Configure Price Quote (CPQ) software, which automates the quoting process across numerous variables, can help manufacturers speed up ordering time, improve quote accuracy, increase sales and increase margins.
High-performing CPQ software goes well beyond traditional salesforce automation tools and customizes the experience for both the manufacturer and the customer. CPQ software works with customer relationship management (CRM) technology to eliminate the disconnect between sales and engineering and the need to clean up deals with unmanageable terms after the closing the contract.
Fewer lost sales because customers chose another supplier while waiting days for a quote. And no more surprises when sales promises something that isn’t possible.
CPQ software enables manufacturers to optimally configure products and services
“CPQ enables manufacturers to accurately define the price of goods across a huge constantly changing spectrum of variables,” said Nils Olsson, chief product officer at Tacton. “There can be millions or even billions of possible product configurations. Every little change in requirements sets off a chain of events across engineering and supply chains that are equally as complex, causing delays and frustration with buyers.”
By aggregating the numerous variables, companies can optimally configure products and services, through bundling and upselling and price them to offer the best quote to the customer based on willingness to pay and other economic factors, Olsson said. CPQ software guides customers through the purchase process, directing clients to the next-best alternative where appropriate.
Without such a fully integrated solution, there is immense pressure on engineers to deliver accurate renderings of each customized product. But designs may be left to guesswork or there may be a disparity between configurations customers want and what can be feasibly built and delivered, Olsson said.
CPQ software hides engineering complexities
Meantime, high-performing CPQ hides the engineering complexities from the customer during the quoting process, making the process about the client, not the engineering parameters, according to a report from Accenture.
The software has helped Tacton’s customers achieve 40 percent faster order handling time, boost efficiency by 34 percent, increase sales by 30 percent, and improve profit by 20 percent, Olsson said.
Accenture outlined similar improvements including a 2-10 percent increase in average deal size, a 10-50 percent reduction in quote turnaround time, a 20-40 percent reduction in quote iterations, a 5-10 percent increase in operational savings, a 2-10 percent improvement in renewal rate, a 5-15 percent improvement in average order fulfillment lead time, a 3-5 percent reduction in inventory costs, 25-200 basis point margin increase, and a 10-20 percent increase in standard terms and conditions.
CPQ software can reduce exposure to legal and compliance issues
CPQ software can reduce exposure to legal and compliance issues that can emerge when terms and conditions aren’t well-researched. Incorporating supply chain data into the quoting process informs sellers and buyers of potentially lengthy fulfilment times up front and offers clients available alternatives, according to Accenture.
Over the last five years, high-performing CPQ software has been able to integrate with every backend system, ERP, CRM, ecommerce and supply chain networks, Olsson said. With Visual Configuration, customers and sales teams can see photo-realistic 3D visualizations of their configured product in real time, Olsson said. Using augmented reality, customers can then virtually walk around these products and even see how the products will fit in their workspaces.
“Our customers have reported that quotes that used to take three days now take only 10 to 15 minutes,” Olsson said.
CPQ software enables collaboration & expedites quotes
Husky Injection Molding Systems, a global leader in supply injecting molding equipment and services, was facing a challenge quoting for its hot runner business because the company needed to consolidate 60 to 70 variables for each quote. Behind each seemingly small variable, was a set of guidelines for what to select into a configuration, Olsson said.
“This meant the sales engineers managing the quote would have to do manual work across multiple systems in Excel and look up charts,” Olsson said. “This led to inconsistent and incorrect quotes for their customers. But most important, the process took too long, resulting in missed sales opportunities to the competition. In a business with short sales cycles and high volume, speed is key to stay competitive.”
Internal collaboration between sales and engineering also was challenging, Olsson said. Each team used different tools for different parts of the quoting process, resulting in inefficiencies and disconnected data flows. Husky wanted a product configuring solution that spanned sales and engineering. Tacton’s CPQ now enables a seamless flow of information from Husky’s customer relationship management platform to order fulfillment for a fully supported sales process. The software also helps information flow easily among commercial operations, customer service, pricing and finance.
With Tacton’s CPQ software, Husky found a tool that can handle its product complexity and reduce the time spent on their tens of thousands of quotes per year by 75 percent, Olsson said.
Working with Tacton helped Husky to automate the preparation of more than 95 percent of the engineering bills of materials in real time during the quoting process. Another time savings comes with design automation, which reduces the time from design to fulfillment.
CPQ software drives innovation
By automating routine and repetitive CAD tasks, engineers can design more in less time. These improvements freed up engineers to focus on innovation. Sales teams are freed up to concentrate on more complex sales.
CPQ also minimizes disruptive change orders because the software should be capable of proposing an optimal solution.
Yaskawa, a global supplier of industrial robots and automation, has improved the quality and overall accuracy of its quotations and was able to cut the time to generate quotes from eight days to just one—despite the complexity of its products, Olsson said.
“When used properly, CPQ solutions deliver accurate price quotes to potential customers quickly, allowing them to make informed decisions in a timely manner,” Olsson said. “This helps increase win rates because there are fewer opportunities to reconsider and/or back out, which is much more common when the process is time-consuming and drawn out over weeks even months.”
*Header image courtesy of Depositphotos