Adding technology to your selling process is not an exercise that should be taken lightly. We’ve all seen examples of software deployments that went awry because the timing wasn’t right, especially in the area of CRM. Responsible businesses read the signs and act when the time is right – doing otherwise can mean lost opportunities (if too late) or lost investment (if done too early).
Configure Price Quote (CPQ) is a good example of this. Not every business needs CPQ – it’s found a comfortable niche among businesses of a certain size in the area of industrial equipment manufacturing – but its usefulness is being discovered by new markets (most notably, telecommunications, high-tech, life sciences and healthcare).
How do you know if the time is right for you to make the move to CPQ? Here are six criteria to keep an eye on.
1. Product Complexity Outstrips Sales Reps’ Capacity to Keep Up
As catalogs grow and customers come to expect more options, sales reps are placed in a difficult spot: they have to be trusted advisors and sources of knowledge about their products, but the variety and complexity of those products is exploding. Unless a sales rep has an eidetic memory, the rep is not going to have a grasp on the entire product line and possible customizations. In that event, the rep will sell what he or she knows – which may or may not be the best choice for the customer, or the most profitable for your business.
Examine sales activity and look for focus on specific products. If you see different reps focusing on different products in their deals, unless they’re working products they’re assigned to, there’s probably a bit of this phenomena at work in your sales operations. If that’s the case, it’s time to consider bringing CPQ into action.
2. Upselling Doesn’t Meet Expectations
Products added to your catalog that seem like sure-fire upselling opportunities are a great idea – unless no one can find them in your catalog. At companies with complex product mixes, this may be the case; a sales rep at the end of a deal isn’t going to interrupt the closing process to go on a wild goose chase for that perfect up-selling opportunity. As a result, that sure-fire up-sellable product may seem like a dud.
CPQ guides reps toward those up-selling opportunities – it prevents the up-sale from getting away. That’s part of the reason Aberdeen found that the average deal size for businesses with a CPQ solution was 105 percent greater than the average deal for businesses without CPQ: no upselling opportunity went unnoticed or unacted upon by sales reps.
3. Sales Reps are Spending More Time Building Quotes than Selling
Quotes can take a long time – four days to a week when product offerings are particularly complex. That cuts into the one thing your company can’t buy or make more of: time, particularly that of your sales reps. The time they spend creating quotes is time that they aren’t selling. That’s no good for them and it’s certainly no good for your business.
If your reps are working fewer deals and generating less revenue even as you add more products to your catalog, it may be that the reps are being forced to budget more and more time for quote and proposal generation. If that’s the case, it may be time to automate that part of their jobs and get them back to selling.
4. Mistakes are Costing You Big Bucks
Mistakes are rife in manual quote creation – which makes sense because it’s a lot of tedious, repetitive activity. Those errors can be very expensive. Take the case of a manufacturer of boiler systems – mistakes in configuration that were only discovered once the very expensive, very large product arrived at the customer’s destination annoyed the customer, but they also resulted in massive costs to the manufacturer.
CPQ systems have been found to reduce mistakes by 40 percent, according to Aberdeen. Tedious, attention-sapping tasks have been automated in everything from factory line work to building security – so why are sales people still preparing proposals when they could be automated by a system that can do it better and with fewer mistakes, save the organization thousands of dollars a year, avoid customer ill will, and free sales reps up so they can sell?
5. Margin takes a Beating from Discounting
Sales reps want to close deals, and the ability to offer discounts is helpful in achieving that. But when your product mix is complex, your reps can’t know every product, let alone the margin on every product. That can lead them to apply discounts that cut into your overall margin, especially in complex, bundled sales.
Yelling at reps to pay closer attention is not useful – they’re there to sell, not to memorize your catalog and all the behind-the-scenes numbers that other parts of your organization should be in charge of. CPQ allows you to build in rules that prevent discounts that dip below a certain level of margin, contingent on the products included in the deal. Doing this takes a load off managers, who won’t be forced to compute margin before giving deals their approvals. Which brings us to…
6. Deals Die While Proposals Await Approval
This is perhaps the saddest indicator that you need CPQ of them all: your reps complete the arduous task of completing complicated quotes, battling with huge catalogs and books full of pricing rules, only to have their quotes end up on the desk of an overworked sales manager who can’t give his approval until he duplicates all their work and makes sure the deal uses current information, respects margin, and is as error-free as possible. Meanwhile, the customer has become impatient and, in the intervening four days between the proposal’s creation and its approval, the customer has gone out and found another vendor – one who could deliver a proposal in less than 30 minutes.
Automation of approvals allows a proposal to get the OK quickly and accelerate the sales process. It makes your sales people happier (they close the deal and get their commissions quicker) and it makes your customer happier (he’s getting the products he needs faster) – and it takes work off the back of the sales manager.
Want to learn more? Attend our webinar on Dec. 3, “Driving Revenue and Simplifying Sales Results,” with Selling Power’s Gerhard Gschwandtner, S. Anthony Iannarino and me. We’ll look at five important considerations for driving revenue, and talk about how they manifest themselves in the use of CPQ, using a real customer to show CPQ’s tremendous value.