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Expert Guide to Configure Price Quote

When it comes to complex quoting processes based on large catalogs,
complex price lists, configurable products, or rule-based discounts, Customer
Relationship Management (CRM) isnt always the right tool for the job.
Configure Price Quote (CPQ) helps you bridge the gap between your front and
back-end systems, elevate the accuracy of your quotes, and keep approving,
bundling and discounting up-to-date.









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CPQ Overview

If youre familiar with customer relationship management (CRM)
tools, such as salesforce.com, you know that CRM effectively tracks
the activities that move a lead to an opportunity to a closed deal. Its
also great for managing the customer relationship once the deal is
closed.
However, when it comes to complex quoting processes, CRM often
comes up short. Many companies that have invested a lot of time and
money bringing a sales team onto a CRM platform find quoting still needs to be done outside the CRM,
especially if tools like Excel and Word are used to get parts of the process done. And when quoting is done
manually, without the safeguards CRM provides, errors, unnecessary risk, lost deals, and angry customers are
right around the corner.
For organizations facing these challenges, configure price quote (CPQ) can be a lifesaver. CPQ picks up where
CRM leaves off by making all of the complex product, pricing, and business rules centralized, automatic and
available in real-time, so sales has everything they need at their fingertips when trying to configure and quote
a deal. CPQ puts guardrails in place that ensure your sales teams only sell to the latest approved pricing and
discounting rules, and that approvalswhen necessarycan move quickly along without holding up your
deals.












CPQ Drives the Modern Multi-Channel Strategy

CPQ isnt just for making your internal reps effective and efficient, it also is an essential part of a successful
global, multi-channel selling strategy. CPQ provides real-time, up-to-date product catalog visibility to every
approved user, whether inside or partnering with your company, so all your channels are on the same page.
CPQ grants you full control over which partners, groups, or channels can access certain pricing or product
information, with role-based access, discount locks, and portals, so you can manage revenue share, exclusive
discounts, or pricing and shipping fees. It also allows you to manage different strategies for different channels
or different geographies by giving you full visibility into sales trends and channel effectiveness, so executives
LEAD
ACCOUNT
MANAGEMENT
OPPORTUNITY CONFIGURE
PRICE
QUOTE
With CPQ, your reps and
partners are more efficient,
more effective, and have
the tools they need to move
the deal along, get the
quote approved, and get to
a signed contract.



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can course-correct when needed. Finally, CPQ enables channel consistency so customers can find the same
product everywhere you offer it, and for a price you control, so you get maximum value out of all of your
channels.
How Configure Price Quote Defines the Sales Cycle

CPQ is an integrated business process that starts with guided selling, and ends with quote creation and
approval workflows. CPQ presents enormous opportunities for added efficiency, at every step of the sales
process.

Connecting Goods to Customers with Sales Configuration
Configuration, the foundation of CPQ, is the engine that ensures your
business rules are accurately and automatically represented in your
quotes and contracts, and that your reps are selling the best mix of
products at the best price.
Configuration Makes Your Reps More Efficient
Leading analysts estimate that the average sales rep only spends 10%
of their time selling. Imagine what would happen if everyone in your
company was only doing their job 10% of the time. Thats an exorbitant
amount of wasted time! You probably wouldnt be in business for long.
While there will always be some things that take Sales away from
managing deals, CPQ is the best weapon against unnecessary
administrative steps in the sales process that eat your reps time. CPQ
can eliminate a manual quoting process, make things like product
training and onboarding more efficient, and put more hours back into
the day.
When Sales isnt bogged down by junk, they can get back to what they
do bestbeing in front of the customerwhich makes them more
effective, and shortens the sales cycle too.






How Do Your Reps
Spend Their Time?

1. Wading through
outdated product
catalogs



2. Waiting for
approvals



3. Scheduling
customer calls and
appointments



4. Learning sales
scripts



5. Complex Excel
spreadsheets



6. Fixing mistakes





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Configuration Reduces Rep Mistakes
For those who arent in sales, you may not appreciate how difficult it is to memorize a dense catalog and sell
a complex set of products and features, especially when your products include things like:
Multiple Delivery Options Warranties And Manuals
Service Packages Compliance Issues
Third-Party Components Status-Specific Pricing
Discounting Offers Product Dependencies

And across a range of industries, like manufacturing, life sciences,
communications, technology, and many others, there are even more
factors that can add to the complexity.
Trying to manage your product rules in an excel spreadsheet can, and
usually does, drive Sales, Sales Operations, Product Management and
even Engineering crazy. As you can imagine, when reps are trying to
manage a million SKUs, and hundreds of different product lines that all
change seasonally, there are some real pain points around configuration.
When you're managing your product, pricing, bundling, and channel
rules with real configuration, you dont have to worry about the
complexity of your business, or how often it changes, because its very
easy to make sure your business rules are automatically reflected in
every proposal or quote.
By making your business rules automatic, and enabling 100%
compliance for your sales team, not only do you reduce errors, but you
reduce the time spent in approvals because your teams quotes will be
close to perfect when they're submitted. If you add a business rule into
the system, your reps will have to follow it if they want to get their
quote approved. So with CPQ, its even easier to encourage Sales to do
what gets them paid.
Automated configuration will allow you to manage advanced pricing
strategies and maintain uniformed pricing rules across all deals and
product channels.




The Cost of Inaccurate
Quotes:
Sales quotes products
that cant be built
Errors in contracts,
invoices, and orders
Added costs from
refunds/returns
Slower sales cycles
Bundles are
quoted/shipped with
missing elements
It takes too long to
monetize new products

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Capturing Maximum Value with Intelligent Pricing
In terms of product configuration, one of the most complicated aspects that you need to define in your
business rules is pricing.



In the CPQ world, pricing refers to the set of rules that tells sales how they can price a deal, offer creative
incentives, and what approvals should kick in when they go outside the preferred price parameters.
The perfect price for a product is influenced by market demand, competitive pressures, your business
strategy, your position in the sales cycle, and your necessary margins. But pricing is also influenced by a
whole set of variables that are constantly in-flux, so even if you come up with the perfect price today, if you
dont have the flexibility to make frequentbut controlledchanges to your pricing if needed, your pricing
strategy will fall short.
Typically, if you see a drop in margins, it is usually tied to pricing. Whether its rogue discounting, or
inconsistent pricing across channels, little mistakes can amount to big costs.
Pricing as a Strategic Advantage
When pricing is a strategic initiative, and youre looking at things like market
conditions, prospect and buyer demographics, close rates, geography-based
factors, and pricing history, you can get some incredible insights that enable you
to offer smarter discounts and price points based on what works, and avoid
making mistakes that cut into your margins.
The first rule is, one-size-fits-all pricing rarely works, especially if your business
is spread across geographies, or leverages a variety of channels. At its core,
pricing strategy is about making informed, data-driven decisions to effectively
manage behavior, whether its the market, the customers, or your own sales
reps.
For example, if you notice that smaller customers spend more when they perceive a lower per-unit cost, while
enterprise organizations spend more on hardware if the services are discounted, you might decide to target
smaller customers with volume pricing and offer discounted services to the enterprise.
Pricing is the MOST immediate way you can impact revenue and margins.
If you are selling without a pricing strategy, you are undoubtedly leaving
money on the table.

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Maybe you have excellent renewal rates, so you offer a subscription with a cheaper first year fee. In both
those scenarios, youre encouraging your buyers to do the things that make sense for your business.
How to Influence Buyer Behavior with Smart Pricing
Promotions
Promotions are probably the easiest way you can influence customer
behavior. Weve all been enticed at one point or another by a Buy
one, get one free offer. In fact, promotions are what most companies
turn to when they try to use price to control a deal. But promotions
shouldnt ever be haphazardly offered. They should always be created
with a clear idea of whose behavior you want to modify.
Is it buy one get one free because you need to move more
inventory?
Is it an extra 3% discount for paying under 30 days because
you need cash in the bank?
Is it 25% discount on service with 50 seats because you want
to encourage larger deals?
Figure out what you want then customer to do first, and then build
your promotion around that.
Volume Discounts
Volume pricing is another way you can influence behavior, and this is
an extremely compelling lever to pull for high volume manufacturing,
where the cost of selling one additional unit is very low. Or say youre
selling a license key for a piece of software or another virtual giftit
doesnt cost you a thing to get someone to buy more. Not only are you
getting the customer to buy more, but you're actually more profitable!
Geography-Based Pricing
And then of course there's geography-based pricing. You might do this to mitigate exchange rates, or you
might do this because you know the market in one area will bear a much higher price. For instance, the cost
of living in Fresno or Sacramento is drastically different than the cost of living in New York City or San
Francisco. If you want to take advantage of the ability to price for a specific geography, youll need a flexible
mechanism for pricing.



Things You Must Consider:
Real Cost
Customer Demand
Competitive Prices
Business Strategy
Business Cycle
Market Demographics
Other Pricing Techniques:
Subscription Pricing
Contract-Based Pricing
Usage-Based Pricing
Ramp Pricing
Flat Fee
Channel Pricing

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Bundling
Bundles are another way you can make a significant impact on revenue and margins with fairly little effort.
They enable you to increase your sales and still give your customer a great deal. For instance, you can sell a
laptop for $1,500. But if you sell it as a part of a bundle (the laptop + an external hard drive, mouse and key
board) for $1,800 you might see an uptick in sales for your ancillary items and increased revenues.
Lets say it actually cost the customer $2,000 to buy all the items separately. Your customer perceives they
saved $200. But you dont take a $200 hit; you actually just got $300 more than what you would have if you
hadnt offered this bundle.
The rule of thumb with bundles is this: As long as your bundle covers your product costs and gives you a
margin, youll increase your revenue. Its a lot easier for a
consumer to buy just what they want, but entice them with
savings and youll see how much more they will spend with you.

How to Make Quoting Easy with CPQ
If you have centralized up-to-date product and pricing information,
and enforceable discounting rules, the quote should be the easiest
part of the CPQ equation.

The quote is really the first chance you have to make a good
impression on the customer. If a customer asks you for a quote,
and you can deliver an accurate and professional document within
their time frame, youve just indicated that you are easy to do
business with.
Another point to consider is that often, the company that first
delivers the quote has the advantage in the negotiation. By the
time the competition has responded, youre already moving down
the negotiation path and its hard to catch up.
Like pricing, there's a lot of opportunity in quotes, but there's also a
lot of risk. Quotes are often a subject of pain, frustration, and
conflict. For example, one high-tech manufacturing firm took weeks
to respond to a quote, because manufacturing, services,
engineering, and delivery partners all had to get involved. Because
The Value of
Effective Quoting


Make a positive first
impression!

Get the first mover
advantage

Set the starting point
for negotiation

Get the customer to
commit






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there was no standard process around quoting, everything had to be manually approved by 7 different
stakeholders spread across the globe. In a scenario like this, while you are going around in circles trying to
collect approvals, your competitors will be closing the deal.
Quoting is a Battle of Speed and Accuracy
When quoting becomes a problem, its usually because the quotes aren't getting to the customer fast enough,
or the quotes are full of errors.
When it comes to speed, your goals should be, to deliver within
the timeline expectations of the customer, and to beat your
opponent. Slow quotes are caused by a number of factors,
starting with poor product knowledge on the sales side. When
reps have difficulty finding the product and pricing information
they need, quotes stall.
Another problem is caused by accessibility. Do reps need to be in front of their computer or in the office to
put together a quote? If there are about to get on a plane, or are driving down highway 101, or on a
networking retreat on a tropical island with no signal can they get the information they need to create quotes
on the fly, and then sync the quote when theyre back online? If so, thats huge efficiency gains.
Poor Product Knowledge + Accessibility Challenges + Unorganized Approvals
= SLOW QUOTES
On the flip side, it doesnt help to be fast if the quote is wrong or incomplete. Plus, if you dont make it easy
for prospects to see what they're paying for, or if you dont send a formal proposal and just bounce product
and pricing info through emails, this can cause problems too. When the space is extremely competitive, and
all the players have strong products, sometimes it comes down to little mistakes that are the difference
between winning and losing.
Even if errors arent a deal breaker and the customer still buys, errors in your quotes lead to a whole string of
problems you dont have the time to deal withproblems like incorrect products being ordered, returns, and
lots of unhappy customers.





Quoting errors are like
resume errors if youve
got them, dont be surprised
when you dont get the job!


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Why Quotes and Contracts Need to Connect
Finally, one of the biggest hiccups in quoting is that quotes are detached from the contract or in some
cases, from the order management system. Whats the value of having an accurate, speedy quote, if you just
run into bottlenecks when its time to make it official? Or if you have to copy all of the quote information
manually into a new system, you re-expose yourself to errors, and lose all of the accuracy provided by your
CPQ solution.
If it takes weeks to negotiate terms and conditions and get a signed contract, youve nullified many of the
advantages of a CPQ solution. Instead you need to have a quote flow seamlessly into a contract, so you can
close deals and get them on the books as fast as possible.
Dont let the contracting process bottleneck your quotes. Implement your CPQ capabilities within a full Quote-
to-Cash solution that will link all of your critical business processes end-to-end. Here are some of the real
business values of an automated CPQ suite.

The ROI of Configure Price Quote

105% larger deal size
49% higher proposal volume
28% shorter sales cycle
26% more reps achieving quota
17% higher lead to conversion rate


What Apttus customers have experienced:
30% deal size increase for new deals
20% increase in renewal contract value
25% reduction in rogue discounting
80% faster time to quote
80% faster contract process




Data acquired from Aberdeen Groups
Breaking the Laws of Physics:
Shortening the Last Mile through
Workflow Automation by Peter Ostrow
(April 2013)

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Apttus CPQ Case Study: Full article: http://customerthink.com/cpq_advance_pipelines_with_apttus/











From Customer Think, CPQ: Advance Pipelines With Apttus by Adam Honig

Summary

CPQ helps you bridge the gap between your front and back-end systems, elevates the accuracy of your
quotes, and keeps approving, bundling, and discounting up-to-date. CPQ picks up where CRM leaves off by
making all of the complex product, pricing, and business rules that captured in your CRM tool centralized,
automatic and available in real-time. With CPQ, your reps and partners are more efficient, more effective, and
have the tools they need to move the deal along, get the quote approved, and get to a signed contract.

CPQ allows you to manage multi-channel strategy, capture maximum value with intelligent pricing, guide
selling, eliminate rogue discounting, connect goods to customers with advanced sales configuration, and
accelerate your quoting process without sacrificing accuracy. Configure Price Quote is a key component of the
Quote-to-Cash process.

About Quote-to-Cash

Quote-to-Cash is the vital business process that connects a customers interest in a purchase to the
realization of revenue. It includes creating a quote, responding to RFXs, submitting a proposal, negotiating
and managing a contract, fulfilling orders, recognizing revenue, ensuring compliance and tracking payments
all within visible and controlled workflow. Quote-to-Cash solutions include Configure-Price-Quote (CPQ),
Contract Lifecycle Management (CLM), and Revenue Management applications.

Quote-to-Cash is the single link between top-line results, bottom-line results and customer satisfaction. No
other process is as critical for maximizing the value of capturing revenue in a profitable way as well as
meeting the needs of customer sales requests. This process relies on the collective intelligence of the
enterprise. The impact of accurate quotes, proposals, contracts and orders make the flow of all data and
processes within an enterprise work smoothly, thus creating value for enterprises and their customers.
In the past few years, however, a number of software application vendors that specialize
in automating configure, price and quote (CPQ) processes have emerged. One such
vendor is Apttus, whose product is built on a modern, cloud-based platform that makes
an excellent choice for businesses that want to tap CPQ capabilities.
[]
In short, using manual processes to handle configuration, pricing and quoting is wasteful
and expensive, and thats what tools such as Apttus are focused on addressing. Using
CPQ also helps businesses tame product or bundle proliferation, in part by letting
salespeople create unique combinations of products or services for any given customer.