What is CPQ (configure, price, quote) software?
Peter Willemse: CPQ software, also known as guided selling software or a product configurator, helps organizations to generate quotes and orders quickly and accurately for complex and configurable products and services. CPQ enables streamlining of sales cycles, making them more efficient, productive, and more successful.
What are some of the challenges that sales teams for medical device manufacturers deal with?
Willemse: Sales teams in this industry are facing some common challenges we see across the board with all of our customers. We can put the challenges these sales teams face into three categories.
First, our customers try to drive the cost of sales down. They need to reduce the time spent per quote, the number of colleagues involved to create quotes, reduce errors on quotes that will require rework both within the sales teams, as well as creating great-looking documents in a short timeframe. Changes in the operation while fulfilling orders because of faulty quotes are a common thing customers struggle with. Also, the time to process quotes after the customer commits is a key area where our customers want to improve.
Second, they want to increase revenue. This includes the volume of sales, as well as the margin per sale. A sales cycle takes longer than they want to because the information is spread around the organization and products and services carry a lot of complexity to quote. Changes to products being offered involve engineering colleagues and require different technical and commercial approvals that take time. Our customers also see an increasing need to provide an online quote and order environment, either for their B2B resellers, dealers, and business partners or by consolidating their supply chain and go direct with a B2C channel.
The third area where our customers face challenges is to reduce operational costs around sales and increase margins. Customers need to generate more margin per order, decrease the processing time of committed orders, the time needed for change requests, and providing insight into order status, to increase their margins and optimize their profitability.
How can CPQ software help sales teams for medical device manufacturers solve those challenges?
Willemse: CPQ software provides a solution to facilitate exactly this. Looking at the challenges related to the cost of sales, a CPQ solution provides a guided selling experience that will make sure the errors on quotes disappear. The sales teams get a solution that guides them through the questions they need to ask and assists them to get the right pricing to their customers in time, while they don’t have to distract colleagues to get answers, and don’t have to wait for feedback to complete their quotes. After they configure the products and services with all the choices they need to make, they can easily generate formatted documents to send to their customers in minutes. This reduces the time to market and time spent on a quote to the absolute minimum and drives the perceived quality of sales up.
Increased revenue can be facilitated too. First, by providing real-time insight into (and verifying) the margin, sales teams can make sure they only sell profitable orders. The detailed cost of the items or services offered is calculated in the background to prevent any assumptions around how much margin an order contains. With the guided selling experience, sales teams are ensured they go through all relevant options and choices to complete their quotes, without having to ask for the guidance of colleagues. Even customer customization requests can be handled digitally and followed up on to speed up the process of completing quotes.
To open new sales channels, CPQ solutions offer a so-called omnichannel experience. It doesn’t matter if the solution is used internally, in a shop, in a B2B dealer portal, or a B2C webshop, the solution behind it shows the same options, runs the same rules and applies the right pricing. Of course, based on the role, the information shown and the rules that apply can vary. A dealer will see its own assortment and dealer margins, and a B2C consumer might not see the margin on a quote where an internal sales rep will. Customers can follow up on the order status online, without having to call an internal sales department. For a best-in-class visual experience, the online solutions can be completed with a great visualization experience, where customers, for example, can see the customized product they just configured adjusting on the screen in 3D.
To reduce the cost of processing committed orders, CPQ software integrates both into the front office (CRM integration) as well as into the back office (ERP integration). Once a quote has been approved, orders go directly into the back office for processing, without any additional manual work. Orders, items, BOM’s, routes, projects, and contracts all can get created to immediately start to fulfill the orders. Because of the quality of the quotes, rework can be decreased resulting in less after-sale cost.
How beneficial is it for sales departments to implement CPQ software?
Willemse: CPQ solutions typically carry a high Return on Investment (ROI) [Can we link to our Experlogix_How-CPQ-Helps-Your-Sales-Team-Infographic.pdf file in our asset syndication program?]. Just as an example, reducing the time spent on a quote by 25% (a very conservative estimation) will allow a sales team to either sell more with the same team or spend an additional 25% of their time on generating more leads. We have seen organizations increase their bottom line from 15% up to even 50% because of better sales. Organizations that successfully launched new (online) sales channels have shown double-digit to even triple-digit growth year over year after putting CPQ solutions in place.