The analysts estimate that Global Configure, Price, Quote (CPQ) Market has the potential to grow from $ 923.74M (2021) to $ 1.95B by 2026 with a Compound Annual Growth Rate (CAGR) 16.09%.
What really is contributing to this phenomenal growth and how it would benefit the Businesses, End Customers, CPQ Product Vendors and System Integration Partners?
Before we understand the benefits, let’s get an understanding of where CPQ fits in and what CPQ is!!!
Every Sales Agent knows that the deal is 80% won if they can engage with the buyer to provide a quote for exactly what the buyer is looking for, at the best price point and in the quickest turnaround time.
In this highly competitive Digital Era, buyers are always looking for something that really fits their needs, and the dawn has set in for “one size fits all” in product & services sales. What this means is, we are driven by the buyer and the businesses have no choice but to adapt to this change. It is indeed good news for the buyer because they end up receiving a configured product specifically for them. However, for businesses, this can create complexity in an extremely sensitive area such as pricing.
The advent of this buying culture brings up the need for having CPQ so that the Sales Agents can deliver to the buyers’ expectation.
CPQ, commonly elaborated as Configure, Price, Quote, is a software solution that helps businesses with the ability to configure complex products, apply varied pricing models, and quickly generate a quote or a proposal document. Typically, a CPQ solution is as an extension of a CRM system. Many CRM systems provide the basic ability of selling products but that are largely limited to simple products (non-configurable) and with standard pricing and discounting methods.
Though there may be many reasons as to why a business would need a CPQ product, in this first series, let’s look at few common reasons.
Reason 1 - Complex Products: Businesses that want to sell products that are configurable by using product attributes, see an opportunity in bundling the products or looking for system to alert the Sales Agent about upsell and cross sell opportunities based on what is added into the cart (intelligent recommendations). The level of complexity that can be there in complex products can be one separate blog altogether and we will pick that up in our next series.
Reason 2 - Dynamic Pricing:Complex products come up with even more complicated pricing models. Other than standard unit based pricing, you want your system to support, volume based pricing, tier based pricing, and parameter dependent pricing. All of this is possible only if your Sales Automation is equipped with CPQ features.
Reason 3 – Quote Submission:Given that the Sales Agent is working on configuring a complex product supported with dynamic pricing models, many businesses want to have a thorough review process before the proposal/quote is sent to the buyer. With CPQ, the entire review, approval and proposal/quote generation process can be automated resulting in error free quotes that can be sent to the buyer in quickest turnaround time.
When your CPQ Solution is the configurator of the complex products eliminating human errors, and when Artificial Intelligence in your CPQ Solution can read the customer buying patterns and suggest right products at right price point and when your CPQ solution provides the ability to create personalized quotes, you have attained a stage of NIRVANA!!!
In our next blog, we will dive deeper into some of the topics we have touched in this blog along with benefits of using CPQ, how do we choose the right CPQ solution, what features make a solution the best CPQ solution and ROI of implementing a CPQ.