infrastructure that allows you to capture sales engagements across various channels and integrate your omnichannel commerce platform with your centralized CPQ platform. This strategy will reduce your capital employed.
Higher earnings will come from augmenting your customer-buying experience by personalizing it with predictive recommendations for products, pricing, and promotions at the desired place of purchase (omnichannel). The 4Ps of marketing can be realized with a powerful CPQ strategy that results in a higher return on capital employed.
Learn more about how a well-designed business strategy with a focus on CPQ can maximize your revenue generation.