Wondering what the definition is for CPQ (configure, price, quote)? We were too, so we went to the world’s leading authority on word and acronym definitions, the Oxford English Dictionary, and we found… nothing.
So we dumbed it down a little, and went to our old college favorite, Merriam-Webster, where we found the meaning of CPQ is… also not listed.
But that’s ok. What CPQ means to the world at large doesn’t really matter. It’s what it means to your business that matters. It’s how it helps close more sales that matters (up to 24% more, according to some studies); it’s how it helps reduce errors in sales proposals that matters (up to 50%); and it’s how it can reduce the time and money a business spends on the proposal process that matters (by up to 70%).
So we’re doing our part to create our own definition of CPQ. (We’ll let M-W provide definitions of words like spanghew and mytacism.)
CPQ is a revenue optimizer
With dynamic product and pricing configuration at the heart of it, your CPQ solution ensures that, externally, customers are being introduced to the products that have been proven (via previously won business) to be most effective in meeting customer needs. Which, in turn, will lead to customer satisfaction, retention and revenue.
Internally, the C and P in CPQ enable centralized control over pricing and discount structures, which, for example, is huge for companies doing business across multiple borders (because a winning configuration that sells for $900 in Bosnia could probably be sold for twice that in Boston).
As crazy as it sounds, some businesses still store products and pricing on spreadsheets and other offline documentation, leading to every rep typically having his own list of both products and pricing, which does NOT optimize revenue.
CPQ is a systems optimizer
Rare is the rep who jumps at the chance to learn a new technology, no matter how great the case is made for using it: “Video calls? HAH! Client visits have always worked for me in the past, and I’ll stick with it, thank you very much.” However, in the last couple of decades, no business has gotten very far without a CRM (customer relationship management) platform as its hub for customer data and deals.
That said, no business currently using a CRM is likely using it consistently across all users or to its full effect.
But when you add CPQ to CRM (Dynamics, Zoho, Salesforce, even “CRM-lites,” like HubSpot) as a single sign-on, you incentivize every rep to use CRM consistently and effectively.
Why? Because they can’t close new business without sending quotes. They can’t make, send, or track quotes without CPQ. They can’t access CPQ without accessing CRM. And once they see how using CPQ with CRM can increase close rates by double-digits, they’ll be deep into the systems daily.
CPQ is a staff optimizer
“Our people are our most valuable resource,” said every CEO about people he expects to hit their monthly numbers or find themselves out in the street. In sales, bringing on new people is almost always a colossal pain, and the #1 reason is often training.
Training new reps can take weeks. If you’re serious about it, it can take months. But CPQ can help train reps in real-time. It’s not going to give them people skills (you should be hiring reps who have those dialed from the get-go). But it does train them in your winning products, your winning proposals, and your pricing strategies, because ALL of that is contained in the system.
You don’t need to train a rep on what products to pitch and at what price, as the CPQ system only presents those to them. You don’t need to train a rep on how to write a winning proposal as the CPQ system contains that, too. And you don’t need to worry about a new rep “going rogue” and offering a margin-devouring discount (so he can notch a new sale) as the CPQ system controls them.
What does CPQ mean? In our opinion, it’s less about a word definition and more about a business direction. And that direction is onward and upward.
