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Glossary » Asset-Based Ordering (ABO)

Asset-Based Ordering (ABO)

What is Asset-Based Ordering?

Asset-Based Ordering (ABO), often referred to as Subscription Ordering, is a sales process used in a subscription business model to sell products and services such as cell phones and cable television. 

Asset-based ordering allows users to generate, change and activate orders that contain varied billing types, a combination of services, complex pricing, or different suppliers. For example, a single order from an internet company can include many providers, from technical workers who need to set the service up and install the phone line to the manufacturers creating the router and wire to the customer service team who deal with the customer. Each service has a different price and requirement but is part of one order. ABO enables the different assets being purchased to be sold in one order.

Asset-based ordering functionality within a CPQ (configure price quote software) enables an organization to have a 360-degree view of all products and services purchased by the customer. ABO treats services, subscriptions, hardware, and software as an “asset” during the sales, delivery, and support life cycle.

The Purpose of Asset-Based Ordering

Asset-based ordering (ABO) manages customers’ products and services throughout their life cycles. ABO allows companies that sell and manage subscriptions, recurring licenses, support contracts, or modular solutions to manage these transactions more efficiently after the initial purchase. In addition, it provides enhanced opportunities to manage renewals, upsells, and cross-sells, which helps optimize revenue.

The main benefit of working with a CPQ with ABO functionality is managing asset change orders in a front-end system. In the past, contract modifications were a back-office maintenance operation disconnected from the sales and service teams responsible for dealing with customers. Since an ABO system is sales-facing, salespeople have access to data on what, when, and how customers use their product, which allows them to offer the best service and product package to meet customers’ needs and budgets.

The Fundamentals of Asset-Based Ordering

An asset is an item of value that a customer owns. Asset-based ordering allows sales reps to use a CPQ in which assets are generated during the ordering process. When the orders are submitted, the CPQ is updated and everything is logged in an asset repository.

Asset Classifications

Many ABO systems use the following asset classifications:

  • New—the order has been placed, but the service hasn’t been activated.
  • Active—the customer currently uses the asset.
  • Deleted—the product or service has been discontinued by the customer.

Move, Add, Change, Delete

Move, Add, Change and Delete (MACD) are used in an asset-based ordering system to denote an asset’s status in the quote and order process. The order contains all of the information required to process the request and can be submitted for approval.

  • Move = move products or services from one location to another.
  • Add = add new products or services.
  • Change = change the existing products or services.
  • Delete = discontinue existing products or services.

Ordering by asset allows sales teams to create, modify, or process orders containing complex pricing, combined billing type, combinations of services, or multiple suppliers. An example of an asset-based sales order is an order that includes products and services from various vendors, each configured differently. An example is an order for service installation, monthly-billed phone service, and call forwarding. These services have different pricing models—one-time, recurring, and usage-based—which must be listed in the same order.

How CPQ Helps with Asset-Based Ordering

A CPQ solution lets ABO access information from various sources – a CRM opportunity, ERP system, or asset database. With this connection between CPQ and other integrated systems, ABO allows sales reps to use their knowledge of customers’ needs and contract status to offer the best products, services, or subscription pricing. In addition, it can also issue the correct instructions to supporting systems so they can move, add, change or delete (MACD) the record for each asset.

Once the order is approved in the CPQ, it initiates the subscription or contract. In addition, the assets are used to track customer purchases which helps sales reps negotiate future sales

Asset-based ordering is becoming increasingly popular, allowing businesses to focus on building long-term customer relationships, increasing recurring revenue, and reducing customer acquisition costs.

Synonyms

  • ABO
  • subscription ordering

 People Also Ask

How do you enable asset-based ordering in CPQ?

If you want to enable asset-based ordering in CPQ, your CPQ needs to support ABO. Once this option is enabled and the asset configuration process is completed, you can select asset line items when creating quotes and orders.

You will also need to create an asset object in your CRM. This object will track information about your assets, such as their location and serial numbers. Next, you must add a field to your CPQ called “Asset Number.” This field will be used to store the asset number for each product.

Finally, you need to create a rule in your CPQ system that says that if the “Asset Number” field is populated, then the product must be ordered as an asset.

What are examples of asset-based ordering?

Home internet, cable, and phone packages, and product-subscription service bundles such as appliances sold with maintenance plans, are examples of products and services sold with asset-based ordering.