5 company functions that benefit from CPQ

The buying cycle begins when a customer requests a sales proposal and ends when the seller receives the revenue from that sale. Configure–Price–Quote (CPQ) and Quote-to-Cash (QTC) solutions have been developed to make that process smooth, efficient and streamlined. They help sales to find, quote, and sell the right solutions, but they also help operations to deliver what was sold and administration to invoice and collect the right amounts at the right time.

That makes sense, right? But how do you know when your company is at a stage where you should consider investing in a good CPQ solution? Or what value could it provide your company and its different functions? In this article, we will dive deeper into how CPQ can help your whole organisation.

1. Product management

“Sales call me 24/7, no time for research and development. We’d need to enforce product guidelines, but how do I get sales reps to listen?” If you have heard something like this from your product managers, that is the first sign that you need a CPQ system.

Product data and pricing logic are essential to efficient sales operations. If your CRM doesn’t have proper CPQ functionalities, you lack the correct hierarchy in the quoted products, which also means that your products have only flat prices. This means the product can’t be represented as the configured solution that it is. Without enforced product rules, your product managers might end up spending a huge amount of time helping sales to quote the right things.

CPQ brings structure and logic to the Salesforce product model. Product Bundles allow the configuration of hierarchical product relationships, while Product Rules evaluate the quoted content and can, for example, enforce option selections or exclusions. Price Rules can access any Salesforce data and use it, for example, in dynamic pricing logic and to perform extremely advanced price manipulation.

This essentially means that you can be sure that whatever is sold through CPQ is also totally in line with your product guidelines and your company’s strategy, and your product managers can breathe a sigh of relief.

2. Sales

“I can’t find any product materials, and my time goes into creating sales calculations. I have no time to sell!” Hearing this from your sales reps is another sure sign of needing CPQ.

CPQ smooths the sales process all the way from value proposition to proposal, negotiation and finally (and hopefully) all the way to the ‘closed won’ stage. It guides sales reps through the sales process fast and accurately. It helps your sales reps to be the first to respond to a request for proposal (RFP) with an accurate and relevant quote, beating the competition.

In practice, CPQ helps sales find the correct products by, e.g. using guided selling, automatically applying the correct pricing, and generating documents that dynamically include the right content with just one click. Sales reps don’t need to memorise product logic or worry about differences between products, pricing, and different document templates. They can also enjoy quick and automated approvals based on the content of the offer. This means they can just focus on selling, selling and selling, as they should.

3. Sales operations

“Our sales reps end up agreeing to any terms and discounts in order to close their deals! We need to stop selling the wrong things to the wrong customers!” If your sales operations manager complains about this, it’s the third sign.

A good CPQ should provide guidance and control to the sales process. We talked about guidance in the previous section, but the control element is just as important. Let’s admit it: all customers are not equally important to you. For some of them, it might make sense to give a bit of an extra discount or to agree to some special terms and conditions, but for the majority of quotes, you want to stick to your corporate guidelines.

CPQ warns your sales reps if they are about to sell something that is not standard. If they still want to proceed with the quote, it requires approval from the right stakeholder before the quote can be sent. Approval processes are a very efficient part of the QA layer that you need to sell the right things to the right customers — with the right discounts and terms!

4. Order and contract management

“A third of our time goes into figuring out what has been sold and filling in service handovers.” Sound familiar? That’s the fourth sign.

Orders are the link to delivery in most companies, especially in the manufacturing industry. Poor quality order data can prove expensive, as any kind of confusion regarding the contents can cause delays. Traditionally, order handling takes time with auditing rounds and approvals, but the goal of a CPQ solution can be to cut order handling time to zero. Your orders can be synced to, e.g. an enterprise resource planning (ERP) system where the actual delivery operations take place.

To support order management, CPQ creates orders and order lines based on the sold quote, and all quote data is automatically mapped to the order. For production and delivery, the order can be synced to other systems — typically to your ERP. Changes to orders are normally managed via change orders, which relate to existing orders in the case of contracted products.

And then there’s the subscription economy! Contracts can be used to build automated recurring business logic around different concepts, like license-based fixed subscriptions, automatic renewals or consumption-based subscriptions. Automating recurring revenue products will save countless hours and provide the base for invoicing.

5. Finance

“We need to invoice on time and decrease the number of reclamations,” says the CFO. That is the fifth sign you should consider CPQ, or in this case (to be exact), Quote-to-Cash (QTC) solutions.

Billing processes can take time and be error-prone — but they don’t need to. Invoicing functionalities integrate to order management: invoices are created based on orders, whether initial or change orders. With CPQ and QTC, you can automatically create invoices based on the products’ characteristics: one-time, subscription, usage, etc., or generate invoicing data for a third-party invoicing system.

Although the full invoice management and payment collection processes sometimes take place in another system, such as ERP, most often, the pain that your finance team struggles with originates from an earlier stage in the revenue process. CPQ ensures that the base data that flows to your invoicing system is 100% accurate, created at the right time, split in the right way and also provides a process for handling possible changes later on.

Payment process integration allows the connection of payments to invoices. Payments are made by, e.g. credit card or bank transfer, and the billing module’s payment runs will fetch these via gateways or integration. Payments are connected to invoices automatically, from where they can drive business logic and reporting directly. Regardless of the method, this provides 360° visibility of the whole Quote-to-Cash process on one platform.

So that’s our list of the revealing signs that you need a CPQ system. If you started nodding at some of the points above, head over to our next blog: How do I get started on a CPQ project?