CPQ for Zoho CRM — Scope, Purpose and Benefits
CPQ stands for Configure, Price, Quote. In simple words, CPQ is a software application designed to enable sales teams to create bespoke, accurate quotes for their customers, efficiently and quickly. CPQ is especially valuable when you have multiple product lines or service categories which involve dynamic pricing.
With a good CPQ system, you will be able to:
- CONFIGURE multiple product combinations and bundles, based on how you wish to sell them. This way, every possible configuration is already saved in the system, and so, when it's time for you to send a quote to a customer, you do not have to take the time and effort to manually put the combinations together. You can choose the products or bundles pre-configured, straight away, upfront — no hassles.
- Fix the PRICE for each product or product bundle, along with discounts and taxes as applicable. You can create price rules in the system, which facilitate dynamic pricing. That is, you can dictate the price of an item when sold as a single unit, or when sold in combination with other product bundles. You can also configure which products should be added as freebies depending on the product combinations selected, as applicable to your company. The CPQ system also provides different pricing models to choose from including flat or slab based pricing, direct discount and volume based discounts, among other options. This way, as you list products in your quote, the corresponding price values change dynamically based on your price configurations.
- Create an extensively customized, accurate QUOTE using the product and price configurations in the system. Quote creation is therefore made efficient, quick and free of mistakes.
There you go. That is precisely what Configure, Price, Quote refers to. It's literally a term coined after the primary actions that can be done using the CPQ application. In the grand scheme of things, the CPQ solution makes your sales process seamless, smooth and quick, ensuring that you don't lose a customer as they wait for an accurate quotation from you.
To learn more about what CPQ in Zoho CRM, watch this recorded webinar:
Why is CPQ required? What problems does a CPQ system solve?
One of the key factors that determines whether a company stays in business or not, is its adaptability. The needs and wants of customers are influenced by various dynamic factors — such as the cards played by competitors, improvements in technology, people's enhanced lifestyle and so on. At such a juncture, a company should also adapt to changing times and improve its processes based on what will help them meet these changing needs.
The CPQ application is an effective solution that will help you with exactly this — adaptability. It will not only help you stay in the race but ensure that you are able to thrive and move ahead of competition. The next question automatically is, how does it help you do that?
CPQ solves specific problems associated with creating quotes for customers. Often, when sales people nurture a prospect and are at the crucial stage of closing the deal with them, they end up losing the sale at the last minute. Why does that happen?
Consider the example of customers lining up in a queue at the billing counter of a departmental store. If the person behind the counter is taking too long to complete the billing process for each person, you'd probably notice people waiting at the far end breathing heavily in frustration, impatiently looking at their watches before eventually leaving the place to find better alternatives.
In this simple example, while the departmental store got it right with attracting prospects, they lost them just before a sale could be made—the reason being undue delays. Perhaps they could have made the billing software faster, or doubled the number of counters. Depending on what caused the delay, of course, the solution varies.
Similarly in your business, if you make your customers wait for their quotes, they are likely to get impatient and decline the deal. If that holds good in your case, it's imperative that you look at your quote management process and figure out what causes the delay. Some common reasons include the following:
- Manual efforts: If your sales teams are currently preparing quotes manually— that is, for every customer, they look up a template, fill the line items and fill the prices themselves, manually, then this is quite an obvious reason for delays. It's time to switch to a CPQ system.
- Legacy systems: You may be using a Legacy CPQ system, which cannot meet your current changing needs. You are likely run into delays because of an application that is most likely outdated— in that case it's time to switch to a cloud-based efficient CPQ application. This new application would be intuitive, user-friendly and designed to solve current as well as future challenges, so you are sorted.
- Erroneous details and misinformation: When a company has just started out, everyone knows everyone else and people multi-task. At such a juncture, some practices may have worked, because the size of the company, the volume of sales and the products offered — all of these could be small. However, as a company evolves, so should their processes. While the company has expanded, but the processes have not improved, it leads to inefficiency and gives room for errors. For instance, information about addition of products, increase in prices, and discount details should be transparent across the organization. If, like during "old times", an email regarding revision of prices for a product is sent to only the "key people", then there is no efficient process in place. Sales people are bound to make mistakes because the details may or may not have reached them on time. It's very important to put an efficient process in place and document it. Otherwise it could lead to inaccuracy in quotes– because of which it goes back and forth and needs to be reviewed multiple times, which in turn causes undue delays.
- Red-tape: Stringent rules introduced to improve the quote management process are ironically at risk of becoming road blocks instead. For instance, there could be a rule that orders have to be approved by the manufacturing department to ensure stock availability. Or that multiple sales managers must sign off on the quote. While these rules are created with the intention of ensuring accuracy of quotes, the fact that it involves too many pairs of eyes invariably delays the whole process, and in the end, companies run the risk of losing the customers they tried hard to secure.
- Making promises that cannot be kept: If the sales teams are not kept in the loop of key factors such as changing trends across the organization, addition or removal of products, acceptable discounts and the like, they are likely to make elaborate claims to customers in order to win a deal. When a sales person sends the customer a quote that promises claims way beyond what a company can offer, it costs them dearly. So it's important that sales teams are kept abreast of the latest prices, product lines, acceptable discounts and order availability so that they quote only what is realistically possible.
When you invest in an efficient, intelligent cloud-based CPQ system, it helps you overcome all of the problems stated above.
- A CPQ system allows you to configure product bundles, so that all the possible combinations are pre-set.
- Price rules in a CPQ system helps you accommodate dynamic pricing, which is the order of the day in product sale.
- There are several templates to choose from, so you can make a highly customized quote.
Therefore with the help of a CPQ system, it's guaranteed that you will be able to create tailor-made quotes, that are also error-free, in a quick and efficient manner.
Who is the CPQ solution ideal for?
A CPQ system is ideal if:
- You deal with the sale of a wide range of products.
- You offer products in combination with services. Example, mobile phone sales and repair.
- You would like to accelerate the generation of quotes in your business, regardless of products or services.
- You are using a CRM system, however, the options for bespoke quote creation are limited.
How does a CPQ system fit with a CRM?
If you look at the big picture, both CRM and CPQ are systems designed to address different challenges in a single sales process. While a CRM is effective in helping you with generating leads, following up with them, nurturing them and monitoring the sales pipeline among many other possibilities, a CRM may not have extensive quote management functionalities. The primary objective of a CRM is customer engagement and retention. So the features in a CRM are designed to achieve that end.
However, the next crucial step in the sales process, after converting a prospect into a customer, is sending the actual price quote to them. This needs to be accepted by a customer, then converted to a sales order and finally an invoice. In this relay race of sorts, the CRM now passes the baton to a CPQ system.
If while creating this quote, the CRM is not able to help you with factors such as dynamic pricing for a range of product categories and combinations, that is when you can consider a tight integration between the CPQ and CRM systems. One cannot blame a CRM for not being a CPQ application — because the primary challenges that a CRM intends to solve are different.
That said, both customer engagement as well as quote management are both part of the sales process and need to be handled by the sales teams. Therefore, for an overall smooth sales process, it's best recommended that you use a CPQ system within your CRM application. This way, you never have to leave a window or switch applications. Right from acquiring a lead, to nurturing them and qualifying them, to interacting with them to make a sale and creating an accurate, error-free quote for them, your sales process is truly seamless. That will be the day you thank technology.
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