Today's guest post is by Steel Brick Founder, Max Rudman.
My last post discussed why today's best-in-class sales organizations use configure/price/quote (CPQ) tools to spend more time selling, create and sustain good first impressions, and rapidly create winning proposals with the correct configuration and price.
In this post, I'll discuss five more ways CPQ automation software can help your sales force improve its performance and catapult your corporate revenues.
Top 10 Advantages of CPQ Continued…
6. Rake in additional revenue gain with less pain.
Most companies source 80 percent of their revenue from 20 percent of their customers, so you know your greatest profit potential lies in penetrating your most profitable accounts. But as post-recessionary budgets tighten, this is increasingly difficult to achieve. CPQ tools do your penetration legwork for you. As your team configures quotes and proposals, the software makes automated up-sell and cross-sell suggestions. You spend less time but increase your average quote and order size. (Source: Aberdeen Group, "Sales Enablement Advances with Configure/Price/Quote Solution," February 2011.)
7. Shrink your sales cycle.
CPQ solutions significantly diminish your workload by automating even the most complex proposal workflows, approval processes, and discounting guidelines. You'll automatically track open quotes and generate electronic approval requests when quotes exceed certain thresholds. You can even enable multistage and partial orders with the click of a mouse.
This may sound like a pie-in-the-sky promise, especially when considering that companies suffered a 1 to 12 percent delay in their lead-to-win sales cycles in 2009. But a 2010 Aberdeen study showed CPQ-empowered organizations optimized their bid-to-win effectiveness twice as well as non-CPQ users. On average, these CPQ users improved their year-over-year sales cycles by 40 percent.
That's an exciting prospect, since other industry rules of thumb show that a mere 15 percent decrease in your sales cycle length can yield a 30 percent increase in revenue.
8. Create inbound transactions.
Buyer/seller conversations have transformed as decision makers increasingly create their own brand preference with online research and social networking. In fact, Gartner predicts customers will transact 85 percent of their business without interacting with a person by 2020, so the more you empower your prospects in their research, the better off your business will be.
CPQ software solutions serve today's self-educating buyer who doesn't want to interact with the sales team until much later in the buying cycle, if at all. Because CPQ tools make your internal sales capabilities external in the cloud, your prospects can generate their own quotes online and place orders with the click of a mouse. Your sales team will exert less effort and generate the same or higher levels of revenue, which means less overhead, higher customer retention, and higher profits for you. Think of it as your sales office in the cloud.
9. Build win-win relationships with your partner channels.
Ever on the prowl for topline sales and bottom-line efficiencies, today's industry leaders are more than twice as likely to leverage channel partners in their sales strategies (32 percent versus 14 percent). These symbiotic relationships decrease selling costs and skyrocket market share, margins, and corporate revenues.
But there are barriers to channel-sales success. Your partners' sales and marketing competencies can be fragmented and yield insufficient topline revenues. De-centralization limits critical visibility into your sales pipeline. Plus, you aren't the only company vying for partner mind share. To optimize these channel relationships, you need to make it easier and more profitable for your channel sellers to represent your solutions over your competitors'.
With CPQ tools, you have a one-stop-shop solution to collaborative selling. You can easily distribute and enforce your business rules, including pricing and discount information. You'll gain and secure mind share while your partners enjoy the automated advantages of productivity, margin preservation, and heightened revenues. This will allow you to capture and track critical data to achieve a clear view into your channel-sales pipeline.
10. Optimize your margins with a minimal time investment.
It goes without saying that you want to maximize your margins, but sometimes it seems you do so only when you engage in time-consuming negotiations over narrow margins. But when CPQ software does the work, you leverage the power of automated discounting functionality that can be applied by item, by product type, or for an entire quote. You'll maximize your margins – but with a minimal time investment.
The Greatest Benefit of All: ROI
CPQ automation tools make your quoting process simpler, faster, and cheaper. They reduce sales cycle bottlenecks, enabling your team to present exactly the right product mix at the right time and cost to the right customer. Perhaps that's why CPQ-friendly sales organizations enjoy enhanced proposal quality, higher customer retention, and shorter sales cycles.
The big question in a CPQ buyer's mind is "What about the ROI?" Here is a simple way to do the math:
- a) How many quotes and proposals does your sales team generate in a week?
- b) How much time do your salespeople spend chasing information around pricing and configuration related to proposals?
- c) What is the cost per hour per salesperson?
- d) Multiply the number of hours your salespeople spend on these tasks by the cost per hour. This will give you the current cost related to CPQ tasks.
After measuring the average cost sales organizations spend on these tasks, we found that the average time to ROI for our clients is less than 60 days! (Check out Steel Brick's blog to learn how to select a CPQ vendor.)
How has your business benefited from CPQ software? Please join the conversation below.
Full disclosure: Steel Brick is not a Selling Power advertiser.