What are the Key Metrics to Show CPQ Deployment Value?

February 9, 2016 Protik Mukhopadhyay

You’ve evaluated, selected and deployed a CPQ solution. Now, it’s time to start proving why the purchase was worth it. Let’s imagine a scenario where it has been a little over six months since you have gone live. At this point, you hopefully have at least 75% of the intended user base — for the whole project or at least phase 1 — fully trained and on-boarded and you have two full quarters of data available for analysis.

As the project sponsor you have a key meeting coming up with your executive team to give them an update on the success of the CPQ project and show them the value realized so far. The meeting also presents an opportunity to get additional budget for future engagements.

As part of the sales cycle, many benefits and KPIs are typically defined, however there likely only a few that are key to your company’s go-to-market strategy. Based on your industry, competitors and peers, you would typically focus on identifying the ones your management cares about the most.

The best method is to prioritize sales effectiveness, efficiency and customer satisfaction to uncover the biggest pain points CPQ is solving rather than trying to show value across all of them.

Naturally, measuring pre-deployment data points against post-deployment data points is the most effective way to show value realization. However, you may not have all the pre-deployment data available to make your case. In these instances, identify key post-deployment KPIs and track them monthly to discover what positive trends you can share.

To offer an example, let’s assume the biggest pain point prior to your CPQ deployment was sales effectiveness, with efficiency and customer satisfaction being less important. For the majority of cases, you should be able to show value using the following five KPIs to demonstrate effectiveness.

KPI #1: Average Sales Cycle Time – This is probably the single most important KPI to measure success of your CPQ deployment. How to Measure Success: Average time from when the lead was qualified until it was closed. If you are using a standard CRM platform, you can easily run cycle-time reports across sales stages to get this data.

KPI #2: Average Value of Quote or Deal – In order to get more value, measure this statistic both in aggregate and more granularly by sales rep, product line, stage, customer type, region or channel depending on what breakdowns are more important in your organization. How to Measure Success: Sum of all quote/deal value (in $) divided by number of quotes generated

KPI #3: Win/Loss Rate (percent) – Reflects improvements to customer experience and sales processes. How to Measure Success: Percentage of quotes that resulted in signed deals

KPI #4: Guidance Compliance – Reflects adoption of discounting guidelines designed to counteract runaway discounting. Or, if using data-science driven pricing guidance with CPQ, the percentage of quotes that stayed within recommended pricing guardrails. How to Measure Success: Percent of deals outside of discount or pricing guidance guardrails.

KPI #5: Percent of Opportunities Quoted – Like average quote value, measure this statistic both in aggregate and more granularly as needed. How to Measure Success: Number of opportunities quoted divided by total number of opportunities

Every business has differences and nuances to how they measure sales effectiveness and CPQ success, but starting with the recommendations above should provide you with a solid foundation for demonstrating ROI to your leadership team.

About the Author

Protik Mukhopadhyay

Protik Mukhopadhyay leads west coast customer success for PROS. He works with strategic customers by building long-term relationships and ensuring they realize full value from their investment with PROS solutions. He many years of experience in sales

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