CPQ AND CX: HOW SALES AUTOMATION CAN ENERGIZE CUSTOMER EXPERIENCEBy Marshall Lager

© 2016 Callidus Software Inc. All Rights Reserved.

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If your business involves selling a complex product or a combination of them, then you have probably considered the benefits of a CPQ (Configure Price Quote) application as part of your strategy. Often, the value of CPQ is considered solely from the viewpoint of the organization—how it can improve the efficiency of the sales process or improve revenue by managing discounts better. These are important concerns, but they’re only half the story.

Research and common sense both indicate that CPQ software will have a positive effect on customer experience when applied wisely. “In today’s world, we no longer sell products or service but deliver on brand promises. CPQ is at the heart of delivering a brand promise,” according to Ray Wang, principal analyst and founder of Constellation Research. A sales process that includes CPQ allows greater transparency and flexibility. “When customers choose to engage, they want to engage on their terms. They want the ability to not only choose their own journeys, but choose when to interact in the sales process. They want mass personalization at scale, but they also want to be guided when it makes sense. CPQ is one of the key tools at the heart of all this.”

CPQ is rapidly becoming must-have technology in a number of industries, both B2B and B2C. “By 2018, 40 percent of digital commerce sites will use price optimization algorithms and configure price quote tools to dynamically calculate and deliver product pricing,” according to research firm Gartner. “This will not be possible without an ability to track customer purchases and buying behaviors across many channels and customer engagement points.”

Improving the customer experience leads to improving business results. A 2015 Aberdeen Group study showed that adopters of CPQ tools outperformed non-users in customer renewal rate (+3.9 percent year over year vs. -0.6 percent) and lead conversion rate (+3.6 percent vs. -0.5 percent). Users also achieved a 4.9 percent reduction in contract and proposal errors, compared to 1.9 percent for non-users, indicating a faster and less frustrating sales process for customer and salesperson alike.

Let’s examine some of the various ways that CPQ can drive customer experience to new heights in your organization, as well as some things to steer clear of:

Focusing on the Big Picture

CPQ software improves customer experience because it lets the salesperson concentrate on moving the deal forward, rather than doing manual labor of building the order or running down discounts and approvals. This may sound like a benefit solely for the seller, but it’s much more. A complex sale is a consultative sale, where the provider is helping the buyer arrive at the optimal package. By taking the busy work out of the sale, your deal makers can return to that consultative role, supporting the customer throughout the process, making sure they end up with a solution that truly suits their needs.

By 2018, 40 percent of digital commerce sites will use price optimization algorithms and configure price quote tools to dynamically calculate and deliver product pricing.

© 2016 Callidus Software Inc. All Rights Reserved.

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The business rules of CPQ prevent bad configurations for a given implementation or pricing that doesn’t fit the proposed budget. By reducing issues like these, you create a stronger sense of communication between seller and buyer, helping them work together and steering them away from products that are not acceptable.

The system also reduces the amount of technical knowledge a seller has to remember personally. However, for this aspect to work, salespeople still need to be on top of their game, not just relying on the technology to do the job for them. “CPQ could work at cross purposes here if the seller doesn’t understand what’s on sale or what the customer needs. I could see a vendor putting CPQ into the hands of newbies and not getting great results,” says Denis Pombriant, founder and managing principal of Beagle Research Group. “There’s no substitute for good selling. That said, yes, if the rep is operating several levels above generating a quote, he or she can focus attention on being more consultative.”

Speeding Up the Sales Process—Not Rushing ItBuilding a quote can be a laborious and very time-consuming process. Compatibility needs to be checked, item numbers found, discounts approved, and more. It can take days, even a week or more, to put together a valid quote, and that isn’t fun time for the customer.

By removing the tedium of quote-building from the sales process, the customer gains a sense of control and will be pleasantly surprised (read “ecstatic”) at the speed of turnaround. For example, one company was able to improve its time-to-quote from two days to just 20 minutes. Not only will instant gratification make a lasting impression on your customers, they may feel more freedom to expand their purchase, giving the salesperson time to upsell if appropriate.

There is real money to be made in providing customers a rapid quote and approval. CPQ should really have an “A” at the end of it, for automated approvals. Quickly completing a configuration and quote isn’t helpful if it winds up in front of a sales manager who has to duplicate and double-check all the steps, making sure the deal uses current information and respects profit margins. This can add hours or days back into the sales process, potentially frustrating the customer and driving them to another vendor.

Letting Them Sell ThemselvesOne of the lessons that all businesses can learn from the B2C world is that sometimes, customers want to do it themselves. When they know more or less what they want and are able to select the best options, a salesperson might just get in the way. CPQ can bridge the gap between e-commerce and traditional sales in some cases.

One of the lessons that all businesses can learn from the B2C world is that sometimes, customers want to do it themselves.

© 2016 Callidus Software Inc. All Rights Reserved.

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Sellers of personal computers led the way in handing basic configuration over to their customers, and have achieved considerable success. Automakers have adopted a similar approach, driving some of their customers to the Web and pushing customers’ car options to local dealers—and have reported a notable increase in positive customer experiences. Buying a new car is one of the more stressful things a person can do, so anything to make it easier and better understood will alleviate that stress.

“The configuration process can and should be an exceptional consumer experience: 3D presentation of the products, available color schemes, scroll in/out or real-time image adaptation of accessories and options,” writes Björn Neumann on the Buljan & Partners Consulting blog. Neumann notes that specs and images alike can be delivered through the CPQ app, are viewable on all our various devices, can be modified in real time and saved, and can be shared on social media or through email. “Customers buy because it is an exceptional experience.”

This is not to say that every vertical industry can achieve equal results by opening up the configurator to customers. “Customers break systems like this all the time,” Pombriant says. This can lead them to become frustrated and possibly even go elsewhere. The proper balance may be to have a salesperson start the process and turn it over to the customer. “A better approach might be to deliver a professionally developed quote with the tools to edit it. That way there’s less opportunity to break things.”

ConclusionCPQ simplifies and streamlines a tedious and error-prone sales task into a point-and-click operation that shows customers immediate progress towards their goals. By delivering the right content to salespeople, they can present the most appropriate up-sell opportunities, and sell from your entire line of products, not just the ones they are most familiar with. This doesn’t just help the sales rep – it enhances the buyer’s experience, and ensures that your business delivers the solution that’s the most precise fit for their needs.

To do this, you need to choose a CPQ solution that’s built to accommodate the size of your business, can work with other applications in the lead-to-money process without costly and time-consuming integration, and can scale to match your business growth. Its delivery should minimize time spent on resolving technical issues and allow your project lead to focus on tuning the system to meet changing business needs and sales strategies.

The deployment strategy you opt for should deliver all these benefits to your salespeople immediately and with as few glitches upon roll-out as possible. If you choose the right CPQ system and deploy it effectively, adoption by your sales force will be enthusiastic and should produce visible results in short order.

Assessing Your Needs: Key QuestionsWhat do you look for when selecting a CPQ solution? Besides the basics, there are some other things to consider. Any responsible software purchase involves the creation of a set of requirements; these are the most basic ones for CPQ.

© 2016 Callidus Software Inc. All Rights Reserved.

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Which Features Do You Need Now – And Will Need in the Future?This is the most basic of all requirements exercises: listing features to create a checklist that all contenders must match. But it’s easy to overlook things in CPQ—especially to fail to spot areas where growth could quickly hamper your CPQ choice’s effectiveness.

For example, if today you sell only within the U.S., you might not have multi-currency support among your requirements. But the odds are good that growth may soon make that a requirement. Do you use a percentage-based or volume-based pricing structure, and might you change between the two in the future?

Flexibility is another critical attribute to consider, especially if your business is changing. Do you offer services as well as products? If so, you need the ability to manage pricing for both within your CPQ solution. Do you offer – or plan to offer – a mix of manufacturing styles – assembled-to-order, configure-to-order, engineered-to-order, and componentized products? Make sure the CPQ solution is flexible enough to accommodate them all.

On-Premise or in the Cloud?Your organization probably already has an established preference for how its software is delivered and used. On-premise software is managed on your servers, by your IT team; you pay up front for it (with an annual maintenance charge), and the responsibility for maintenance, security, back-up and updates is all yours. With cloud-based applications, you pay for it on a monthly basis (usually as part of an annual contract); hosting, maintenance, security, back-up and updates are handled by the software provider. Over time (generally, about three to five years), cloud-based software license costs will exceed the costs of on-premise applications’ license costs, but on premise software still requires an ongoing investment in IT hardware and talent that often tips the scales back in favor of cloud-based options.

Does It Integrate With Your Existing Applications?Data and applications shouldn’t exist in a silo, and CPQ is no different. Integration means CPQ can draw from and provide helpful data to your CRM, ERP and marketing automation applications. For this to work well, it’s best to use applications that are designed to work well together, or have pre-made integrations available. Otherwise, you’re looking at significant expense – not just now, but every time any of these applications are upgraded and break your custom-built integrations. Understand what applications you’re using to collect and control customer and product information and make sure that your choice of CPQ solution will integrate with them as closely as possible.

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Stand-alone or Suite?Many CPQ vendors offer CPQ as their only product or as one of a small number of products, while others also offer CPQ as part of a suite. In circumstances where a CPQ solution is needed urgently, the impulse can be to lean toward stand-alone vendors – but this can lead to integration costs and delays that offset any perceived time benefits a stand-alone solution seems to offer.

A well-organized suite does not require a rip-and-replace attitude toward existing systems. Instead, its components often integrate with legacy systems (many times, using built-in integrations) and provide a pathway for bringing in new functionality (for example, using quote information as part of sales compensation, or tracking the correlation of customer experience and satisfaction against time to quote).

For deeper integration between CPQ and CRM systems, look for services from enterprise-grade CPQ vendors. All of them are adept at this. But don’t stop with CRM. As CPQ systems continue to evolve, integration with other applications in the lead-to-money process are becoming more important. Integration with commission calculation systems, motivation systems, learning systems, contract management systems and coaching systems will continue to drive additional value to CPQ users.

About CallidusCloud

Callidus Software Inc. (NASDAQ: CALD), doing business as CallidusCloud®, is the global leader in cloud-based sales, marketing, learning, and customer experience solutions. CallidusCloud enables organizations to accelerate and maximize their lead to money process with a complete suite of solutions that identify the right leads, ensure proper territory and quota distribution, enable sales forces, automate configure price quote, and streamline sales compensation — driving bigger deals, faster. More than 4,600 leading organizations, across all industries, rely on CallidusCloud to optimize the lead to money process to close more deals for more money in record time.

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This document is provided for information purposes only, and the contents hereof are subject to change without notice. © 2016 Callidus Software Inc. All rights reserved.