CPQ: A need for speed

Have you aligned your sales process with the way customers are now buying?

Web enabled orders have been replacing the traditional customer order tools including fax, postal mail, and phone, and this trend is expected to grow over time.

  • Gartner has observed that companies automating the configure, price, and quote process view it as a strategic priority, and can expect to grow sales by 10 percent. Even a modest improvement in the perfect order rate can increase customer or partner satisfaction, increase repeat business, decrease expedites, and shrink quote-to-cash cycles. Not only are the results easy to track, but the benefits appeal to sales, marketing, finance, customer service, and most importantly, customers.

CPQ: A need for speed

Speed is no longer a competitive advantage…it’s table stakes. Consistent with the movement to the cloud, more and more companies are realizing the “need for speed.” Successful organizations still need to figure out how to automate growth and scale without adding manual processes. The more automated a business becomes, the more they can focus resources more strategically, and enable executives to manage by exception.

This concept is particularly important when it comes to issuing quotes and proposals, responding to customer requests, and putting together a deal. If you are building quotes manually, take a week to approve an order, or miss renewing (or ending) a contract, there’s no way you’ll keep up with the competition.

Companies must eliminate inefficiencies throughout the inquiry-to-order (ITO) process to remain agile and competitive in today’s economy, but before improvements can take place, they have to understand where the inefficiencies exist; in evaluating existing processes for improvement, consider the following potential objectives and value-based benefits of a streamlined sales process:

  • Sales representatives and distributors instantly generate quotes online in the field, without support from the sales and engineering teams.
  • Every quote is generated at least 50 percent faster and with 100 percent accuracy, and quotes are converted to orders with one click.
  • Orders are submitted online and flow “hands-off” from customers or channels to the enterprise system and production environment, with no intervention.
  • Quotation costs drop 20 to 70 percent, order entry costs drop 50 to 80 percent, and fulfillment cycle times improve at least 50 percent.
  • More than 80 percent of customer service inquiries are resolved quickly through self-service over the web.
  • Up to 75 percent of printing and distribution costs for catalogs, technical bulletins, and price sheets are eliminated.

A streamlined sales process begins with the salesperson, distributor, or customers themselves selecting the best product fit, configuring the total solution, and generating an accurate price quote. Technology can be used to automatically generate a detailed proposal, with little work from the salesperson. The sales data should seamlessly feed into the order and fulfillment system, and ultimately into a reporting system for visibility across the organization.

What you do not measure, you cannot improve.

Managing process improvements can be frustrating for suppliers of complex products or services, as well as for companies with large, complex sales and distribution channels, but any inefficiency at the front end of the business process, during the sales and quoting cycle, has a direct impact on the customer experience and can resonate across the entire organization, affecting quality, customer service levels, profit margins, and profitability.

Understanding how information systems support the value stream is critical, because the limitations of the current systems often cause substantial waste, duplicate data entry, redundant work steps, and so on.

The most Significant KPIs of a successful ITO transformation include the following:

  • Reduced lead and cycle times: With a single cohesive system, sales personnel, distributors, and value-added resellers can quickly create consistent, accurate, and cost-effective proposals, complete with supporting documentation and graphics, and accurate pricing. By granting 24/7 access and providing complete guided selling information, companies can reduce ITO cycle times by 50 to 100 percent and eliminate one to four days from the order-to-shipment cycle.
  • Mistake-proof quoting and pricing: With the configuration logic, pricing rules, and workflow, quote and order errors can be eliminated. This can result in 100 percent clean orders and the elimination of 80 to 90 percent of credit memos caused by pricing errors.
  • Faster customer response time: With all required data, including historical order information, available via a web – based portal, sales personnel can respond to customer queries in seconds or minutes, rather than hours or days.
  • Higher fulfillment rates: Technology-enabled automation results in quoting efficiency and fast order processing—from order to production—leading to higher throughput of finished goods.
  • Margin improvements: Standardizing, automating, and synchronizing front-end processes can reduce selling, general, and administrative expenses by 10 to 20 percent. This typically reduces operating costs by 1 to 5 percent of revenue and boosts operating profit by 30 to 50 percent. Margin improvements are typically achieved through faster and more accurate quote generation, automated order entry with no errors, decreased need for sales engineering support, and fewer demands on customer service resources.
  • Revenue growth: Automating quote follow-up and improving quote management through accurate real-time reports can increase quote conversion (hit rates) by several percent. Improved price control, up-sell, and cross-sell capabilities can increase average order value by 10 percent.

Sales optimization is a process of continuous improvement; optimizing operations across the enterprise, including critical customer-facing sales processes, makes good business sense in both the short and long term.

Challenged to increase earnings in difficult economic times, companies cannot rely on the market alone to drive growth. Many businesses are turning to mergers and acquisitions, global outsourcing, and penetration into high-growth global markets such as China and Eastern Europe. Depending on a company’s size and market position, these growth strategies can be costly and their outcome uncertain. Optimizing and streamlining the sales process, however, presents a more cost-effective, less risky opportunity to drive out bottom-line costs and pave the way for organic top-line growth.

Here is a link to read the full white-paper, “Aligning Your Sales Process to Increase Speed, Accuracy, and Revenue.”


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