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CPQ – What is it?

CPQ stands for Configure, Price, Quote. The abbreviation describes a process chain in sales: product configuration, price calculation and quote generation. This process chain is supported, digitalised and optimised by CPQ software. In addition, the CPQ software creates a sustainable and central platform for the marketing of multiple-variant products and solutions. Across all channels. But what exactly does that mean?

CPQ – What does it stand for?

The abbreviation CPQ contains the terms Configure, Price and Quote. These refer to three stages of a sales process that you can complete with CPQ software.

Configure

In the Configure stage, you assemble products or services from individual elements. You carry out a configuration. CPQ software is a product configurator. This ensures transparency in product modules with multiple variants. It is therefore an indispensable tool for your sales team and your customers.

With a product configurator, you can translate individual customer requirements into concrete solutions with ease. You are then able to convert the individual configuration within the CPQ software into a price calculation and a quotation.

Guided Selling – guided analysis of requirements
Plausibility check – only what really fits and works can be configured.
Display of “rule violations” – If a selection is made that does not work, the software explains why.
Green Configuration – configure products according to sustainability aspects
3D visualisation – make your product come to life during configuration, with the help of 3D visualisation.
Cross- and upselling – let the system display cross- and upselling opportunities during configuration
Webshop and dealer portals – also provide your customers with a product configurator.

Price

You can also carry out the price calculation with a CPQ solution. The configuration generates a detailed parts list for the configured product. The individual elements used in the configuration are listed. On this basis, the price is generated.

However, fixed prices without discounts are a rarity nowadays. Your sales staff are therefore able to add special individual conditions by means of an integrated discount function. The CPQ system checks whether your sales representative is complying with their individual discount limits.

In some offers the discount has to be larger than the individual discount limit of the sales representative. In such cases, an approval process is automatically triggered by the CPQ software. A larger discount is thus possible at any time, but not without the approval of the responsible supervisor.

Discounting – you are able to define fixed discount limits. In this way, every sales employee will stay within their approved range of discounts.
Approval workflow – the approval process is triggered automatically.
Engineer-to-order pricing – no more problems with price calculations for individual products.

Quote

Once the product has been assembled and pricing is complete, the CPQ solution consolidates all the information. Prices, product descriptions as well as photos and 3D visualisations are integrated and embedded in a clear and uniform layout. In this way, you can create a quotation in the corporate design of your company in next to no time.

CI-compliant layout – quotations are created in a uniform layout
Different offer versions versions of quotations – does the customer want an alternative to the quote? Then simply save them all.
Quote comparison – compare different quotations with each other.
Multilingual – generate offers in different languages.
Quote generation in an ERP or SAP system – with the special interfaces you hardly notice the different systems.

What is a CPQ system?

The abbreviation CPQ stands for Configure Price Quote. This refers to software solutions that support sales staff in preparing quotations. The system guides you safely and quickly through all the stages of product configuration, pricing and quote generation. CPQ integration in webshops allows customers and dealers to configure their individual solutions themselves with ease. In this way, companies additionally open up new channels for lead generation.

The process of preparing a quotation is accelerated, simplified and optimised. The CPQ system represents the link between all the stakeholders (customers, sales and production).

Where is CPQ used?

CPQ is often used in companies that sell multiple-variant products. In other words, products that are specially assembled from various individual components. These include, for example, plant and mechanical engineering companies, component manufacturers, equipment and parts manufacturers, and producers of construction products and medical technology. In our references you will find numerous companies that already use CPQ.

The desire for ever more individual products has led to an increasing number of variants. In order to handle this variety, the products are modularised. This makes it possible to significantly reduce variety internally and control it. However, you can still fulfil the individual wishes of your customers. This creates a modular system of variants. You can thus combine these standardised assemblies to create customised product variants. This is the basis of CPQ.

"The time required for quoting has been reduced by 70% on average. Added to this are the savings from no longer having to make enquiries with the design department."

Manfred Aulmann

Head of Design, Schulte Elektrotechnik GmbH & Co. KG

What are the advantages of CPQ?

If you opt for a CPQ solution, you will benefit from numerous advantages, including the following:

You will accelerate your entire sales process.
There are no errors in the configuration and the quotation, because the system knows all the rules and dependencies.
Product knowledge is no longer held by individuals, but in the system. Among other things, this makes it faster and easier for new members of the sales team to get started.
You will reduce your costs, because your employees are relieved of a great deal of work by the software. In this way you accelerate the process chain and work more efficiently.
The CPQ system can automatically alert you to cross-selling and upselling opportunities.
Not only your sales staff, but also dealers and your customers themselves, can assemble products independently.
Data silos? Not with CPQ. The various interfaces ensure better interaction and thus a lower error rate.
With CPQ you can evaluate which configurations are made most frequently. With CPQ you can evaluate which configurations are made most frequently.
You retain your customers. • You will also increase your turnover, thanks to better customer retention and more effective work in your company. Plus, you’re already giving your customers the opportunity to learn about your products on their own. This increases customer loyalty.
You will also increase your turnover, through better customer retention and more effective work in your business.

What are the disadvantages of a CPQ solution?

A CPQ solution does not really have any disadvantages. However, there may be a few challenges:

Implementing CPQ software can be costly. It always depends entirely on the product portfolio and the desired depth of integration of the software. After the introduction of the solution, however, it quickly becomes clear: it is well worth the effort! With the right partner at your side, you will receive active support even during your preliminary considerations for a CPQ project. This reduces the effort required for implementation to a minimum.
People are creatures of habit. This is also noticeable when processes in the workflow are changed. This is why some employees may be a little reluctant to use the new tool at first. However, as soon as they have got used to working with the software, your staff will not want to be without it.

Do you want to find out more about CPQ and the benefits of the software? Then feel free to take a look at our eBook “Time = Money = CPQ”.

When should you use CPQ?

Are you wondering if it is time for you to implement CPQ in your organisation? There are several signs that it’s time for CPQ software. Take the test yourself. If two or more statements apply to your company, CPQ is the right answer to your challenges:

	It takes several days or even weeks before we can submit a qualified offer to a customer. The competition is often faster.
	Errors slip into our offers again and again. In some cases, the solutions offered are not feasible or the discounts granted are too high.
	Not every sales representative is familiar with the entire range of services offered by our company, and some of our salespeople focus on a fairly limited part of our portfolio.
	The sales department does not actively pick up on product innovations. It also fails to make the customer any additional offers, such as spare parts or services.
	A lot of internal consultation with the respective departments is necessary for a reliable offer. This is very time consuming.
	Familiarising new sales staff with our range of products and services involves a great deal of effort. Training often takes a very long time.
	If a long-standing sales employee leaves our company, a lot of knowledge is lost.
	Because we are unable to manage our product information centrally, data maintenance involves a great deal of effort.
	Our business and pricing rules are not linked to the product data. As a result, the internal checks and approvals of the quotations are very extensive and time-consuming.
	We are unable to visually depict our individually configured products.

You can find the downloadable checklist in this eBook.

Do you need a CPQ solution? Then test now whether you are ready for the introduction of CPQ software:

CPQ: Three compelling arguments

Reliable
The sales team always has an overview of the entire range of solutions. All the relevant data and rules are stored and maintained centrally – so there is no risk of anyone working on the basis of outdated or incorrect information. The system automatically excludes any erroneous configurations.
Faster
Thanks to comprehensive process automation, quotations can be prepared at a significantly higher speed. Processes that used to require a lot of time and the involvement of numerous employees from different areas of the company are shortened to an absolute minimum.
More profitable
The high transparency of the data and rules prevents discount limits from being exceeded and thus leads to higher company revenues. Additional sales are easier to achieve because the system actively points out cross-selling and upselling opportunities.

Do you want to stay up to date on the topic of CPQ? Then watch our webinar with Feintool to see the role encoway CPQ Sales has played on the road to digital sales. Or have you already decided to implement a CPQ solution in your company? Then the next step should be to create a specification sheet. You can find out what you should look out for in our checklist.

You want to stay up to date on the topic of CPQ? Then make sure that you check our blog regularly: