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  • CPQ
    January 12, 2016

Configure, Price, Quote: Behind the Curtain, Ahead of the Curve

The first of this blog series delivered a compelling argument for utilizing CPQ as a must-have component of your sales effectiveness efforts, based on performance results between adopters and non-users. Today, let’s get under the hood of this machine by exploring how the strongest-performing companies in Aberdeen’s research use the solution most effectively.

What exactly is CPQ? Aberdeen defines it as “a technology enabler with which selling organizations manage their opportunity-to-order (or lead-to-win) methodology with automated tools that impact the speed and accuracy of developing quotes, proposals, contracts, and products. The most common application solutions help literally configure, price, and generate quotes for buyers of goods and services.” In other words, CPQ helps sales operations teams support their front-line sellers by allowing them to work smarter, not harder. Take a look at the efficiencies that Best-in-Class companies, those with the most reps hitting quota, and the best annualized improvements in revenue and lead conversion rate, are self-reporting, as found in our upcoming study “Got Friction? Workflow Fixes that Shorten the B2B Sales Cycle,” summarized in Figure 1:

Figure 1: Numbers Don’t Lie: Best-in-Class Sales Effectiveness Advantages Over Under-Performers

Source: Aberdeen Group, July 2014

Is savings of less than one-third of a proposal iteration (2.57 vs. 2.85) that big a deal? Consider how many proposals, quotes, or contracts arrive each year in your prospect’s and customer’s inboxes, and the labor-intensive activity behind your firewall that goes into each one (9.6 hours per proposal for the Best-in-Class, 18.4 and 19.1 hours respectively among Industry Average and Laggard firms), and then what impact a 9.8% reduction in manpower will have on your team’s output. And their sanity. CPQ ‘s very mission is to cut down on paperwork, repetition, and re-inventing the wheel; perhaps it can lower blood pressure, too.

Next, I often half-joke about Directors of Sales Prevention. You know who they are: well-intentioned folks in legal, procurement, or other back-office functions, who are legitimately tasked with protecting your organization, but sometimes end up more focused on guarding and validating their jobs. The 18% delta in human friction between Best-in-Class and under-performing enterprises is a deliberate, calculated goal of CPQ deployments. Like so many sales automation efforts, the rationale behind the solution is to keep our sellers selling, and to standardize often-repeated tasks such as locating documentation, choosing prices, developing proposals, and engaging in any other activities that have already been addressed by our peers within the enterprise.

Finally, there is no more frustrating way for a high-end B2B sales rep or account manager to spend their valuable time, than trying to locate the same internal raw materials for a proposal that their peers have already sourced and stored…somewhere. Top-performing sales operations teams are 18% more efficient than other companies in limiting the volume of sales content repositories to which their front-line sellers need to explore, to simply find what they need. Within CPQ platforms the collection, cataloguing, and availability are automated, seamless, and efficient, so salespeople spend their most precious resource—time—developing and closing business relationships.

We could argue whether a causal relationship exists between Best-in-Class performance results and these sales enablement efficiencies: are top performers generally just more efficient, and CPQ is mere icing on the cake? The data suggest not: 52% of the Best-in-Class plan to increase their CPQ spend over the next 12 months, compared with 36% of Industry Average companies and only 24% of Laggards. Moreover, these elite performers plan a 14% more aggressive annual increase in sales headcount than their followers, as well as 54% more resources dedicated to CRM / CPQ integration. I think the connection is self-evident.

Next post: CPQ Everywhere: How Direct, Channel, Enterprise, and Middlers Seal the Deal.

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