CPQ meaning: CPQ is the abbreviation for Configure, Price, Quote. It is a software solution that helps sales managers configure custom quotes that imply many properties fast and stress-free.
Let's dive deeper to discover what CQP software is and how it can benefit a business.
WHAT IS CPQ SOFTWARE?
A configure, price, quote (CPQ) solution isn't a simple calculator that helps multiple prices of add-ons and forms a final price. It is a feature-rich solution that allows sales managers to automate daunting quoting processes.
The CPQ abbreviation may have various spelling options that are:
- Configure Price Quote
- Configure, Price, and Quote
For starters, let's explore the three components of CPQ solutions separately.
Configure. The “C” stage needs sales managers to configure a custom quote by specifying all the details, properties, add-ons, etc.
Price. The “P” stage refers to the process of automatic price calculation. A CPQ tool analyzes many factors to calculate a customized quote.
Quote. The "Q" stage is the final quote that a sales manager reviews and shares with a clients.
Consequently, the client receives a personalized quote that may imply a large number of products with distinctive properties. Such programs help automate the above processes and reduce the time spent to a minimum, thereby providing the client with a custom solution in the shortest possible time and with the most honest quote.
How Does CPQ Software Work?
The process of configuring a custom quote implies a lot of crucial actions that are not visible to sales managers or clients. Let's elaborate on CPQ software systems in more detail.
The complete process of configuring a custom quote implies the following stages:
1. Order configuration
2. Price calculation
Let's take a closer look at the main features of a CPQ solution.
A salesman collects requirements from a client to understand what type of product they need. After this, they need to use a CPQ tool to configure a custom quote.
A sales manager specifies all the details using a convenient-to-use interface. The software may automatically update the preview of a product, depending on selected options.
The CPQ software can check if the requested product is in stock and can be delivered to a client.
AI-enabled CPQ software systems can analyze products configured by sales managers and suggest additional items to upsell.
At the price-configuring stage, the CPQ software calculates the final price.
In order to facilitate the work of sales managers, it can analyze a customer's profile in a database to offer personalized discounts. For instance, it can check if a client is qualified to be a loyal customer or calculate a discount, considering the number of past purchases.
Also, a CPQ system checks and applies current promotions, regulations, local taxes, personal discounts, etc.
A quote is created and shared with the customer. It can have the form of a custom payment link or an invoice.
If a customer doesn't approve a quote, it can be updated by a sales manager in a few clicks. There is no need to create a new quote from scratch.
Some advanced CPQ solutions can provide reports to discover the churn rate, quote approval rate, average discount, sales volume, and other details to optimize sales processes.
CPQ Software Example
A manufacturing company produces office desks. Every item can:
- be made of four different materials
- come in five different finishes
- come in three shapes
- have two size variations
Hence, a salesman comes with (4x5x3x2)=120 different product variations to offer for one position in a catalog.
Every option affects the final price. Moreover, the number of a product's variations can increase significantly with a large number of a product's properties.
Using a CPQ solution, a salesman can gather all the requirements from the client and create a custom quote in a few clicks.
Moreover, the software helps ensure that the requested product option is in stock and creates a custom payment link or invoice.
Advanced Features of CPQ Software
CPQ software systems may have a large assortment of features to help businesses increase sales, performance, customer engagement, etc.
Let's explore the most advanced features of CPQ software systems.
Fixed prices. Provided quotes remain unchanged when offered even when prices change.
Recurring payments. The ability to charge monthly payments automatically for a certain period for services that are provided regularly.
Visual configuration. The visual presentation of a product configured.
CRM integration. The ability to connect CPQ software with a selected customer relationship management (CRM) system.
Product suggestion. AI-driven products upsell suggestions to increase sales.
Discount management. Custom discounts are applied to bulk orders, custom products, or loyal clients. Discounts may expire to force clients to pay without delay.
Reporting. Detailed reports on quotes created, purchases completed, disapproved quotes, etc.
CPQ SOFTWARE STATISTICS
CPQ software has already become an indispensable tool for small and big businesses, and therefore the market growth is understandable.
Various studies show that the CPQ software market will grow by $1.49 billion over the 2021-2025 period. It is explained by the fact that more and more companies want to automate their CPQ processes.
CPQ solutions help sales managers enhance performance and increase sales. Let's explore Configure-Price-Quote software statistics in more detail.
83% of sales managers utilize CPQ solutions
40% of human errors are eliminated with the help of CPQ software
17% is the average lead conversion rate increase achieved by CPQ software adopters
50% of customers choose businesses that respond first
BENEFITS OF CPQ SOFTWARE
CPQ software provides a number of advantages, not only for businesses but also for customers. CPQ software solutions help:
- shorten a sales cycle
- increase lead convection rate
- reduce staff training time
- reduce the number of errors
- optimize internal processes
- boost sales team performance
- improve quoting productivity
Let's take a closer look at the benefits of CPQ software for manufacturing representatives and customers.
|Benefits for Business and Manufacturers||Benefits for Customers|
|The sales team immerses faster in the company's processes||Enhanced purchasing experience|
|Sales managers can generate more quotes||Quotes are received without a delay|
|Increased lead conversion rate||Access to customized services and products|
|Increased average sale rate||Fever time spent on reviewing quotes and negotiating|
|Shortened average sales cycle||Ability to pay at any time|
|Faster training of new employees||
|Minimized risks of a human factor||
|Consolidation of information about all products||
CPQ SOFTWARE IMPLEMENTATION GUIDE
The process of CPQ software implementation is essentially a part of the digital transformation process. Therefore, implementation will take time, and you need to prepare for it carefully. We have broken down the process into several main stages.
Stage 1: Preparation
In order to prepare for the CPQ systems implementation, you should first define the goals of your business. Create a development strategy for the near future and understand how exactly CPQ software will help you achieve business goals.
Determine what problems, gaps, and processes the best CPQ software can improve and close and include them in the implementation plan. Evaluate which sales strategy is being applied at the moment, what channels it consists of, and how it is applied. Document and analyze them to understand how these processes meet the business goals and business logic of your company.
Finally, analyze the effect of implementing the CPQ software and determine which processes will be affected and how. Predict how your team will accept digital changes, what role changes will follow, and so on.
Stage 2: Development & Implementation
If you strive to adopt CPQ solutions, you can choose between using a ready-to-go and custom-built solution.
In order to implement a ready-to-go solution, you should review the best CPQ software to choose one that meets your needs. Contact a vendor to get product implementation instructions.
In case none of the existing solutions can meet your needs, you can develop a well-tailored CPQ system from scratch. Many different technologies may be used to create a Configure-Price-Quote solution, depending on the specified business goals.
Therefore, it's vital to find a reliable vendor to delegate CPQ software development.
How do I choose a CPQ software vendor?
There are enough CPQ software companies on the market. You can find them by exploring the Internet, freelance websites, or B2B listings. Also, you may ask your connections to share references.
In order to make the right choice, you need to be guided by the following parameters:
Assess your goals. It is impossible to choose the right software if you do not fully understand what tasks you are pursuing. Also, decide on the budget and implementation deadline.
Check testimonials. Online comments may not be very trusting, so look for reviews on popular platforms such as Clutch.
Check a workflow. Explore the workflows of reviewed companies to discover how they build digital products.
Explore case studies. Review the products already developed by reviewed vendors to discover their capabilities to build top-tier CPQ software solutions.
Communicate and elaborate. Feel free to schedule one-a-one meetings with the representatives of selected companies. Share information about your business goals and clarify if they can be achieved with a new CPQ solution.
Define team members responsible for the implementation of a new solution. Create a list of tasks for allocated team members and test the implemented solution before onboarding new users.
Stage 3: Staff Training & User Onboarding
Educate your team members on using the implemented CPQ solution. The two most popular training approaches are:
Learning materials. User guides and instructions on how to use new CPQ software.
Workshops. A series of meetings aimed to share knowledge on how to use a new CPQ system.
To onboard new team members effectively, we recommend the following:
Define roles and required knowledge. Prepare a list of your team members who should learn how to use new software. Define a system's functionality that should be learned by every team member.
Create a learning schedule. Define learning time for every team member and create a thorough schedule to not compromise on ongoing business operations.
Evaluate skills learned. Assess the skills learned by employees by creating and running tests.
Update and maintain. Assign a manager responsible for maintaining technical documentation. The manager should update internal instructions if new features get developed.
Stage 4: Maintenance
Finally, the main task is to constantly evaluate the effectiveness of the CPQ software. If you see that your sales processes can be improved and thereby bring even more value to customers, then collect feedback and optimize the CPQ systems for your needs.
A good piece of advice at this stage would be constant training of your sales specialists to work with the new CPQ software. This is especially important for new team members.
CODEIT CPQ SOFTWARE DEVELOPMENT EXPERTISE
Our company has already had CPQ software solutions development projects, and we want to show one particular case.
The Client and Business Goals
The client is a US-based entrepreneur who wanted to create versatile CPQ software for the B2B segment. The client wanted the software to be up-installed on the customer's CRM. In addition, 2D and 3D visualization at the configuration stage was crucial for the client.
This way, customers could see what kind of product they were customizing and what they would receive in the end. Finally, the customer had to receive an official quote that would be understandable, trustworthy, and secure.
A team of specialists was assembled, which included a full-stack developer, QA engineer, marketing specialist, customer care specialist, and project manager.
Within nine months, we managed to create a versatile software that allows managing the quoting process in "one-click," together with the client's specialists, set up in the most accurate way in order to optimize and speed up the client's sales processes.
The software is easily configurable, and users can set up templates that are reusable in configurable for each specific case. This product helps companies that manage human resources. With the help of this product, it's possible to forecast the revenue in a flash.
It consists of 3 main services:
- Quote configurator
- Resource demand forecasting
- Real-time revenue forecasting
TOP CPQ SOFTWARE
There are many ready-to-go CPQ systems available with various feature sets. Let's review the top five solutions available on the market and CPQ software pricing policies.
1. Salesforce Revenue Cloud
Salesforce Revenue Cloud is a comprehensive solution that helps businesses track their revenues from top to bottom.
Configure-Price-Quote is one of the system's features. Businesses can create customized quotes with ease and access all the data to explore revenue sources.
The solution's users can choose among two monthly plans:
- Basic functionality: $75 per user per month
- Advanced functionality + automation: $150 per user per month
2. Hubspot Sales Hub
The Hubspot CPQ functionality is part of the Sales Hub, a CRM platform. The software offers the opportunity to create custom quotes and track deals.
Also, the inbuilt Configure-Price-Quote functionality offers the opportunity to create custom payment links so that clients can pay for services or products in a few clicks.
The CPQ functionality is included in all four packages that are:
- Free: 0$
- Starter: from 45$ per month
- Professional: from $450 per month
- Enterprise: from $1200 per month
PandaDoc is a document creation and processing tool. Quote generation is one of the solutions offered by the system.
The system foresees the opportunity to create custom quotes, manage sales, sign documents digitally, and track progress.
The four pricing options are:
- Free: $0
- Essential: $29 per user per month
- Business: $59 per user per month
- Enterprise: custom price
QuoteWerks is a digital solution that helps create branded quotes fast and share them with clients.
The tool has a lot of features to create invoices, process payments, sign documents remotely, track quotes, etc.
The three editions user can choose from are:
- Standard: $15 per user per month
- Professional: $21 per user per month
- Corporate: $30 per user per month
Oracle CPQ is a cloud-based platform with many useful features to create and share custom quotes.
The software's main features are intuitive configuration, subscription payments, flexible pricing, electronic signatures, and contract management.
In order to use the CPQ system from Oracle, businesses need to pay $240 per user per month.
Conducting a detailed CPQ software comparison is vital to choose the right solution to help meet all the business goals.
According to the CPQ meaning, Configure-Price-Quote is a type of software that helps businesses create custom quotes and share them with clients.
Modern CPQ solutions have a lot of useful features that facilitate the work of sales departments. The top additional features that CPQ solutions may have are:
- fixed prices
- recurring payments
- CRM integration
- product suggestion
- discount management
Striving to adopt a CPQ system, businesses can choose between setting up a pre-built solution and developing a new Configure-Price-Quote system from scratch. The process of implementation of a CPQ solution implies the following stages:
- Development & Implementation
- Staff training & User onboarding
CPQ Software consists of three main values - configure, price and quote. All three values are responsible for automating sales and quoting processes for sales teams and providing customers with a better and more customized service.
CPQ software brings a lot of benefits and automates sales and quoting for sales teams. Ultimately, the customer gets the opportunity to customize the product the way he wants and get a fair and honest quote at the same time.
CPQ software is an ideal companion for large manufacturers and for companies that have a large number of products and allow their precise customization.
According to Gartner, CPQ software is widely used by organizations that operate in B2B and B2C environments.
The foremost CPQ benefits are:
- a shortened sales cycle
- increased lead conversion
- reduced number of errors
- enhanced sales performance
- increased lead conversion rate
The top CPQ software providers are:
- Salesforce CPQ software
- Hubspot Sales Hub
- Oracle CPQ