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  • CPQ
    January 19, 2016

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

Ask most B2B sales reps why they won their last deal, and they’ll undoubtedly take sole credit for the win. Query as to the story behind their most recent loss, and the culpability suddenly shifts toward…well, anyone but themselves. And it’s probably due to pricing, right?  Let’s look at the data to decide. My newest research, scheduled for publication soon in “Got Friction? Workflow Fixes that Shorten the B2B Sales Cycle,” includes a simple question for executive respondents: what are the most frequent reasons why your team loses deals? Interestingly, the most popular results were a dead heat between the standard—yes, price—and the unexpected: “failure to diagnose or control internal politics in our buyer’s organization.” In other words, pricing disconnects between buyer and seller do, in fact, deserve half the blame for sales losses, but the sales rep is equally as responsible for misreading their target account.

OK, enough with the bad news. Even the Best-in-Class companies in the research only convert 42% of their leads (compared with 31% and 20% respectively among Industry Average and Laggard firms), and see 48% of formal contracts result in orders (vs. 38% and 34%), so you can’t win ‘em all. I know this to be true: I’m a Red Sox fan.  In B2B selling, however, given the enormous expense of human and technical resources dedicated to meeting quota, it’s imperative that we stack the deck in favor of the strongest possible batting average, because those losses not only hurt, they cost serious money. Perhaps not CC Sabathia-level losses, but you get my drift.

Figure 1: Smarter Selling, Better Results

Best in Class Companies vs Laggards - CPQ

Source: Aberdeen Group, July 2014

So now we turn to configure / price / quote solutions, the subject of this blog series, and the extent to which Best-in-Class companies use these platforms to run their sales operations as responsible, 21st century businesses, more effectively than under-performing companies.  This is where pricing as well as reading the customer’s tea leaves comes into focus, because regardless of which of the following scenarios most mirrors your business, the data suggests that CPQ will streamline your sales workflow processes:

  • Direct, enterprise sales force: Best-in-Class companies are quicker to recognize that discounting is a fact of selling life, formally offering a price break to support a “win” 35% more often than under-performers. Figure 1 shows that they are also 45% more likely than All Others (71% vs. 49%) to incorporate this realization into their sales workflow automation system.  CPQ solutions can be tailored to regulate, as if with a home thermostat, the window of flexibility that large, direct sales teams require for pricing variability, which helps multi-national and disparate selling organizations establish discounting boundaries and trigger manual discussions only when the windows are exceeded.  In other words, everyone is essentially pre-approved to make certain concessions; slowing down the sales process to “let me speak with my manager to see if this discount is feasible” only occurs when the price jumps over the guardrails.
  • Indirect or channel-centric team: It’s hard enough to keep all employees up-to-date on our ever-evolving family of products, pricing, and messaging; what happens when our sales are predominantly handled by channels, partners, franchisees, VARs, and others not on our payroll?  This is an especially vexing scenario in multi-region, multi-lingual environments, and is exasperated by the cold reality of competition: our channel often sells both our solutions and those of our competitors. The solution? Any good CPQ or sales workflow automation solution should be cloud-based and easily extendable to your channel partners.  When they receive this level of TLC that is normally reserved for W-2 sellers, no doubt they’ll gravitate toward the OEM showing them the most support – you – when deciding which product to promote in their market-facing activities.
  • Mid-Market or eCommerce sales: Finally, is CPQ helpful to organizations that aren’t huge, global, or high-end in their sales focus?  When I publish research in papers such as Big Data for Sales: Are We Ready?, the takeaways are universal, and not restricted to global enterprises with large sales enablement budgets.  This big data play, for example, refers to technology enablers that are embedded in all sorts of sales effectiveness technologies, at various size-sensitive price points, including – you guessed it – CPQ offerings. Our beloved Best-in-Class winners use such predictive analytics to work so much smarter than harder, that they are 140% more adept than Laggards at avoiding the most dreaded scenario of all: that stomach-wrenching “no decision” that results from misreading buyer-side cultural or political influences in companies of any size. For resource-constrained, fast-growing, or eCommerce-centric sales teams, the added value of CPQ arrives when embedded analytics link to the digital behavior that one-to-many marketing campaigns gather on prospects and customers. 

Figure 1 links performance to behavior, which is the essential focus of Aberdeen’s objective, non-sponsored research model.  In addition to defining the Best-in-Class practices above, one more slice-and-dice of the same survey data provides a compelling coda to the story:  CPQ users are 23%, 11%, and 89% more adept than non-adopters at these same core competencies.  Take special note of that last one: companies using CPQ to streamline their sales funnel are 89% less likely to waste precious sales resources on unlikely wins, because they are able to connect properly archived content – pricing, quotes, proposals, contracts, even marketing collateral and CRM-collected customer intelligence – to the ultimate dispensation of their successes and failures alike.  Knowing when to hold ‘em, and when to fold ‘em?  Kenny Rogers may just well have been a President’s Club sales ace.

Next post: Four Lessons from Junior Soccer: Can Everyone Actually Be a Winner?

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