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CPQ CXC
CPQ CXC
will use price optimization promise,” according to Ray Wang, principal analyst and founder of
Constellation Research. A sales process that includes CPQ allows
algorithms and configure
greater transparency and flexibility. “When customers choose to
price quote tools to
engage, they want to engage on their terms. They want the ability to
dynamically calculate and
not only choose their own journeys, but choose when to interact in
deliver product pricing. the sales process. They want mass personalization at scale, but they
also want to be guided when it makes sense. CPQ is one of the key
tools at the heart of all this.”
CPQ is rapidly becoming must-have technology in a number of industries, both B2B and B2C. “By 2018, 40 percent
of digital commerce sites will use price optimization algorithms and configure price quote tools to dynamically
calculate and deliver product pricing,” according to research firm Gartner. “This will not be possible without an ability
to track customer purchases and buying behaviors across many channels and customer engagement points.”
Improving the customer experience leads to improving business results. A 2015 Aberdeen Group study showed
that adopters of CPQ tools outperformed non-users in customer renewal rate (+3.9 percent year over year vs. -0.6
percent) and lead conversion rate (+3.6 percent vs. -0.5 percent). Users also achieved a 4.9 percent reduction in
contract and proposal errors, compared to 1.9 percent for non-users, indicating a faster and less frustrating sales
process for customer and salesperson alike.
Let’s examine some of the various ways that CPQ can drive customer experience to new heights in your
organization, as well as some things to steer clear of:
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The business rules of CPQ prevent bad configurations for a given implementation or pricing that doesn’t fit the
proposed budget. By reducing issues like these, you create a stronger sense of communication between seller and
buyer, helping them work together and steering them away from products that are not acceptable.
The system also reduces the amount of technical knowledge a seller has to remember personally. However, for this
aspect to work, salespeople still need to be on top of their game, not just relying on the technology to do the job for
them. “CPQ could work at cross purposes here if the seller doesn’t understand what’s on sale or what the customer
needs. I could see a vendor putting CPQ into the hands of newbies and not getting great results,” says Denis
Pombriant, founder and managing principal of Beagle Research Group. “There’s no substitute for good selling.
That said, yes, if the rep is operating several levels above generating a quote, he or she can focus attention on
being more consultative.”
One of the lessons that all businesses can learn from the B2C world
is that sometimes, customers want to do it themselves.
By removing the tedium of quote-building from the sales process, the customer gains a sense of control and will be
pleasantly surprised (read “ecstatic”) at the speed of turnaround. For example, one company was able to improve its
time-to-quote from two days to just 20 minutes. Not only will instant gratification make a lasting impression on your
customers, they may feel more freedom to expand their purchase, giving the salesperson time to upsell if appropriate.
There is real money to be made in providing customers a rapid quote and approval. CPQ should really have an
“A” at the end of it, for automated approvals. Quickly completing a configuration and quote isn’t helpful if it winds
up in front of a sales manager who has to duplicate and double-check all the steps, making sure the deal uses
current information and respects profit margins. This can add hours or days back into the sales process, potentially
frustrating the customer and driving them to another vendor.
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Sellers of personal computers led the way in handing basic configuration over to their customers, and have
achieved considerable success. Automakers have adopted a similar approach, driving some of their customers to
the Web and pushing customers’ car options to local dealers—and have reported a notable increase in positive
customer experiences. Buying a new car is one of the more stressful things a person can do, so anything to make it
easier and better understood will alleviate that stress.
“The configuration process can and should be an exceptional consumer experience: 3D presentation of the
products, available color schemes, scroll in/out or real-time image adaptation of accessories and options,” writes
Björn Neumann on the Buljan & Partners Consulting blog. Neumann notes that specs and images alike can be
delivered through the CPQ app, are viewable on all our various devices, can be modified in real time and saved,
and can be shared on social media or through email. “Customers buy because it is an exceptional experience.”
This is not to say that every vertical industry can achieve equal results by opening up the configurator to customers.
“Customers break systems like this all the time,” Pombriant says. This can lead them to become frustrated and
possibly even go elsewhere. The proper balance may be to have a salesperson start the process and turn it over to
the customer. “A better approach might be to deliver a professionally developed quote with the tools to edit it. That
way there’s less opportunity to break things.”
Conclusion
CPQ simplifies and streamlines a tedious and error-prone sales task into a point-and-click operation that shows
customers immediate progress towards their goals. By delivering the right content to salespeople, they can present
the most appropriate up-sell opportunities, and sell from your entire line of products, not just the ones they are
most familiar with. This doesn’t just help the sales rep – it enhances the buyer’s experience, and ensures that your
business delivers the solution that’s the most precise fit for their needs.
To do this, you need to choose a CPQ solution that’s built to accommodate the size of your business, can work with
other applications in the lead-to-money process without costly and time-consuming integration, and can scale to
match your business growth. Its delivery should minimize time spent on resolving technical issues and allow your
project lead to focus on tuning the system to meet changing business needs and sales strategies.
The deployment strategy you opt for should deliver all these benefits to your salespeople immediately and with as
few glitches upon roll-out as possible. If you choose the right CPQ system and deploy it effectively, adoption by your
sales force will be enthusiastic and should produce visible results in short order.
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Which Features Do You Need Now – And Will Need in the Future?
This is the most basic of all requirements exercises: listing features to create a checklist that all contenders must
match. But it’s easy to overlook things in CPQ—especially to fail to spot areas where growth could quickly hamper
your CPQ choice’s effectiveness.
For example, if today you sell only within the U.S., you might not have multi-currency support among your
requirements. But the odds are good that growth may soon make that a requirement. Do you use a percentage-
based or volume-based pricing structure, and might you change between the two in the future?
Flexibility is another critical attribute to consider, especially if your business is changing. Do you offer services as
well as products? If so, you need the ability to manage pricing for both within your CPQ solution. Do you offer – or
plan to offer – a mix of manufacturing styles – assembled-to-order, configure-to-order, engineered-to-order, and
componentized products? Make sure the CPQ solution is flexible enough to accommodate them all.
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Stand-alone or Suite?
Many CPQ vendors offer CPQ as their only product or as one of a small number of products, while others also
offer CPQ as part of a suite. In circumstances where a CPQ solution is needed urgently, the impulse can be to
lean toward stand-alone vendors – but this can lead to integration costs and delays that offset any perceived time
benefits a stand-alone solution seems to offer.
A well-organized suite does not require a rip-and-replace attitude toward existing systems. Instead, its components
often integrate with legacy systems (many times, using built-in integrations) and provide a pathway for bringing in
new functionality (for example, using quote information as part of sales compensation, or tracking the correlation of
customer experience and satisfaction against time to quote).
For deeper integration between CPQ and CRM systems, look for services from enterprise-grade CPQ vendors.
All of them are adept at this. But don’t stop with CRM. As CPQ systems continue to evolve, integration with other
applications in the lead-to-money process are becoming more important. Integration with commission calculation
systems, motivation systems, learning systems, contract management systems and coaching systems will continue
to drive additional value to CPQ users.
About CallidusCloud
Callidus Software Inc. (NASDAQ: CALD), doing business as CallidusCloud®, is the global leader
in cloud-based sales, marketing, learning, and customer experience solutions. CallidusCloud
enables organizations to accelerate and maximize their lead to money process with a complete
suite of solutions that identify the right leads, ensure proper territory and quota distribution, enable
sales forces, automate configure price quote, and streamline sales compensation — driving bigger
deals, faster. More than 4,600 leading organizations, across all industries, rely on CallidusCloud to
optimize the lead to money process to close more deals for more money in record time.
4140 Dublin Blvd, Suite 400 Dublin, CA 94568 www.calliduscloud.com 1 866 812 5244
This document is provided for information purposes only, and the contents hereof are subject to change
without notice. © 2016 Callidus Software Inc. All rights reserved.