Investments in CRM are paying off. Companies are seeing measurable improvements in streamlining of the forecast process, improved sales rep/sales manager communications and reduced administrative burden on the sales team.
Although good news, you only get a moment to bask in the glory and now have to answer the question: What’s next? Companies like Gartner track technologies. For CRM, they track 29 technologies in their 2014 Hype Cycle for CRM Sales report, with 14 classified as maturing and reaching the Slope of Enlightenment or Plateau of Productivity stages. So what is the next investment you can make that will continue to provide your sales team with an industry-leading edge?
There is a great deal of discussion about adding Configure, Price, Quote (CPQ) capabilities to your CRM. Evidence for the additional impact is impressive. An Aberdeen Group study found sales rep productivity improvements of 49 percent for those companies using a CPQ solution. And who doesn’t want a 49 percent increase in productivity?
Yet investing can be like trying to hit a moving target; you have to aim ahead of the target to meet it where it will be. So investing in CPQ now will get you a solution tomorrow equal to where the competition is today. Useful, but not an industry-leading strategy. What do you invest in now to be ahead of the competition tomorrow? CPQ with data-driven pricing guidance. Now you get the productivity gains from CPQ and the incremental revenue and margin from the data-driven pricing guidance.
The benefits of CPQ, discussed in detail in other articles, include:
- Increased lead conversion rates
- Increased quota attainment
- Decreased sales cycle times
- Increased productivity
These outcomes are all possible with the addition of CPQ. But let’s aim ahead. How about an incremental 100 to 300 basis points to your margin? Interested?
With CPQ, your sales team is creating more accurate, more comprehensive, more professional-looking quotes, faster. Yet, the pricing on those quotes is based on the same old pricing policies in place prior to the investments in CRM and CPQ capabilities. Only part of the opportunity has been captured.
Pricing optimization and guidance can sound like rocket science, but it really involves three steps: significance, segmentation and guidance.
Determining which attributes of your customers is meaningful to their buying behavior is what the significance step is all about. Today, you may be segmenting your customer on company size, industry, length of time as a customer, or share of wallet with that customer.
Those are all good attributes for helping you characterize your customers. But are those attributes helping you segment your customers in a way that uncovers revenue and margin opportunities? Looking at additional attributes may uncover characteristics that are important, but you have not been including them in your analysis. Having a clear, comprehensive understanding of which attributes are really significant is the foundation for accurate and useful pricing guidance.
Once the significant attributes have been determined, your customers can now be segmented in a way that groups them in meaningful clusters based on similar characteristics and buying behavior. This segmentation may look quite different from your current version.
With this new segmentation, you can quickly compare each customer to a peer group and identify product and pricing opportunities. It is also the foundation for being able to determine an appropriate price by product and by customer.
The final step is generating pricing guidance based on the segmentation of your business rules. Companies taking this approach are seeing an incremental 100 to 300 basis point improvement in their margins. That’s all in addition to the increased productivity from CPQ.
Now, communicating that pricing guidance to your sales team through the CPQ tools in the CRM platform means they can generate those more accurate, comprehensive, professional-looking quotes with data-driven pricing to ensure they are working with customers from an informed position, enabling them to win more, faster.
When thinking about your next post-CRM investment, consider aiming ahead with CPQ and integrated pricing guidance. Work with a solution provider that has proven results in delivering real pricing optimization. It is a topic where “good enough” or “close enough” doesn’t work. It has to be right. Aiming ahead with this investment also means it will be hard for the competition to compete with you given all of your dust they’re choking on.