CPQ in Complex and Rapidly Changing Businesses

Other blogs in this CPQ series have identified and quantified potential benefits of adding Configure, Price & Quote (CPQ) capabilities to your CRM implementation. This blog deals with you not doing so; what if you simply don’t?

For starters, you’ll have plenty of company. According to CSO Insights’ 2016 Sales Performance Optimization Study, 86% of companies have implemented some form of CRM but only 18% have implemented CPQ. Not everyone has complex solutions or multi-variant answers to address a client’s problem. So CPQ is not for everyone.

But many companies that do have complex, highly engineered, and/or multi-faceted solutions continue to operate with spreadsheets and other homegrown systems. Is this serving them and, if not, why do they continue to do so?

The costs associated with mistakenly specifying wrong parts including rework, lost time, and ill will from customers, all can combine to cost justify a new CPQ solution. Too often, these are simply accepted as normal costs of doing business, when, in reality, these are costs of continuing to do business as usual.

However, there are additional, unseen costs associated with sticking with the status quo. Henry Ford is credited as saying, “If you always do what you’ve always done, you’ll always get what you’ve always got.” Many people subscribe to this philosophy and doggedly stay the course they’ve been on despite warning signs it’s not working.

The warning signs may include increases in order entry errors, customer returns, protracted installation and billing times, decreasing customer satisfaction ratings, or increases in allowances/gratis parts due to bad orders. In fact, Ford’s observation is only true in a static environment—hardly the situation in today’s sales/business environment. The chart below shows how changes impacting sales have increased dramatically in the past decade.

And yet, companies continue to act as though they don’t need to improve. The appeal of remaining fixed is easy to see: it doesn’t require anyone to do anything! No change means no discomfort, no need for increased budget, no shifting of priorities or the pain of acquiring a new skill. But there is a “cost of doing nothing” that can be calculated in terms of higher rates of lost or no-decision deals, lower margins, lower deal values, increased discounting, higher cost of sales, higher salesperson turnover, longer ramp-up times for new hires, lower lead conversion rates, longer sales cycles and fewer repeat orders.

CPQ can’t solve every business challenge. What it can do is capture corporate wisdom, identify up-sell and cross-sell possibilities, and avoid specifying solutions that don’t work and that frustrate everyone along the way. Today’s CPQ applications are thinner and more intuitive than earlier generations and can help your firm streamline its processes to stay competitive in today’s rapidly evolving environment.

Questions for you:

  • How do you ensure your salespeople have the most current/complete product configuring information?
  • Have you investigated CPQ and its applicability to your environment in the past 18 months?
  • How do/will you capture product knowledge currently held in the heads of your most tenured and technical sales reps?


Related blog:

Setting Sales Transformation Priorities: Finding a Problem Worth Solving

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