4 Questions to Ask Before Investing in CPQ Products

CPQ products are transforming how manufacturers sell their products and interact with prospects and customers on a global scale. By automating complex product configuration, pricing, quoting, and much of the engineering workload, they’re shaving weeks off sales cycles and hundreds of thousands off staff and production costs.

But as with any significant software purchase–especially one that promises to change the way you work and deliver value to customers on a fundamental level–implementation requires careful thought and planning. Below are the essential questions you must ask yourself and your potential vendor before taking the plunge.

1. How Will CPQ Products Impact Our Sales Process?

What does your sales process currently look like?

1. Are sales reps struggling to wrap their heads around an ever-expanding list of product options?
2. Are they making configuration and pricing errors?
3. Are they coming up with configurations that won’t work in the real world?
4. Are they effectively communicating customer requirements to engineering?
5. Are they spending all their time in Excel when they should be out selling?
6. Are they leaving customers hanging on for days or even weeks before sending them a quote?

If the answer to some or all of the above questions is a resounding “yes,” then don’t worry–you’re not alone. The majority of manufacturers of complex configurable products face similar challenges.

The only difference is that while digital-first manufacturers are using CPQ products to streamline and eliminate mistakes from their sales process, digital laggards are still plodding along, trying to do everything manually, ruining their customer experience as a result.

CPQ products remove all the tedious tasks, error-prone processes, and guesswork from sales of engineer-to-order products. They automate and streamline everything from start to finish, allowing sales reps to focus on attracting new business instead of banging their heads against a brick wall.

The following is what the sales process looks like when a CPQ is in the mix:

1. The sales rep uses a configurator built on top of engineering and pricing rules to design a product and generate prices.
2. These rules ensure every configuration is optimized for customer satisfaction and profit-generating potential (if a sales rep makes a sub-optimal product choice, the configurator guides them to a better alternative.)
3. Once the configuration is complete, CPQ generates a quote for the customer. No more waiting around.

2. How Will CPQ Products Benefit (or Disadvantage) the Engineering Department?

Chances are, investing in the right CPQ products will benefit your engineering department hugely. As above, let’s break down the challenges most engineers face and how CPQ products can change the game for them.Is this what your sales-to-engineering process currently looks like?

1. A sales rep sends engineering a product configuration that’s little more than a napkin sketch.
2. Engineers then have to translate this sketch–sometimes full of errors and unrealistic promises made to customers–into a design that can be manufactured for profit and actually functions in the real world.
3. They make the necessary changes and send it back to sales for feedback from the customer.
4. The customer isn’t happy with the new design, so, together with their rep, they make some tweaks and send it back to engineering. Then the back and forth begins!
5. Once the customer is happy with their configuration and the price, the engineer has to manually create a CAD file and BOM for the shop floor, which takes ages and lacks any of the creative endeavors they dreamed of when they left college.
6. The engineer hates their life and considers applying to a company with a more digital-first approach.

In contrast, this is what the engineering process looks like with a best-in-class CPQ system:

Thanks to the sales and engineering automation outlined above, manufacturers leveraging CPQ systems can shrink sales cycle duration to seconds, which has a massive positive effect on win rate and deal size. But that’s not the only way customers benefit. How is this possible? It’s because product rules and CAD and design automation functionality carry the entire engineering workload. Here’s how it works:

1. Sales reps design products using a configurator that ”knows” precisely how products can and should be assembled thanks to advanced product rules. There’s no need for engineers to sign off on designs (although, admittedly, some manufacturers will still require them to.)
2. Once a product is configured, CPQ auto-generates all necessary design files, BOMs, and even things like CNC cut sheets, additive manufacturing files, parts lists, and assembly guidance.
3. Instead of dealing with requests from sales all day, the engineer can concentrate on more interesting, high-value jobs, like new product development.
4. The engineer is happy and thanks their lucky stars that he works for such an efficient, forward-thinking company.

3. How Do CPQ Systems Affect Customer Experience?

The engineer-to-order process is often long and complicated, with multiple stakeholders involved. This means customers are frequently left waiting days or even weeks for quotes, slowing them down and making them more likely to search out more responsive suppliers.

Thanks to the sales and engineering automation outlined above, manufacturers leveraging CPQ systems can shrink sales cycle duration to seconds, which has a massive positive effect on win rate and deal size. But that’s not the only way customers benefit.

Here are some additional questions to ask to gauge the impact of CPQ on customer experience:

Does My CPQ Solution Enable Visual Product Configuration?

The best CPQ products let users–sales reps and customers themselves–configure products by interacting with 3D images. Instead of reading long, boring product descriptions and ticking boxes to make selections, they can drag and drop parts on-screen, change colors and dimensions, and spin products 360 to ensure they’re 100% happy with their selection.

Because visual product configuration is a totally digital process, it can take place remotely–no more flying around for meetings or showroom visits. This makes life easier for customers in a post-COVID world and dramatically reduces costs for sellers.

Is My CPQ Pricing Dynamic?

The best CPQ products can handle any complex pricing strategy you throw at them. Forget basic cost-plus models; with advanced pricing rules, you can take a fully value-led approach, calculating prices in real-time based on any number of factors, from inventory level, promotions, and volume discounts, to demand and even live competitor prices.

Can Customers Self-Serve?

Yes, they can. Product and pricing rules programmed into the visual product configurator guarantee error-free product configuration, whoever’s at the wheel. Even the most clueless customers can follow the on-screen prompts and recommendations to design a product that will suit their needs perfectly.

Self-serve product configuration is brilliant for customers who would rather configure, price, and quote independently than interact with a salesperson they may not like or trust. But it’s great for the seller, too: Customers who design their products become more emotionally invested and are more likely to buy. And having fewer salespeople on staff means lower salary and training costs.

Is the Buying Experience Highly Compelling

With the right CPQ products, manufacturers can add virtual and augmented reality functionality to the visual product configuration process creating fully immersive experiences that buyers love. It’s a great way to stand out in competitive markets and attract new buyers.

Does a Digitized Sales Process Lack the Personal Touch?

Research from McKinsey shows that personalization often drives a 10 to 15 percent revenue uplift. Fortunately, the best CPQ products create a highly personalized buying journey, even though there’s less–or zero in many cases–human interaction involved.

The best way to personalize the customer experience is to integrate your CPQ with CRM. Once integrated, CPQ can pull customer information in real-time, doing the easy stuff, like displaying the customer’s previously negotiated prices, and the hard stuff, like providing intelligent recommendations based on their customer persona and purchase history.

4. Will CPQ Integrate with My Existing Tech Stack?

Well, this depends on which CPQ solution you use. But, yes, with a CPQ like Epicor CPQ, you’ll find integration with your ERP, CRM, CAD, PLM, PIM, and eCommerce systems instant and painless, thanks to native applications and APIs.

How About CPQ for SAP and Salesforce?

With 425,000 and 150,000 users respectively, there’s a decent chance your company will be working within a SAP or Salesforce environment. Both SAP and Salesforce have their own “native” CPQ products. But are they any good?

The answer is: it depends. If you sell a relatively limited number of standardized products, then the CPQ for SAP and Salesforce will be more than sufficient for your needs. BUT, if any of the following statements are true, then you will be better off integrating a specialized CPQ solution instead:

Your products are highly visual, i.e., showing prospects 3D interactive images will likely increase conversion rates. CPQ for SAP and Salesforce lack best-in-class visual product configuration functionality and don’t yet support VR or AR.

Your products are highly complex, i.e., configuration relies on advanced, complicated engineering rules and pricing logic. The CPQ for SAP and Salesforce have a pretty simplistic rules engine.

You want to maintain everything in-house, i.e., you want a no-code rules engine. The CPQ for SAP and Salesforce have a complicated rules engine that requires specialist coding.

You want customers to self-serve, i.e., you want to embed your visual product configurator into your website for customers to use. The CPQ for SAP and Salesforce are mainly used behind the scenes by salespeople with limited front-end capabilities.

In Summary: Ask Yourself This…

Implementing CPQ can have a transformative impact, saving manufacturers time and money while increasing efficiency, improving the customer experience, and, crucially, attracting and retaining top engineering talent.

Still, before diving into the world of CPQ, you must carefully consider how it will affect every stakeholder in the engineer-to-order process, from the customer to sales, engineering, and production. Too many people focus purely on sales improvements, limiting the ROI from their CPQ investment.

When deciding which CPQ vendor to go for, consider what functionality you might need in the future as well as what you need today. With customer expectations rising and the weight of global competition bearing down, you might need to leverage features like 3D/VR/AR product configuration and self-serve sooner than you think.