CPQ: What Does it Really Mean?

August 3, 2016 John Murphy


Too often, when companies embark on a project to determine which (if any) CPQ solution is best for them, they come to the conclusion that CPQ really stands for Confusing Plethora of Questions and their frustration with the project stalls the project. To avoid this, let’s define what each of the letters in CPQ really stand for and how to determine your needs in each area.

C: Configuration. In this context configuration means configuration of your products. Are you losing sales because of a time consuming process for your sales teams to put together a quote or valid products? Are you losing upsell and cross-sell opportunities due to your people either forgetting or not even being aware of possible connections with products they are quoting? Are you losing sales because the quotes being sent to customers contain products that are not ideal for the needs of the customer? Are you experiencing warranty/replacement costs due to the fact that inappropriate products are being sold and then have to be replaced for free or refunds have to be issued? If any of these are occurring, a CPQ investment may pay for itself quickly just on the configuration capabilities alone.

P: Price. This can refer both to prices of individual items as well as packages. These prices can also be for services and products, which may be sold together or individually. If you have fairly complex pricing, you may be losing business or selling at less than optimal margins simply due to ignorance by your team of how to offer optimal prices. You also may be losing deals due to long quote turnaround time resulting from too many hands involved in delivering pricing or special pricing requests. Additionally, if your company has tier-based pricing for your products and services, your team may not be adjusting pricing correctly or may have difficulty explaining pricing to customers, resulting in lost revenue and sales. A CPQ tool, especially one supported by pricing science, can assure the best pricing is made available for every quote. A properly designed and easy to maintain CPQ system can provide positive ROI based on pricing improvements alone.

Q: Quote. Quoting is probably the most overlooked part of CPQ. However, it can be quite important. When talk about quoting, we mean the quotes you send to customers. Think about this for a minute. Your team delivers a quote to a customer with all the upsell and cross-sell opportunities included. Then, because you have no control over how the proposal is being built, your prospect sees an unprofessional, poorly organized quote document that is so hard to read it turns them away from your company. Or, if you can’t provide the file format your prospect wants, so you cannot even deliver the proposal to them. With a data science-driven CPQ tool, you provide the right products at the right price and deliver it in a professional looking document.

So keep it simple when looking at CPQ for your company, but be sure to consider all aspects of a CPQ solution. If you choose the right solution and are properly prepared for change in your company, what CPQ can mean to you is an enormous improvement in your in-house processes and sales performance.


About the Author

John Murphy

John Murphy is a Senior Pre-Sales Engineer with PROS.

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