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Seeing is believing: What is CPQ software?

Imagine one of your sales team members sitting down with a customer to discuss a possible order. For years, this has worked the same way -- the salesman listens to what the customer needs, takes extensive notes, brings the notes back to the office for the engineering team to price out, then days or weeks later, gets the price quote and specifications back to the customer, sometimes with misunderstandings, requiring revisions to the proposal.

By the time the bid is right, the customer may have changed her mind or even selected another bid.

Now imagine that same interaction, but with CPQ (Configure Price Quote) software added to the mix. During the initial meeting, the salesman opens his laptop and creates the CAD drawings and quote on the fly by asking the customer a series of predetermined questions about configuration, materials, quantities, and other options.

 

 

The process is faster, more accurate, requires less expertise from the sales staff, and results in a higher likelihood of a sale.

An ancillary component is required for this configuration? He can make sure it’s included in the quote.

A required part is unavailable? He can swap in an acceptable alternative.

The customer wants to lower the price? The salesman can edit the options on the spot to design exactly what she needs.

The process is faster, more accurate, requires less expertise from the sales staff, and results in a higher likelihood of a sale.

What is CPQ?

CPQ software visualizes custom manufacturing orders by providing sales representatives and customers with digital tools to build solutions from scratch, then convert the results into sales quickly and at a greater value to both the vendor and the buyer.

Here’s a simpler example of how the technology can be used: If a customer wanted to purchase a number of different Class C components over the telephone, each varying in size and quantity, a sales representative utilizing a CPQ platform could aggregate all the products into one invoice, instantaneously confirm build specs with the customer, and tabulate the pricing accordingly.

configure price quote

CPQ software puts a solution in a customer's hand in real time, preempting whatever might dissuade them from investing if the process took longer.

However, CPQ doesn't stop at "simple." CPQ software thrives on creating more complex solutions dependent on parameter-driven requirements. CPQs empower sales representatives with limited engineering expertise by guiding them through necessary build terms and providing other information vital to complete customer service, such as estimated labor costs.

From the perspective of a customer inquiring about rates or offerings, CPQ software produces 3D graphic models that assemble in real time as users provide more details. On the other end, sales representatives see and make use of an intuitive interface where they can input values into prompted fields and generate blueprints, as well as pricing figures.

How can CPQ help drive revenue?

In custom manufacturing, CPQ software accelerates traditionally slow sales conversions. Without CPQ, businesses spend an inordinate amount of time and resources setting clients up with engineers to map out solutions by hand, then take the info back to the office to quote a given project. These efforts could last days or weeks and ultimately be in vain if a customer backs out. Alternatively, CPQ software puts a solution in a customer's hand in real time, preempting whatever might dissuade them from investing if the process took longer.

Guided selling also benefits both the customer and the manufacturer in a number of different ways. First, CPQ technology bundles solutions for customers according to their exact needs. Should one part of a customer's order be incomplete without ancillary products, CPQ will present the customer with information prompting them to include the missing pieces.

The same is true when sales representatives coordinate with customers over the phone. CPQ-powered sales prevent manufacturers from selling incomplete solutions because of small but integral inconsistencies with ordering data. In effect, CPQ software also optimizes sales workflow by making representatives more responsive and effective during calls.

What's the result? Higher quoterates, conversion rates and sales rates for businesses that integrate CPQ into their current ERP configurations.

What does CPQ mean for ERP?

As an extension of enterprise resource planning technology, CPQs both inform, and are informed by, manufacturers' current process management systems.

For example, CPQ not only augments how businesses employ data for greater customer service and conversion, but the software platform also supports lean inventory initiatives. Custom manufacturers know their materials requirements before sales are even processed, creating end-to-end demand-driven procurement and reducing inventory management costs to virtually nothing. For businesses hoping to achieve a true buy-to-build environment, CPQ is essential.

How does abas do CPQ?

abas CPQ software has two basic configurations:

  • a self-service portal customers access on their own, and
  • an internal enterprise resource with which sales representatives facilitate phone orders with table-driven configurators.

Both contain powerful customization potential, along with step-by-step prompts that only pair compatible products and eliminate nonviable values as users move through the process. From there, abas CPQ automates Bill of Materials creation and generates prices. Customers taking advantage of a CPQ-powered self-service portal will notice a high degree of user-friendliness, akin to ordering retail products from their favorite online distributors, and sales representatives using internal CPQ will also experience the same intuitiveness and simplicity that abas ERP is known for.

Next up in our ERP trends series: 3D printing and augmented reality. How mid-sized businesses are using these technologies today to improve their sales and manufacturing processes.

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