04 Mar The true cost of Salesforce integration in high-tech: #2 The cost of an appropriate CPQ pricing model
by Ryan Christensen
Partial contracts, bundled pricing, special offers, accurate dates, attached contracts, renewals, warranties: these are a few of the many factors high-tech must consider with when negotiating a sale. As wonderful as it is, the CRM platform is designed to handle customer relationship information, not sales.
Enter CPQ—a software that helps businesses manage their pricing across a wide array of variables and quickly generate quotes to win business.
What is CPQ and what are its benefits?
C is for Configure: Or, in other words, customization. Businesses buying your products often want to customize the packages they are investing in. This isn’t exclusive to only the software but includes services and possibly hardware. How do you price differently for 50 licenses vs. 5000? Your high-tech business can configure CPQ with product information and its related offerings, pricing, and terms so that the salesperson creating a quote has this available instantaneously.
P is for Price: Variations in pricing for each product or service are a necessary evil. CPQ allows you to enter earned or custom discounts, volume, and bundled pricing. This flexibility will allow for minimized approvals as standard parameters are set, but provide the field with the opportunity to negotiate where appropriate.
Q is for Quote: This enables the sales rep to quickly develop, present, email, and even electronically sign the quote. Removing the manual processes makes your company easier to do business with and the likelihood of winning the sale. One company that moved to a CPQ software saw the quoting time for a simple sale reduced from 30 minutes down to 5. According to Salesforce, using CPQ correctly can improve sales efficiency by 15%. CPQ helps improve the whole business transaction process, and since it is cloud-based software, a sales rep can access the platform on any device.
How does my high-tech business decide on the appropriate CPQ software?
As with any substantial business investment, extensive homework should be done before purchasing. You will need to consider the following: the complexity of your customer and partner portfolio, product mix, and the number of transactions and renewals.
1. Configuration. Do you want to:
- Offer products your customers demand and require?
- Offer logical and related product bundles/services?
- Configure products as a set of options and upgrades?
2. Pricing. Do you need to address:
- Pricing constraints?
- Cross-selling and up-selling deals?
- Bundled products?
3. Quoting. Do your customers:
- Buy individual or a collection of products?
- Shop across product lines?
- Purchase differently globally than your U.S. customers?
Is CPQ complex to implement and integrate?
It is imperative that CPQ is implemented and integrated correctly. It will likely require a few months, or even more than a year, depending on the size and complexity of your business. Here are some guides to assist you with your considerations:
1. Know your software. Use the out-of-the-box features as much as possible to avoid hard-to-maintain customization and poor coding.
2. Leverage guided selling, as well as cross-and up-selling early on in the implementation. These need-based questions are of great assistance in generating an appropriate list of products for the customer as well as revealing new sales leads.
3. Automate workflows:
- Use a CPQ design that adopts smart workflow approvals.
- Automate business processes where applicable.
- Automate emails, task assignments, activity assignments, approvals.
4. Know your integrations. What is your source of truth, and how many different systems need to communicate with CPQ to accurately know and interact with your customers?
5. Test your implementations for accuracy and scalability.
6. Train your staff. Users of Salesforce CPQ have emphasized the importance of getting adequate training on the software.
How much does it cost to implement a CPQ software?
There are at least three cost factors involved in implementing CPQ. First, will be the cost of the software itself. Second, implementation. Do not discount the criticality of a clean implementation. Third, is the cost of training and certifying your staff on how to use the software.
As it relates to the software, Salesforce provides three simple purchasing options (scroll halfway down to review) for their CPQ offering.
To have Salesforce or a partner consulting company, such as Simplus, perform the implementation, you will need to schedule a comprehensive scope of your environment and business requirements as to obtain a quote.
A staff trained in CPQ is equally critical because it is a unique software that touches nearly every part of your organization. Salesforce and other partnering companies offer training to help you fulfill this necessity.
Many companies that have implemented a CPQ software are finding that it has greatly improved their sales configurations, quoting, and pricing. As your high-tech company continues to scale, this is a software that will greatly impact your bottom line.
Ryan Christensen is the Director of Vertical Sales at Simplus. He has over 12 years of technology sales experience and a diverse background ranging from start-ups to industry-leading enterprise organizations, specializing in SaaS and its services. Ryan recently participated in the CEO keynote at Dreamforce 2017, focusing on the success Adidas is having using Salesforce globally. He is travel-obsessed, fearless on the dance floor, and bilingual in English and Italian.