Which is the ‘hottest’ enterprise app generating the biggest buzz currently? For manufacturers like you, the answer is likely to be Configure-Price-Quote (CPQ). In fact, Gartner paints a very positive outlook for adoption of this software, predicting the segment to expand at an annual growth rate of 20% through 2020. And, the manufacturing industry continues to be the leader in embracing the technology for effective management of their end-to-end lead-to-cash (L2C) processes.
The business logic is quite clear. The quantum of working capital “stuck” in inefficient L2C processes at leading global companies is estimated to amount to between $1 trillion to $2 trillion, or almost 7% to 12% of their aggregate revenues. By using CPQ solutions, manufacturers are looking to systematically simplify their L2C lifecycle, and unlock more value from their selling and fulfillment processes.
Why invest in CPQ?
Given the rising energy costs and a volatile global economic outlook, you are under constant pressure to transform your pricing, sourcing and logistics strategies. It is critical to adopt customer-centric practices such as configure-to-demand and make-to-order, in order to offer a differentiated value proposition, and build a loyal customer base.
More than anything else, the agility to penetrate existing markets further, or enter and create new ones, can play a decisive role in determining your long-term sustainability.
However, selling highly configurable products and services to today’s sophisticated buyers, and closing deals faster, is not an easy task. Operational constraints, complicated configuration rules, and tight margins often delay the sales cycles. You need improved processes, and a technology solution that fosters smooth management of complex product portfolios, sales cycles, and multiple sales channels.
Many manufacturers are seeking to address these challenges by implementing CPQ solutions for streamlining their L2C processes. They have begun actively eliminating manual, paper-based methods for generating quotes, instead opting for a more integrated and automated selling approach.
CPQ is a robust sales tool that allows manufacturers to produce highly customized quotes for a variety of product options, by defining appropriate product, pricing and business rules in real-time. The software can enable your users to create accurate and complete proposals, and improve workflows, sales analysis, contract management, and renewals. By driving real-time integration between Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and other core systems, CPQ helps shorten the L2C cycle. This, in turn, paves the way for a reduction in the volume of credit memos, RMAs and returned products.
Built on an integrated information architecture, the latest CPQ solutions offer a comprehensive, one-stop customer view, allowing you to take swift, informed decisions for preventing revenue leaks and customer attrition. These tools also help institutionalize enterprise knowledge, allowing dealers, indirect sales representatives and other stakeholders to easily exchange information. Moreover, CPQ facilitates more frequent updates of product details, and related changes in promotions and pricing.
Data at your finger tips
One of the biggest advantages offered by next-generation CPQ solutions is advanced data analytics. Workflows and analytics built into these applications provide reliable data on past sales that can help drive better demand forecasting. With access to detailed, real-time analytics related to various functions such as sales, finance and operations, you can reduce the number of Days Sales Outstanding (DSO), and improve collections and order management. It is also possible to use the data sourced from CPQ for understanding evolving customer behavior and market trends. Based on these insights, you can refine your customer engagement and sales models for superior margins and enhanced customer satisfaction.
Choosing the right CPQ platform
In the early years, industrial enterprises had to contend with a limited pool of costly, highly technical and inflexible CPQ solutions. That dynamic, though, has changed completely now, thanks to the advent of sophisticated, configurable, and well-integrated solutions. In fact, today CPQ vendors are also looking to embed machine learning within apps, to enable ‘smarter’ pricing, and facilitate higher up-selling and cross selling.
Based on their specific business needs, manufacturers can decide whether to opt for cloud-based or on-premise solutions. While on-premise implementations require constant upgrades, Cloud solutions enable easy and quick updates and new features.
Here are some of the key features you should be looking for while evaluating a CPQ platform:
- Graphical and easy-to-use applications, with simple navigations and intuitive User Experience Design (UXD)
- Ease of integration with CRM, ERP and CAD systems
- Features enabling intelligent pricing and profitability modeling
- Configurators that support 3-D modeling and can operate natively on mobile devices
- Powerful rules engine to fulfill complex requirements, without the need for coding
- Ability to support a wide range of up-to-date, easily accessible marketing and sales content including product brochures, videos, and pricing guidelines
- Offline functionality to allow users to configure orders, generate quotes, and access information even from remote locations without internet connection
- Ease of enablement of self-service functions and distributor/dealer sales channels
With CPQ technology, you can embrace an integrated and data-driven approach to managing the L2C lifecycle. Eventually, this can help you improve deal sizes, accelerate sales, increase revenues, and enhance customer experience and opinion of your company. Above all, modern CPQ software can allow you to move beyond a product-centric approach to selling comprehensive solutions and services, thereby ensuring a loyal customer base.