Making the Case for CPQ (Configure Price Quote)

A few summers ago, I was traveling through Europe with my wife and daughter. One sunny day we decided to stop for lunch at a local outdoor café. We didn’t pay much attention to the prices on the menu until we glanced around and accidentally discovered that the wait staff was handing out two different menus to the patrons. Identical entrees, but with different prices – one for the locals and one for the tourists! We were so peeved by the sleight that we got up and left before the meal arrived!

The takeaway for me was that clients are not offended by your prices if they perceive your approach to be fair. After all, we expect to pay for quality, and often ignore the identical utility provided by a similar (yet cheaper) competitor’s product because we perceive the preferred product to be of higher value. Companies work hard to imprint the distinction between their product and that of their competitor.

For most companies, however, the tragic gaffe occurs at the point of quote delivery. Within most companies, there is an active tension between sales and finance; between cutting price to win the sale and holding margins. And day to day, it’s very difficult to predict who will win that battle. In fact, the winner is very often determined by who has the stronger personality or who has the ear of the boss. While the ebb and flow of pricing in this manner may achieve the purpose of generating sales (and therefore keeping the doors open), it has a devastating effect on your relationship if your client feels that Joe, across the street was able to get a better deal than he was. It’s why we, as consumers, hate shopping for a car. Regardless of what kind of deal we negotiate, we always leave feeling that we got the raw end of the deal.

The Promise of CPQ

What is CPQ and do you need it? The most prominent (and yet, most overlooked) advantage of Configure/Price/Quote is its ability to affect your clients’ customer-journey in the initial buying process and beyond. Most companies have an elaborate process to move a lead through to purchase and payment. But their inefficiencies in internal quoting, approval and contracting frequently generate a best guess (of what they think the customer will pay) quote.

In addition, while they are putting the quote together and ‘test-firing’ it with their own management and the client, the delay in getting a quick, confident quote to the client often misses the client’s decision time-frame. Essentially, you’ve missed the ‘urgency window’.

Moreover, once the contract has been approved and executed, these home-grown processes become more complex and visibility into renewals and additional revenue opportunities becomes maddeningly obscure. This is the challenge that CPQ targets to solve.

CPQ prods you to accelerate your involvement with your customer, and drive value-delivery faster and more effectively than your competitors can. The benefits flow directly to your bottom line this quarter and well into the future. CPQ methods are more than just abstract theory. They define concrete steps and well defined processes that leading edge companies are implementing today!