Finding the right tools to streamline your sales processes can be key to running a more successful and profitable sales operation. One popular solution for managing and automating parts of the sales process is by using CPQ (Configure, Price, Quote) Software. However, what is a CPQ and what are its primary benefits? And most importantly, does your business need it?
What is a CPQ? What are its benefits?
CPQ (Configure Price Quote) is a type of sales software that allows sales reps to quickly and easily configure products and services, generate accurate pricing, and create quotes to be sent to customers.
Here are some of the key advantages of using a CPQ:
- Accurate Product Configuration: It’s easier for sales reps to build a customized package of products and services depending on a prospect’s specific needs and requirements. Since these are configured into the system, CPQs also reduce the chances for errors or misunderstandings.
- Automated Pricing: Sales reps don’t have to manually calculate the pricing estimate each time they’re doing a quote because pricing information is already built into the CPQ. This ensures that quotes have accurate and up-to-date pricing.
- Professional-looking Quotes for Prospects: CPQs often have customizable templates that can standardize the appearance of quotes, making them easy to understand for prospects and customers. This improves your chances of closing deals faster.
When is it time to use a CPQ?
Businesses typically consider a CPQ system when they want to achieve the following, after hitting a certain point of growth:
- Price compliance and consistency among sales reps
- Streamlining quote creation and management
- Shortening overall sales cycle
These are all especially important for when your sales team is getting caught up in more administrative tasks than they can take on, and for when you want to implement scalable processes within the organization. In addition, price compliance and consistency is important for when you want to ensure that your sales team isn’t making unauthorized changes to pricing in order to hit quotas.
However, what most people don’t know is that CPQs can be expensive, complex, and difficult to implement and maintain.
What are some disadvantages of using a CPQ?
Here are some disadvantages when it comes to using CPQ systems:
- It can be expensive. There are upfront costs when choosing to implement a CPQ, as well as ongoing subscription fees, which can lead to it being a major investment for organizations.
- Implementation can take months. Because of the complexities surrounding CPQ software, it can take months to implement it and usually requires specific consultants to get it off the ground.
- Complex to use and maintain. CPQs can be inflexible and difficult to customize, and often requires a really strong RevOps / Operations team to maintain it. It often requires dramatic rework anytime pricing or packaging needs to be updated.
Although CPQs can be advantageous especially when enforcing price compliance and consistency, the difficulties to implement and maintain the tool might be at the expense of your sales reps’ and operations teams’ productivity.
So, do you need it?
Generally, CPQs are designed for large enterprises with a more complex product catalog. However, there are a few factors to consider, especially for small-medium businesses.
- Size and Complexity of Sales and Operations Teams
- If you have a small sales team, implementing a CPQ may not be necessary. The system might be too much for what you’re trying to do; all the more if you don’t have a strong operations team to back up your sales team. The success of CPQ software heavily relies on its implementation and maintenance, often done by your Revenue Operations / Sales Operations team. Having a strong RevOps / Operations team is key to making the most out of a solution like CPQ.
- However, if you have a large sales team and a strong RevOps team to maintain your CPQ solution, then it could potentially make sense.
- Product and Service Catalog
- If you sell simple, standardized products or services, then a CPQ may not be necessary. A tool like CPQ is best utilized for complex products or services that require customization and configuration per account. However, there are other tools that can provide this benefit without going the full route of implementing a CPQ.
What’s the alternative? (Especially for SMBs)
Depending on the use case, there are a lot of alternative tools that you can use for your business.
Typically, SMBs can greatly benefit from using a dedicated quoting software, which can help in generating quotes quickly and accurately. A lot of these quoting softwares already offer many features such as product and pricing databases, customizable templates, and the ability to handle complex configurations – which are mostly the key things you’d want from a CPQ software anyway. It is oftentimes a more scalable and efficient tool compared to using a manual spreadsheet program. For a list of comprehensive quoting tools, you can check out HubSpot’s list here.
However, one tool in particular that gives you most of the core benefits of a CPQ tool is FastSpring IQ.
FastSpring IQ (which stands for Interactive Quotes) is a lightweight CPQ alternative that’s specifically designed for small-medium businesses.
For sales reps, IQ provides an easy way to create, customize, and manage sales quotes, as well as keeping track of deals and integrating everything into your CRM platforms.
For RevOps and Operations teams, it’s a more flexible solution to implement price compliance and consistency among your reps, and provides a good approval workflow for your quoting process.
It also offers real-time analytics, eSignatures, and payments, for a simpler and more effective quote-to-cash process.
The best part is that you can get started right away and test the platform out as much as you want – IQ is free for up to 2 users, core functionalities and unlimited quotes included. Find out more information here.