Ten Signs Its Time To Grow Your Sales Strategies Up From Configure-Price-Quote (CPQ) And Quote-To-Cash (QTC)
- 83% of sales professionals are using Configure-Price-Quote (CPQ) applications today according to a recent study by Accenture Interactive in the Accenture study Empowering Your Sales Force: It’s Not Just Automation, It’s Personal.
- 81% of sales teams are using technology-based tools to identify and take action on sales leads that are often tracked entirely in CRM, and are manually shared across organizations, according to Accenture Interactive.
- 80% are using automated CPQ tools to provide prospects with quotes that include their product and service configurations, making integration with ERP and PLM systems essential to excel at selling.
CPQ’s many strengths at accelerating sales cycles are well-known and making a positive impact on global manufacturers’ revenue growth today. It’s one of the strongest, most proven applications for streamlining quoting, pricing and improving the clarity of product configurations customers want. Capturing and capitalizing on product configuration, pricing and quoting data combined with CRM data is revolutionizing CPQ strategies. Descriptive, predictive and prescriptive analytics and machine learning are enriching CPQ selling strategies with greater contextual and customer-driven intelligence. Gartner considers CPQ to be one of the most valuable enterprise applications on a consistent basis as the Forbes article Cloud-Based CPQ Continues To Be One Of The Hottest Enterprise Apps Of 2016 illustrates.
CPQ Gets Sales Started; Configuration Lifecycle Management Closes Them
CPQ scales well on the front-office or sell-side of any business, excelling as a prospecting and selling application to drives customized product sales. The challenge is making the entire production, manufacturing or fulfillment engine run as smoothly and delight customers as much as a CPQ app can. CPQ can capture highly complex orders and deliver them electronically to an ERP system to produce an accurate Bill of Materials (BOM). It’s an excellent transaction system as long as a product’s complexity doesn’t exceed its boundaries. And, with more products having advanced electronics and software embedded and exponentially greater configuration options, many CPQ applications are struggling to scale. With greater device-level intelligence and more configuration options, manufacturers need to manage the entire life cycles of product configuration. Presented below are ten signs it’s time to grow your sales strategies up from Configure-Price-Quote (CPQ) And Quote-To-Cash (QTC):
- Incorrect and incomplete product orders are shipping based on errors in configuration rules due to a lack of accurate data in CPQ systems. CPQ excels at streamlining the selling process, but falters when rules and constraints are not well managed. When CPQ applications become too siloed, isolated errors in constraints and rules become commonplace. Integrating CPQ applications with CRM systems to gain greater customer insights is commonplace. Companies who excel at CPQ integrate their systems with ERP and PLM systems to assure rules and constraints are accurate and reflect what can be produced.
- Selling strategies scale only as far as CRM systems can reach, with sales teams frustrated that more complex products aren’t sold via CPQ applications. CRM applications and the databases they rely on are the systems of record for nearly all of today’s CPQ systems. While CRM systems excel at capturing and analyzing customer data, they often don’t have the transactional and product-specific data ERP and PLM systems have. ERP and PLM systems provide contextual intelligence that enables companies to create more customer-specific products. CPQ only goes so far in enabling more complex products to be sold. To grow faster, manufacturers have to get to the next level of product complexity.
- Lack of collaboration across sales, product, pricing, and engineering teams lead to deadlines missed on the biggest deals. The larger the deal, the more complex the level of collaboration required to win it. CPQ applications typically don’t scale well for collaborative selling, with the majority of CPQ vendors charging extra for a module just to support this strategy. The path to greater collaboration starts by managing products across their configuration life cycles. Having product line visibility across sales, product management, pricing and engineering teams by managing life cycles creates more collaboration in leads to more won deals.
- CPQ apps aren’t closing product gaps that exist across complex products, leading to quote and order errors. All product lines have significant gaps that aren’t reflected in the product models that are the basis of their CPQ applications. Closing these gaps takes an iterative approach to fine-tuning models and achieves higher levels of computing and order performance. CPQ apps on their own often can’t figure this out. Integrating PLM, CRM and rules-based frameworks can. Creating more accurate product modules is one of the main factors driving more manufacturers to manage configurations over life cycles instead of just one-off product definitions.
- Smart products with embedded electronics, integrations, and software are producing data that isn’t being monetized to its fullest potential. The high level of interest in turning product data into cash is driving all manufacturers to design in electronics, Internet of Things (IoT) and software to capture data that can be turned into a subscription service. Manufacturers who excel at this strategy are using a configuration lifecycle approach to managing existing and future product generations capable of capturing, aggregating and creating subscription-based businesses. Integrating ERP, PLM and CRM systems to create a unified system of record is a must-have to launch a subscription-based monetization strategy based on product data.
- Too many missed opportunities to improve existing products and creating new ones based on CPQ sales and quality data. While CPQ applications are transaction-centric, the data they create is vital to improving existing products and inventing new ones. Capturing the metadata CPQ applications generate is invaluable in determining which products customers are looking for and don’t find.
- Product roadmaps are becoming predictable with the lack new product development becoming a competitive weakness. Complacency kills more companies than competitors do, and when the configurations customers wanted but weren’t able to get isn’t tracked, valuable new product ideas are lost. By capturing the data from CPQ sessions from customers and aggregating it for tracking in PLM systems, greater customer insights can be gained. Without ongoing customer input and capturing customer needs, roadmaps become predictive, and a lack of intensity starts to permeate product management. To keep innovation alive, a lifecycle-based approach to configuration management needs to become the new normal across product management, marketing, sales, and engineering.
- Product development, PLM, and engineering are among the strongest systems in a company, yet CPQ sales are not meeting expectations. Engineering-centric manufacturers tend to invest heavily in product data management systems that support product development, PLM and engineering. Often, engineering-centric companies place feature depth and breadth over the simpler, but challenging-to-develop, features customers want for a product. The result is that the complex of engineering systems is quite strong while CPQ apps and the sales they are generating are low. It’s time to balance the two with a lifecycle management approach to managing configurations that brings the voice of the customer into every system integration strategy and workflow.
- Product launches fail due to a lack of coordination across sales, marketing, product management and engineering. On average, high tech products and components manufacturers generate 60% of their gross profits from a product introduction in the first quarter or less when it’s done well. Product launches are a major source of revenue across all manufacturing and service industries. CPQ apps can provide the sell-side support to initially make sales happen, but it’s the ability to define the product model and have it scale across all selling channels in real-time that makes a launch succeed.
- CPQ and QTC don’t improve wall-to-wall production efficiency when product data is lacking. Digital transformation is the goal when wall-to-wall CPQ apps and QTC systems orchestrate every step of turning an order into a delivered product. It’s essential to have product-based data if the digital transformation of any company’s fulfillment workflow is going to succeed. Integrating ERP and PLM systems is essential for wall-to-wall production efficiency to be achieved.
CPQ and QTC are the initial steps companies need to take to transform themselves to compete in 2018. It’s not enough to automate the sell-side; the entire configuration lifecycle of a product must be made as efficient and responsive to customers as possible. Configuration Lifecycle Management (CLM) is key to taking these strategies enterprise-wide, enabling wall-to-wall performance gains.