- 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 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 excelling 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
Excelling as a prospecting and selling application that drives customized product sales exceptionally well, CPQ scales well on the front-office or sell-side of any business. 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, deliver them electronically to an ERP system, so an accurate Bill of Materials (BOM) is produced. 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 within them and exponentially greater configuration options, many CPQ applications and the databases they rely on are struggling to scale. With greater device-level intelligence and more configuration options, manufacturers need to manage the entire lifecycles 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, yet falters when rules and constraints are not managed well. When CPQ applications are allowed to become too siloed, and 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 more complex products aren’t sold via CPQ applications – CRM applications and the databases they rely on a are the system of record for nearly all CPQ systems today. While CRM systems excel at capturing and analyzing customer data, they often don’t have the transaction, 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 customers want.
- Lack of collaboration across sales, product, pricing, and engineering teams leads 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 lifecycles. Having product line visibility across sales, product management, pricing and engineering teams by managing lifecycles first 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 taking an iterative approach to fine-tuning models and achieving 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 lifecycles instead of just one-off product definitions.
- Smart products with embedded electronics, integration, and software are producing data that isn’t getting 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. By nature, CPQ applications are transaction-centric, yet the data they create are 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, or attempt to configure.
- Product roadmaps are becoming predictable and the lack an intensity of new product development is becoming a competitive weakness. Complacency kills more companies than competitors do, and when the configurations customers wanted and weren’t able to get isn’t tracked, valuable new product ideas are lost. By capturing the data from CPQ sessions by 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 systems are among the strongest in the company, yet CPQ sales are not meeting expectations. Manufacturers who are engineering-centric 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 more simpler but challenging-to-develop features customers have for a product. The result is that the complex of engineering systems is quite strong while CPQ apps and the sales they are generating is 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 cross sales, marketing, product management and engineering. On average the typical high tech products and components manufacturer generates 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. 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 are essential for wall-to-wall production efficiency to be achieved.
CPQ and QTC are the baby steps companies need to take to transform themselves and compete in 2018. It’s not enough to automate the sell-side, the entire configuration lifecycle of a product needs to be made as efficient and responsive to customers as possible. Configuration Lifecycle Management (CLM) is key to making these strategies enterprise-wide, enabling performance gains wall-to-wall across any enterprise.