Written
by Lestraundra Alfred @writerlest
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Your
days are jam-packed with tasks related to bringing in revenue for your company.
As your company finds its stride and continues growing and scaling, your daily
tasks become increasingly complicated, especially as your product line grows in
complexity.
If
you are manually tracking orders, you can save time, reduce your sales cycle,
and increase future sales by implementing a configure price quote (CPQ)
solution.
Configure, Price, Quote (CPQ)
Configure, Price, Quote software (CPQ) enables sales teams to
generate price quotes for orders quickly and accurately. An effective CPQ
solution can help businesses streamline their invoicing and payment processes,
and can simplify inventory management.
If
you think using a CPQ tool is the same as sending a basic PDF invoice, think
again. By using a reliable CPQ tool, you can streamline your sales process and
reduce your time spent performing administrative tasks while your company,
pipeline, and product offerings continue to grow.
Let’s
break down the CPQ process so you can understand how it works.
The CPQ Process
1. Configure
Facing
more product options than ever, customers are no longer interested in
purchasing one-size-fits-all solutions. Many buyers are looking for custom
products that suit their needs. In fact, one in five buyers is willing to
pay a 20 percent premium for personalized products.
Through
configuration, you can give buyers the custom products they’re looking for. You
can work with buyers to ensure your offering has the features and functionality
they are looking for through one system that is easy for you to track.
If
your company has an extensive product catalog or a variety of different
customization options, configuration features within a CPQ tool can help you
quickly and easily create an offer for the product your prospect wants.
For
example, if your company sells custom athletic gear and you are selling team
wear to a local sports team, you can use configuration software to capture the
correct customization of their order including details such as color and
fabric.
2. Price
Once
you have configured the offering to the buyer’s liking, price functionality
allows you to optimize the price to give to the customer by taking into account
the nuances of their purchase, and any applicable discounts or taxes.
Depending
on your company’s pricing strategy, the
price functionality of a CPQ tool can support your ability to make the sale by
modeling the correct price for each deal. Common pricing strategies include:
·
Competition-based pricing —
Basing the price off of market rate for your offering.
·
Cost-plus pricing —
Marking up the final price of your product to include the cost of producing
your product plus how much your company intends to profit.
·
Dynamic pricing —
Fluctuating the price depending on customer demand.
·
Rate-based pricing —
Commonly used for service-based deals. The customer is charged an hourly rate
for the amount of time it took to perform the deliverable.
·
Value-based pricing —
Charging how much a customer is willing to pay for the product.
For
each product, you can specify how pricing should be determined within your tool
and it can be generated automatically. You can also vary pricing depending on
the product functionality if that suits your company and the sale you’re
working to close.
Continuing
the team sportswear example, if your company offers a pricing model that lowers
the price per unit for high quantity orders, your CPQ tool should be able to
calculate the correct price.
Let’s
say your sportswear company charges $25 per jersey for orders of 20-40 units,
and $18 per jersey for orders of 50-70 units. If the buyer you are working with
is ordering a total of 60 units, your CPQ tool should know to calculate the
total price using the $18 per jersey rate.
3. Quote
Once
your customer’s order has been configured and the pricing has been set, it’s
time to send over a quote. Using a CPQ tool, you can instantly send accurate
quotes to all major stakeholders, speeding up the process for your sales team
and customer.
By
generating automatic quotes within your CPQ tool, you can create more accurate
quotes in less time, and you can eliminate the back-and-forth that comes with
sending quotes and invoices via email. This will allow you to streamline any
necessary approvals and collect signatures electronically.
Another
common feature of CPQ software is online payment integration, allowing you to
collect payments online when you send the quote to your customer.
Not
only does using a tool make it easier for you to send quotes to your customers,
but using a CPQ tool ensures you’re sending polished on-brand quotes to your
customers. This ensures your contacts are getting a consistent experience,
which reflects well on you and your company as a whole.
Once
the deal has been closed, CPQ software can help you facilitate more robust
reporting practices to drive more sales in the future. If you use a CPQ tool
that can connect directly to your CRM — such as the sales quote tool within HubSpot
Sales Hub — you can maintain accurate records of what was sold in
each deal, all accessible through your contact records in CRM.
Start
keeping better sales records and take your invoicing process to the next level
with a CPQ software solution. To learn more about setting prices that help you
make the sale, check out this post.
Originally published Nov 20, 2019 7:30:00 AM, updated November
20 2019
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