Configuring, pricing, and quoting are just the tip of the iceberg when it comes to the CPQ (Configure, Price, Quote) process. In this beginner’s guide, we’ll explore the ten key aspects of the CPQ sales process that go beyond the basic “configure, price, quote” framework. Whether you’re a sales professional or a business owner, understanding the intricacies of the CPQ process can significantly enhance your sales effectiveness and streamline your operations. Let’s dive in!
1. Configuration: Customizing Your Product
The first step in the CPQ sales process is configuring the product. From cars and skateboards to computers and beyond, customers can now personalize and customize a wide range of products to suit their unique preferences and requirements. However, it’s important to note that the concept of product customization extends far beyond these examples. CPQ software empowers production and sales teams to understand the customer’s desired product configuration accurately, setting the stage for the subsequent steps in the CPQ process.
2. Pricing: Determining the Costs
Determining the pricing or cost of a product is the second step in the CPQ process. Pricing plays a crucial role in the success of any business, and CPQ processes recognize the significant influence that pricing and costing have on each other. Whether you’re trying to establish a competitive price point or calculate the production costs, understanding and optimizing pricing is essential to ensure profitability. CPQ software facilitates the pricing process by providing comprehensive insights into pricing rules and ensuring accuracy.
3. Quoting: Presenting the Price to the Customer
Once the pricing is determined, the next step is to send the customer a quote for the product. In some cases, the quote may be negotiable, allowing customers to discuss pricing options. However, for certain products, the price is fixed. Regardless of the negotiability, CPQ software ensures that customers receive their quotes promptly and efficiently, eliminating any delays in the sales process.
4. Proposal: Providing Detailed Information
The proposal stage in the CPQ process builds upon the quote by providing more detailed information about the product. A well-crafted proposal includes not only the essential product details but also terms and conditions, payment plans (if applicable), warranty and service information, and any other relevant aspects. Companies often send proposals for significant purchases or long-term agreements. CPQ software streamlines the proposal process by enabling sales representatives to access the product configuration during customer conversations, ensuring accuracy and consistency.
5. Negotiation: Exploring Discounts and Incentives
Negotiation plays a vital role in the CPQ process, especially when customers have room to ask for discounts or other incentives. Long-term customers or bulk orders often have more bargaining power, and companies may be more willing to offer concessions. CPQ software supports negotiations by providing sales representatives with real-time access to the product configuration, enabling them to make informed decisions and respond to customer requests more effectively.
6. Approval: Gaining Internal Authorization
Obtaining approval from an authorized decision-maker within the company is an integral step in the CPQ process. The customer’s agreement on a quote or proposal must go through an internal approval process, especially for significant orders that may require buy-in from upper management. CPQ solutions facilitate the approval stage by providing visibility into contracts and approvals, ensuring smooth and efficient workflow.
7. Order: Placing the Order
Once the customer agrees to a quote or proposal and the internal approval is obtained, the next step is for the customer to place an order. The order should include all the necessary information about the product and payment details. For instance, when purchasing a car, the order would specify color, model number, wheel type, interior material, technological additions, and any other customizations. Accurate order placement is crucial to ensure a seamless transition from the sales process to the production stage.
8. Production: Bringing the Product to Life
The production stage of the CPQ process involves the actual manufacturing of the product. Companies can either handle the production in-house or delegate it to a trusted third-party manufacturer. Regardless of the production method, this stage marks the turning point where the customer’s product starts to take shape. CPQ processes integrate smoothly with production operations, ensuring that the right specifications and configurations are translated effectively into the manufacturing process.
9. Delivery: Fulfilling Customer Expectations
Once the product is manufactured, it’s ready to be shipped to the customer. Timely and efficient delivery is crucial to meet customer expectations and maintain a positive brand reputation. CPQ tools provide valuable support during the delivery stage by offering visibility into order statuses and tracking information. This facilitates proactive communication with customers and ensures a smooth delivery experience.
10. Installation: Going the Extra Mile for Customer Satisfaction
While not applicable to all products, installation is an essential final step in the CPQ process for certain businesses. Proper and timely installation can be a crucial factor in customer satisfaction and loyalty. Companies that go the extra mile to ensure installations are efficient and seamlessly integrated provide added value to their customers. By focusing on installation, businesses can differentiate themselves from competitors and build long-term relationships with their clients.
In conclusion, the CPQ sales process encompasses much more than just configuring, pricing, and quoting. From product customization and negotiation to internal approval and installation, understanding the ten key aspects of the CPQ process is essential for successful sales and customer satisfaction. By leveraging CPQ software and following these steps diligently, businesses can streamline their operations, enhance their sales effectiveness, and deliver exceptional customer experiences.
