CPQ: The Costs and Consequences of Getting a Quote Wrong
When you’re selling one or two simple products, it’s relatively easy to give prospective buyers an accurate quote quickly. Great salespeople, after all, have straightforward pricing information committed to memory. They know exactly how long it takes to ship products and provide services to would-be clients.
Things are very different when you’re selling a portfolio of several products and services—all of which can be uniquely configured and modified significantly before being sold at many different price points and discount levels. It’s pretty much impossible for even the most talented salespeople to figure out how much custom offerings cost in any reasonable amount of time.
To speed up the process up, some salespeople decide to make an aggressive offer to move the deal. Others simply make a mistake that is not caught by other parts of the organization.
The costs and consequences of getting a quote wrong can be significant:
Damaged company reputation and loss of trust. Let’s say you give a prospective customer a quote that sounds too good to be true. The customer is thrilled and you—thinking that your quote was accurate—are, too. You get back to the office and find out that your quote was way lower than it should have been and are forced to let the would-be customer know that you made a mistake. That customer will almost certainly not do business with you because you’ll have demonstrated you can’t be trusted—which doesn’t reflect well on your organization. Fingers crossed the individual doesn’t tell folks in their network about their experience.
Negative bottom line impact. Honoring a quote that was too low can hurt a company’s bottom line if it is not economical to provide the product or service at that price point. However, it might not stop there. If the price was for a single division and it was advertised throughout a large organization, you may be expected to honor it in future deals with other parts of the company.
Increased sales cycle. Time is one of the biggest killers of all sales deals. The longer a customer has to wait to sign a contract, the more time they have to reconsider their decision. When you’re unable to provide an accurate quote immediately—or you get a quote wrong and need to revise it shortly thereafter—you extend the sales cycle, which reduces the likelihood the customer will sign on.
Decreased productivity. Salespeople who need to come up with quotes manually end up spending a lot of time crunching the numbers. This time, of course, is time they can’t spend on other mission-critical work responsibilities. On the other hand, companies that use modern solutions that make price quoting easy can increase quote productivity by 33%.¹
Costly errors. What happens when an error sneaks through the system into an order? For example, let’s say a sales rep is configuring a boiler room and parts that don’t work right together end up shipping out in the same order. How much time and money will your organization have to spend fixing the error?
The good news is that these problems are easy to avoid when you’re using the right tools.
For example, CPQ software enables sales teams to sell faster by leveraging repeatable and intuitive configuration, pricing, and quoting processes—and ensuring accurate quotes are given to all customers upon inquiry. Best-in-class CPQ solutions offer intuitive interfaces that quickly and intelligently guide sales reps to sell each customer the right solution at the right price, while delivering a frictionless buying experience. The technology allows salespeople to easily configure customized offerings, price them while taking available discounts and fluctuations into consideration, and then deliver an up-to-date quote to customers in a timely manner. This functionality empowers sales reps to meet customer expectations—every time.
Thanks to CPQ software, your sales team can liberate itself from tedious manual processes, giving them more time to focus on closing deals and selling more—which sure beats scaring away would-be customers with inaccurate pricing or incredibly long wait times.
Take the next step in your CPQ journey and learn more about why CPQ implementations fail.
Matt McEnerney | June 8th, 2018