What is CPQ?

A Complete Guide to Configure Price Quote

Definition of CPQ - What is CPQ software, and how does it benefit sales organizations?

CPQ stands for Configure Price Quote. CPQ software helps sales organizations configure product offerings, set up pricing rules and discounts, and generate quotes and professional proposals customized to buyers’ needs. CPQ streamlines the sales process, reduces administrative tasks, and ensures the delivery of accurate quotes to buyers. Some advanced CPQ solutions also track buyer engagement with the quote, monitor deal progress, and provide analytics on the sales process.

Configuration ensures that products or services are available, meet buyer specs, and deliverable within agreed-upon terms.

Price management allows sellers to choose between products, packages, and services, and offer approved discounts.

Quote generation ensures everything comes together in a way that is on-brand, legally compliant, and contains all necessary collateral to help close the deal.

What is CPQ? Infographic of CPQ Configure Price Quote

CPQ Functionality - What does CPQ allow organizations to do?

The key functionality of CPQ is the ability to configure the right products to sell to your customer, whether you offer simple or very complex products. A CPQ automates the quote generation process, taking into account product dependencies, pricing models, and discount policies. Professional proposals are then generated to send to the prospective customer.

Configure Price Quote software encompasses a range of solutions: from very simple tools that allow salespeople to enter a product, select a discount, and generate a quote, to the other extreme which integrates with ERP systems such as shipping and inventory.

Using a CPQ simplifies selling by guiding sales reps through the sales process using a sales playbook. The Sales Playbook tool within the CPQ guides selling workflows to keep deals focused on buyer needs and drive deals forward. Sales reps can select the right configurations for each customer to ensure consistency in pricing, discounting, and approvals. A product rules CPQ template that simplifies multiple SKU variations into a guided question and answer process eliminates complexities and produces quotes that are easy for buyers to understand. Cross and upsell advice is built into the workflow, so deals can be tailored to each buyer’s needs. 

Guided Selling - Opportunity to Close

A CPQ with guided selling enables sales reps to create automatic quotes complete with visual product comparisons, online visual aids, and audit trails. Sales managers can track all changes and actions taken as they happen.

Instant, high-quality quotes enable sales teams to expedite the quotation process, typically reducing it from days and weeks to minutes and hours. Sales reps and channel partner reps will be quoting like pros – with minimal training – and the personalized quote templates will help sales organizations maintain a standardized, professional company message.

Quote Approvals - How does CPQ ensure quotes are validated and approved?

CPQ solutions also address the issue of product configuration and quote approvals. Integrated approval workflows ensure key stakeholders are in the loop on quotes before they’re sent, which is crucial when special pricing or customized product offerings are involved. Once approved, CPQ solutions can also make sure sales quotes can’t be changed, whether by accident or intent after they’ve received approval. Sales reps can be certain that quotes sent to customers are fully validated and orders based on these quotes will not be rejected.

Benefits of CPQ - How does a CPQ solution positively impact Sales Operations?

In 2013, Aberdeen Group surveyed 159 organizations to determine the sales processes and technologies that the top-performing organizations used to close deals. They learned that optimizing sales workflows with a CPQ solution provides tremendous efficiencies and advantages. Among them are:

  • More Accurate Quotes
  • Increased Lead Conversion Rate
  • Increased Quote Generation
  • Shortened Sales Cycle
  • Increased Deal Size

CPQ vs Non-CPQ Sales Performance Data

CPQ Users Out-Perform Non-CPQ Users

CRM with CPQ Integration - How does CPQ complement CRM?

Using a CRM has become standard practice among organizations of all sizes to keep customer information organized and track sales opportunities. But, integrating a CPQ with a CRM helps organizations become more efficient and streamlines the sales process.

Seamless Proposals, Quotes, and Contracts

Many sales teams use optimal CRM solutions like Salesforce, Microsoft Dynamics, and Freshworks, to assess leads and follow up with them, but then use stand-alone tools for things like sales quoting, price optimization, proposal generation, contract management, and playbooks.

Instead of having to use Microsoft Excel and Word for these sales solutions, a CPQ can turn them into a seamless part of the sales process.

CPQ essentially does the same thing as a CRM, just for different elements within the sales cycle. With a CPQ integrated natively within the CRM, sales reps can communicate with prospects and send proposals in record time. When all sales processes are connected, the sales cycle never becomes bottlenecked, which increases the likelihood of a successful deal.

Faster Sales Cycles​

Studies show that companies that use CPQ solutions enjoy faster sales cycles. Reps can generate complex quotes promptly, respond rapidly to proposal requests, and avoid “indecision” sales losses.

When combined with the power of efficient CRM solutions, a rep’s job becomes easier with a streamlined and optimized workflow.

Fewer Errors & Delays

When reps are using CRM solutions and disconnected sales tools, the chance of errors occurring increases exponentially. Reps tend to waste time searching for materials because they aren’t part of the workflow.

Manual price quoting is inherently error-prone. When reps have to search through Excel sheets, price lists, and product documents to configure a quote, mistakes are bound to happen. 

When CPQ is integrated with CRM solutions, everything meshes. Prices are updated in real-time, and the CPQ acts as a single source of truth about products, inventory levels, pricing, and discounting rules. Quote generation is part of a workflow that reduces errors and allows reps to create quotes and proposals and include supporting content assets with ease.

This impresses prospects, wows customers, and makes it more likely that reps will get an emphatic “yes” when it comes time to close the deal.

Easy Adoption​

An often-overlooked benefit of CRM-CPQ integration is that it eases user adoption. There’s little to no learning curve when integrating a CPQ with the CRM platform sales teams already use. The CPQ becomes part of the sales process itself. Reps quickly realize that the CPQ makes their job easier and helps them close deals faster.

When justifying the need for CPQ, consider the needs of the organization, the sales operations department, the sales team, and customers.

CPQ Justification - Does your organization need Configure-Price-Quote software?

There are many reasons why organizations need to implement CPQ. Among them are:

  • Sales process inefficiencies 
  • Burdensome administrative tasks
  • Quotes going out with errors
  • Frequent rework of quotes
  • Rogue discounting
  • Quotes sent without approvals
  • Poor response time to customers’ requests for quotes
  • Missed upsell and cross-sell opportunities
  • Missed renewals
  • Poor customer experience and low satisfaction with the sales process

When justifying the need for CPQ, consider the needs of the organization, the sales operations department, the sales team, and customers.

Organizations need CPQ for pricing standardization, quote accuracy, and corporate branding. CPQ enables sales teams to represent the company in a standardized manner in pricing, messaging, and the look and branding of the proposal. CPQ shortens the sales cycle by ensuring sales reps respond quickly to customers, produce quotes fast, and generate proposals that get noticed by decision-makers. 

Sales Operations needs CPQ to ensure efficiency in the sales process, including quote and proposal generation, as well as sales rep training. A CPQ ensures that each step in the sales process is carried out according to a standard playbook and that pricing and configurations are accurate. Team members always have updated pricing and discounting built into the software, so the quote generation process is error-free.  

CPQ solutions include tracking and analytics to measure customer response to quotes and determine where quotes are stuck in the pipeline. Analyzing the value of quotes and the acceptance and rejection of deals helps improve revenue operations.

Further reading: 5 CPQ Features that Matter Most to Sales Operations Leaders

CPQ benefits sales teams by reducing the amount of time they spend on non-sales activities. A CPQ helps them respond faster to their customers with the right pricing, messaging, and marketing documentation while eliminating time-consuming administrative tasks. 

CPQ ultimately benefits customers when they receive a quick response to their requests for quotes. They enjoy greater satisfaction with the sales process, and a greater sense of trust as well. Quotes are accurate and have gone through an approval workflow before being sent to the customer. Proposals include personalized content to help customers make sound business decisions. These factors are essential to a customer-centric sales process.

Further Reading: Why Your CRM Needs a CPQ Integration

Sales Operations Efficiencies - How does CPQ help sales organizations achieve their goals?

CPQ streamlines the sales process, which increases the efficiency and productivity of sales teams. Guided selling reduces new hire training time, decreasing time to value. When sales reps spend less time on administrative tasks and follow an intuitive workflow, they have more time to focus on building relationships with customers and selling.

Take a look at the positive impact of CPQ on Sales Operations:

CPQ software helps sales teams succeed CPQ affect on sales KPIs

CPQ Integration - When is the right time for CPQ?

There are preconceptions about the right time for organizations to consider CPQ. Organizations don’t need a certain number of salespeople before looking at CPQ or very complex pricing or configurations to see the value from a CPQ solution. There are more relevant factors to consider when determining the right time to implement CPQ.

Consider these questions:

How much time are your salespeople spending on generating quotes? If your sales team spends a great deal of time on administrative tasks and manually generating quotes, it may be the right time for CPQ.

Is the size of your sales team increasing? If new salespeople spend weeks learning your sales process and how to use your sales tech, you’re losing value from your new hires. CPQ can speed up the training process, so new reps provide value quickly. 

How fast are you able to get back to your customers? Customers expect and appreciate a fast response to their requests for quotes. They are deep into the buying process before they ever reach out to you. A quick response shows your customers that you are prepared to meet their needs and helps build trust. 

Is generating quotes a tedious process that requires sales reps to pull information from several sources? If your quote generation process encumbers your sales cycle, it’s the right time to consider CPQ software.

Are quotes going into your CRM, and is everyone using the same playbook? If your reps are entering their own discounts or you are unable to track quotes because they aren’t synced with your CRM software, it’s time to take a look at a CPQ that integrates with your CRM

What are the costs of errors from incorrect configurations or incorrect pricing? If you are losing revenue due to inaccurate quotes, your organization should consider CPQ.

“DealHub gives us excellent value for the money. The platform is very agile and easy to configure.” –
Yuval Zilberman
Global Director of IT, AVT​

CPQ Selection Process - How to find the right CPQ for your needs

CPQ is cross-organizational, so consider the needs of the different groups within the organization, including Sales Management and Operations, Finance, and Legal.

Determine what Sales Management and Sales Operations are trying to achieve. List the pains they are experiencing and the features that a CPQ solution must have to address those issues. 

Sales Management and Operations will be concerned with issues such as:

  • Price quote control
  • Version control
  • Quotes synced with CRM
  • Margin approval accuracy
  • Sales process standardization
  • Improved buyer experience
  • Standardization of sales team processes
  • Sales rep administrative tasks vs. active selling time
  • Reduction in error rates and inaccuracies
  • Response time to requests for quotes

What needs do Finance and Legal have that the CPQ solution will address? Consider how a lack of standardized pricing, advanced configurations, inconsistent discounting, and non-compliant contracts may be causing issues within your current sales processes. The CPQ should be able to solve those problems. 

Further reading: 15 Tips for Choosing the Right CPQ Software

How to Select a CPQ Vendor

Selecting the right CPQ solution for an organization’s needs can be confusing. There are solutions of varying complexity on the market. 

When evaluating CPQ solutions, consider your organization’s growth and the scalability of the solution. Ask yourself, “What is the functionality that I need today? What is the functionality that I will need in the next 9, 12, 18 months?” 

Look at the functionality of the CPQ solutions you’re assessing. Are they going to offer the capabilities that you need as you grow, as your team grows, and as your needs expand?

CPQ Requirements Documentation 

Once you’ve evaluated the needs of different stakeholders, and have gathered the requirements from each group, prepare a requirements document. When you speak with vendors in the CPQ marketplace, use this document as a checklist or score sheet to ensure the software addresses the needs of each group. Document your evaluations so you can compare vendors based on your specific needs – your must-haves and your nice-to-haves.                          

CPQ Vendor Evaluation

Once you’ve interviewed your stakeholders and you’ve built out your requirements document, then examine how each vendor matches your requirements. Bring those vendors in and have them demonstrate, in a live environment, their capabilities, and how they meet your specifications. 

It’s not enough for vendors to promise that their solution offers certain capabilities. It’s crucial to see that functionality operating. Then, short-list the vendors that match your capabilities or requirements and bring the stakeholders back into the process for the final evaluations and decision-making. You want their consensus. You’re going to need their buy-in. Get them involved in the final decision.

CPQ Vendor Selection

When you make the final selection of your CPQ, take a look at any hidden considerations that may be involved, paying particular attention to the time required to implement the solution. CPQ implementation projects can range from three to six weeks, up to 12 to 15 months, depending on the solution. Every project involves disruption and defocus within the organization, so implementation time should be a main consideration. 

Select a CPQ that is going to minimize the disruption within the organization. There is also a cost involved in implementation time; not only the cost of physically implementing the solution but the time to value. How long is it going to take your sales team to see value from that solution? That’s a cost that you must consider.

An often overlooked consideration when selecting a CPQ vendor is determining how dedicated they are to CPQ. Are they committed to enhancing that CPQ functionality, to taking that solution to where you need to go in the next 6 to 12 months and beyond? Will it scale with your business? Make sure to take into account these hidden considerations when selecting your CPQ. 

Learn about DealHub CPQ

“We selected DealHub because of the people, product, and process… It’s really fast to get to value. It’s one of the easiest integrations we’ve had to do.”
Rebeca Crum - Director of Alliances Program Manager at Lastline Talks About DealHub
Rebecca Crum
Director of Alliances Program Manager, Lastline

Using CPQ to Evolve Your Sales Operations

The great engineer and management consultant W. Edwards Deming said, “Eighty-five percent of the reasons for failure are deficiencies in the systems and process rather than the employee. The role of management is to change the process rather than badgering individuals to do better.” Utilizing a best-in-class CPQ, integrated with a CRM, allows sales operations to change their processes and achieve better results for their organization, their team, and their customers.

Aberdeen reported that by using a CPQ, best-in-class sales teams were better able to realize efficiencies in the following areas:

  • Minimizing the number of people, functions, etc, required to develop and deliver quotes to buyers
  • Managing by exception with pricing/discounting “guardrails” in place
  • Generating complex quotes in a timely manner
  • Providing sellers with marketing tools to develop, send, and track response to messaging
    (Source: HubSpot and Aberdeen Group Report)

When choosing a CPQ for your organization, look for CPQ vendors that perform well in these areas. These guidelines will help you find a CPQ that will make a positive impact and help you meet your sales operations goals.

Make DealHub CPQ Part of Your Sales Process

CPQ is part of a holistic sales process, focusing on consistent and accurate delivery of the essential information buyers need to make decisions. The best CPQ tools have the power to streamline the quoting and proposal generation process, helping sales teams close deals faster. Choose a CPQ solution that will help your sales team achieve their sales goals while helping your organization increase revenue. 

DealHub CPQ Integration with Your CRM 

When you can manage your entire deal flow within your CRM, there’s no risk of losing crucial information. Your CPQ should be an extension of your sales operations workflow, native within your CRM. DealHub CPQ integrates seamlessly with Salesforce, Microsoft Dynamics CRM, and Freshworks. All fields feature bi-directional synchronization so your information is updated in real time.

Our customers love DealHub CPQ because it’s fast to implement and easy to use: plug in your product data, configure your business rules, and start quoting. No coding necessary, so you can be set up and ready to go in minimal time. Our customers also appreciate our competitive price point.

We invite you to take a look at how DealHub stacks up against other CPQ vendors rated by users on G2 Crowd. You’ll see how DealHub has been named the Highest Performer, and how our solution ranked best in the CPQ Software Category in the following categories:

  • Best Usability
  • Best Support
  • Easiest Setup
  • Easiest to Use
  • Best Relationship
  • Best Meets Requirements

Free Guide: 9 CPQ misconceptions dispelled

9 CPQ misconceptions dispelled ebook

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