10 Ways Agile CPQ Strategies Deliver More Revenue

Bottom Line:

The greater freedom customers have to customize products, the greater the opportunities to grow sales. Providing them the freedom they want starts with an Agile CPQ strategy integrating CAD, CRM, ERP and PLM systems on a single configuration thread.

The single greatest roadblock to driving more product revenue is the wide disconnect between what customers want to buy, what engineering says is possible to build, and what manufacturing can deliver. It’s time for every manufacturer to realize that customer perceptions are their new reality.

Relying on IT platforms and enterprise applications built for uniformity first, supporting only basic workflows, lacking integration options and designed for now outdated ways customers want to buy are driving the gaps wider between customers and manufacturers. By taking an Agile CPQ approach to unifying marketing, selling, engineering and manufacturing on a single configuration thread, manufacturers are able to keep growing and close gaps between them and their customers.

Why Agile CPQ Strategies Now

Manufacturing’s inflection point is here. Data, information, insight and manufacturing intelligence are leading to a revolution in customer responsiveness and flexibility. The days of relying on monolithic systems that excel at producing standardized products with no variation are over. The future belongs to manufacturers who seize intelligence and use it to compete and win more customers. By unifying engineering (PLM & CAD), production (ERP) and marketing & sales (CRM) on a configuration thread, the widening gaps between manufacturers and their customers close. The following is an overview of how Agile CPQ strategies work.

Agile CPQ enables manufacturers to anticipate customers’ product customization preferences better, relying on real-time data to be more responsive than any other competitor. And the quicker and more complete any company’s responsiveness, the more deals are won. The following are just a few of the many reasons why now is the time for Agile CPQ strategies to flourish:

  • CPQ needs to move beyond CRM integration alone and join the configuration thread if more sales are going to happen. Recognizing that product configuration relies on and impacts nearly every system in a manufacturer, an Agile CPQ strategy focuses on capitalizing on the different cadences, or clock speeds every system runs at that supports product configuration.
  • Improving customer responsiveness and quality using CPQ alone can’t be left to chance, manufacturers need to go all in on exceeding customer expectations. Time is too precious in customer relationships to waste trying to get an order transferred right the first time from a CPQ to an ERP system. It’s a waste of time to rely on a CPQ system that can’t scale and deliver a complex, configurable product order right the first time. Agile CPQ strategies make it easier to respect customers’ time and sell what’s buildable. Using a single configuration thread, sales, marketing, manufacturing, and engineering all have real-time visibility of feature and product attributes. Every member of each of these teams can also see date and model effectivity, product modularization, product model definition and master data models. The gaps that slow sales down get closed, and customers are sold what’s buildable on time and at high quality.
  • Solving the performance paradox of product configuration starts by realizing accuracy and quality don’t have to be sacrificed for speed. Adding more product lines is one of the fastest ways to grow revenue. The paradox is that more product lines there are in a product configuration system, the more its performance slows down, jeopardizing delivery dates to customers. An Agile CPQ strategy scales product configuration workflows by providing the most recent data and intelligence from CAD, CRM, ERP and PLM systems to check every quote and order for 100% accuracy and buildability. Customer expectations are met, perfect order performance goes up, and so do sales.

10 Ways Agile CPQ Strategies Deliver More Revenue

Companies who excel at providing customers the freedom they want today for customizing products stand the greatest chance of dominating their markets five years from now. Agile CPQ strategies are the roadmap leading manufacturers are relying on closing the gaps separating them from their customers. Presented below are ten ways Agile CPQ strategies deliver more revenue:

  1. Eliminating disconnects between what engineering designed, marketing and sales are selling, and manufacturing can produce leads to more sales at higher gross margins. Agile CPQ is designed to close the many configuration gaps in manufacturers, enabling them to sell their most profitable customizable products. By unifying CAD, CRM, ERP and PLM systems on a single configuration thread, a single system of record provides a proven, scalable platform for driving higher gross margins. Agile CPQ encodes product rules and constraints based on engineering’s designs driven by customer requirements. Marketing and Sales add in the go-to-market requirements including pricing, and can’t change the original engineering product rules and constraints. Real-time integration enables ERP and PLM systems to share engineering and manufacturing data, further closing configuration gaps and driving more revenue.
  2. Opens up new global markets by being able to personalize products at scale increasing Total Available Market (TAM) revenue size and growth. Localizing products doesn’t have to take months or years. When an Agile CPQ strategy that builds on a configuration thread is in place, product managers, markets, and engineers only have to change a product model once for a new national or regional market. Agile CPQ increases the speed and scale of global expansion by simplifying product configuration management over lifecycles.
  3. Real-time fine-tuning of the marketing mix by products and personas is now possible using Agile CPQ strategies, shortening sales cycles. When engineering and manufacturing can see how their product designs and delivery impact customers via the CRM system, marketers can work with them to fine-tune product requirements in real time to drive more sales. CRM systems tailor customized marketing mixes by persona or customer in real-time, adding in product promotions to drive sales. When engineering and manufacturing are included as part of the marketing strategies, sales cycles shorten, and pipelines grow.
  4. Accelerating time-to-market for new customizable products that more perfectly meet customers’ requirements, delivering new revenue. The majority of a new product revenue ramps sharply up in the first six months following launch. By capitalizing on the unique cadences or clock speeds of CAD, CRM, ERP and PLM systems, Agile CPQ strategies enable manufacturers to reach a new level of customer responsiveness and product quality and maximize launch revenue. By unifying these diverse systems on a configuration thread, manufacturers are slicing through the performance paradox of product configuration, delivering excellent quality products while meeting challenging delivery dates.
  5. Closing product configuration gaps with Agile CPQ improves customer order accuracy, fulfillment speed and product quality creating greater customer loyalty and follow-on sales. The gaps between CAD, CRM, ERP and PLM systems cost manufacturers’ valuable time that’s spent solving order problems instead of excelling on each customer order. When these four systems are orchestrated on a configuration thread, time-to-customer improves due to the unique cadences or operating speed of each system being synchronized with each other. The result is greater follow-on revenue from satisfied customers.
  6. Extending the sales of best-selling products by adding new features to product models without disrupting existing build-to-order production workflows. Agile CPQ is based on a single, unified product data model that can flex and change as customers’ preferences shift to new features or options. The best aspect of having a unified product data model is that the existing one being used in production can be duplicated then modified to support product line enhancements fast. Agile CPQ also extends the life of best-selling products by managing the many feature and product attributes including effectivity, product modularization, product model definition and master data models
  7. Amazon Prime same-day deliveries and the instant feedback social networks including Facebook, Instagram, LinkedIn, Twitter and others have set a new standard for customer-based speed, scale, and simplicity. Five years from now the auto manufacturers who will be seeing double-digit revenue growth will have one-click ordering for customized vehicles, anywhere in the world, anytime. Today Amazon offers limited configuration for vehicles, yet the manufacturers who will dominate this area will provide full customization and be running a configuration thread-based business model complete with Agile CPQ unifying the front- and back-office. There’s a revolution going on in retailing and CPQ alone can’t keep up with the demand customers have for greater control over the final products they buy.
  8. Improve the balance of revenue across configurable products to sell higher margin models while reducing margin exposure for the less profitable configurations. When engineering, manufacturing, marketing, and sales all share the same data and customer intelligence, it’s much easier to align the entire company on designing, selling and building the most profitable configurable products. Agile CPQ strategies close the gaps that make expensive pricing and profit margin mistakes happen.
  9. Guided selling graduates from a catalog management app to one that capitalizes on real-time information from the configuration thread to suggest up-sells and cross-sells that meet or beat customer requirements. The majority of CPQ vendors today are using guided selling as a front-end to their catalog management systems, providing a basic level of customization by customer or user. When guided selling capitalizes on the combined insight and intelligence across the configuration thread, engineering, manufacturing, marketing, and sales can team up and suggest the products they know will be of the highest quality delivered ahead of schedule at the highest margins. With customer perceptions being the new reality, delivering high-quality products ahead of schedule leads to repurchases and greater customer lifetime value.
  10. Eliminating pricing errors on orders that lose sales while providing a more precise approach to automating Special Pricing Requests (SPRs) drives more sales. Price lists proliferate across the many selling channels any given manufacturer relies on, often leading to incorrect quotes and orders. When customers find out the pricing is wrong, they cancel orders and go to competitors. This happens because CPQ systems aren’t integrated to pricing, ERP, and back-end systems. Agile CPQ strategies built on a configuration thread solve this problem and automate requests for special pricing, winning more deals in the process.