Understanding CPQ Meaning: A Guide for Modern Businesses

If you are looking for the right solution for your own business and want to digitally map the products you offer, you will quickly turn to CPQ software. This is an essential option for companies that provide customized, multi-variant items. Thanks to this innovative sales solution, quotations can be created automatically. Every customer receives their desired product much faster than before. Errors occur less frequently. Products are described precisely thanks to the clear set of rules.

The abbreviation CPQ stands for 3 terms (Configure, Price, Quote) and describes the most important steps in the sales process chain. They can be run through using CPQ software. The software enables the configuration of complex articles. They are priced immediately. The corresponding quotations are then sent out. This is a significant advantage for retailers who are looking for new ways to implement products quickly and accurately.

Thanks to this tool, business is positively influenced. As the quotation creation process is accelerated, customer confidence and satisfaction increases. They visit the webshop again and again, which leads to an increase in sales.

In this article, we explain what is CPQ and the importance of it for companies and customers in more detail. You will learn more about the areas of application and possibilities of CPQ systems, their advantages and disadvantages.

Benefits of CPQ systems

Since quote generation is quite a laborious and time-consuming process, CPQ software solutions is truly a lifesaver for online retailers. Creating quotes for complex products with numerous customization options requires more time. It is more difficult to configure the existing products. That's why it pays to use CPQ systems.

This allows the sales team to respond to individual customer requests. In this way, everyone receives an offer tailored to their wishes. CPQ has a positive effect on both customers and companies. Let's look at the advantages of this software from both perspectives.

For companies

• Increased efficiency: The processes involved in preparing quotations are automated through the use of CPQ systems. This makes it possible to reduce the time required for configuration and ordering. The training time for sales staff is reduced. Work in the company becomes more effective and customer loyalty is improved.
• Error reduction: Errors occur more frequently when filling out forms manually. Since this software knows certain rules and dependencies well, errors can be avoided when configuring and creating quotes. When Configure Price Quote systems are used, the latest information about products is used. This avoids unwanted conflict situations and returns.
• Margin improvement: The pricing models of companies are intelligently designed. Dynamic price adjustments are made on the basis of current market conditions, volumes and combinations. This can increase company profits.
• Scalability: The easy integration of products and services into the CPQ system offers companies flexibility and agility. As the portfolio expands with new items and the range of customers, the company can easily scale.

For customers

• Short response times: As quotes are generated immediately and inquiries are processed quickly, waiting times are significantly reduced. Customers benefit from this and ultimately remain satisfied. This increases the chances of a successful sale.
• Transparent pricing and options: Thanks to CPQ systems, prices and several options on offer are clearly displayed. When selection criteria are changed, customers can immediately see how prices are affected. Then the feeling of reliability appears.
• Self-service option: With the help of powerful Configure Price Quote systems, you can individualize products and services yourself. They can deal with the items, which leads to an increase in customer loyalty.
• Stability and reliability: CPQ software is used to create accurate quotes. Customers can be sure that their requirements will be taken into account. This contributes to a lasting customer relationship.

Disadvantages of CPQ systems

In the beginning, it is difficult to get to grips with the new tool. That's why employees try to distance themselves from it. If they are already familiar with the software, they will no longer do without it. On the whole, the CPQ software has only positive effects. However, there can be some difficulties at work:

• Depending on the product portfolio, the introduction of the CPQ system may require more effort. Once you understand how to use it, everything becomes clear. The support of an experienced expert, e.g. a full-service e-commerce agency, during the CPQ project is always recommended.
• The data used by the CPQ solution should be up-to-date, verifiable and accurate. If they are not, prices will be overstated or delivery times inaccurate when quoting.
• When switching from manually filling out templates or working in spreadsheets to the integrated CPQ system, the team may encounter obstacles. The transition can be overwhelming for them.
• Not all customers fully understand the CPQ meaning. They don't use the software to its full potential. Sometimes the offering is not customized with additional products and new services because the team has not considered current information.
• Human error creeps into the CPQ process. Sometimes delivery or shipping costs cannot be included.
• Customers lose the opportunity to clarify details of the quotation process with the seller. Lively communication no longer exists.

Areas of implementing for Configure Price Quote systems

You already know what is CPQ-system and now we will explain you how it can be used in different areas. It can be used in different areas. CPQ is particularly necessary for suppliers of complex, configurable products that are combined from various individual components. These include medical technology, mechanical engineering, telecommunications, construction products, software development and much more. When it comes to articles or services with specific customer requirements, the CPQ solution is a real helper.

CPQ software is used in the B2B and B2C sectors to support sales and satisfy customers' needs in terms of specific options and prices. When CPQ is used in the insurance industry, the offer is created taking into account individual risks and wishes. For online retailers, it is important to configure the desired items according to the selected criteria and calculate the prices immediately.

Due to the high demand for customized products, the number of variants is increasing. To manage this, items are modularized, which leads to a reduction in internal diversity. By using CPQ systems, standardized assemblies are combined with customer-specific product variants. This is the basis for CPQ.