4 minute read
How manufacturers can evaluate performance of their CPQ capabilities
In the world of manufacturing, complex products, custom builds, and lengthy time to market are standard fare for businesses. Managing these different variables is a challenge for companies, and taking into account these factors when configuring, quoting and ordering processes can cause significant delays and errors. Additionally, many manufacturers’ current process takes weeks from the initial discussions about a product through the pricing and configuration steps, which often leads to unsatisfied customers, blown deals and lost revenue. Adam Hatch from FPX looks at how manufacturers can evaluate their performance.
The good news is, there are solutions out there that can help solve this problem. With the right tools, including a configure, price, quote (CPQ) solution, companies can reduce or eliminate many of these problems while turning those complex products and solutions into competitive advantages.
When it comes to laying the groundwork for a successful CPQ evaluation and implementation, manufacturers first need to assess what their current system can handle, and identify their most glaring needs. This upfront due diligence will empower companies to avoid delays and see ROI faster.
Typically, companies see improvements in several areas after implementing a new CPQ solution, including:
• Less time drafting quotes
• More deals closed
• More incremental revenue
• Cost savings
• Visibility into sales revenue
• Better business decisions
For these benefits to be realised, manufacturers need to implement a CPQ system. Before going into implementation, ensure you have all of your CPQ processes and priorities established. Assessing the main challenges in your current pricing and configuration process will help you avoid implementation hiccups, meaning you can reap the above rewards and improve overall company performance sooner rather than later.
Eight Questions to Identify Your CPQ Needs
In order to determine the tool that you need and your path forward, manufacturers should ask the following questions of their current system. This assessment should be frank and honest in order to discover areas that can be improved. As part of the assessment, manufacturers should answer the following questions, and be completely honest about their current capabilities.
1 – Do I have a documented process for configuring products, pricing, and quoting today? If so, what is it?
Identify whether the process is followed uniformly throughout the organization and where there are gaps.
2 – How many quotes do I generate in a year?
Determine the volume to get a sense for the level of sophistication necessary in a CPQ solution. Once this question is answered, leverage data to determine how many hours on average it takes to generate each quote (the final number may be surprising).
3 – How often am I the first vendor to submit a quote?
This is important because the first vendor to provide a quote more often than not wins the deal.
4 – Does my existing system effectively handle omnichannel sales from both direct and indirect sales channels? On this same note, does it accomplish this with an intuitive user interface?
Today’s sales world means business comes through a variety of channels, and ensuring that sales teams can easily handle requests is key to company growth.
5 – How much do I spend on fixing problems when products are delivered with the wrong configuration, and how many of these errors do I experience annually?
Every error leads to lost revenue, and while a buggy system may not cost actual dollars to fix, the opportunity cost can be huge.
6 – What is my win ratio for the quotes submitted, and what’s the revenue generated by the deals won?
This is a key feature in assessing the viability of the current solution. Understanding how effective and profitable your current system is (or is not) is a key step in determining the best path forward.
7 – How often do quotes have to be revised due to errors in product configuration or pricing? How many of these revised quotes actually win the deal?
If your current system necessitates revisions and iterations on quotes, it’s important to understand if those new quotes secure business. If the issue is on the client side, or you have to make multiple rounds of adjustments due to new requests, the system may not be the issue.
8 – Is my CPQ process scalable? What’s more, will my CPQ system still work if core applications of my technology stack are changed, whether due to new technology or a merger or acquisition?
Technology evolves at an ever-increasing pace. Being able to adapt as new features and stacks are built, and customer demands change is crucial to long-term success.
Once you have a clear understanding of where you are today, there is a simple two-part path to take. First, decide where you want to go with your CPQ solution. If you have a great one in place, then this is easy. If not, it’s time for an upgrade. Second, determine what problems can be solved by this new solution. This will help figure out what type of CPQ solution fits how your business today, and can adapt in the future as their technology and processes evolve.
In today’s fast-paced business environment, manufacturers have to be able to adapt in order to stay viable. Making sure that your system can quickly and accurately price and configure products is the best way to meet customer demands and grow your business.