The manufacturing industry is currently on a financial rebound from a nearly 15% drop in revenue last year. To continue this upward trend and significantly increase revenue, shortening sales cycles is key.

This puts pressure on all internal teams, but especially sales reps who are on the frontline facing off against quotas and revenue forecasts. Without the right processes and technology in place to support them, this added pressure can lead to mistakes, inconsistencies, and bottlenecks in the opportunity-quote-order process.

Consider a sales team responsible for supporting tens or even hundreds of opportunities at a time. If the team is using outdated configure, price, quote (CPQ) processes, a sales rep’s first step is to configure a list of products to solve their potential customer’s needs.

Then, they’ll consult a price book to determine the pricing for each product. They’ll add the products and prices to a spreadsheet, and if they know of any discounts, they’ll add those in as well. Depending on the overall price, they might have to send the quote to a manager for approval. 

If the quote is approved, then the sales representative can put it into a quote template and finally send it over to the customer. Doing this for multiple opportunities, especially if the company supplies thousands of SKUs, is not only time-consuming — it can be difficult to keep track of and can even lead to quoting errors. Having to correct those errors results in even more lost time and, potentially, even lost revenue.

Here’s the good news: A modern CPQ solution makes this manual process obsolete. It sets off a chain reaction of processes that takes advantage of automation and real-time capabilities. Quotes are generated more quickly and require fewer internal approvals; the customer receives an accurate quote that they then need less time to approve, and the deal cycle is shortened, leading to increased revenue.

Outdates vs new CPQ solution

5 business challenges salespeople face with quoting and pricing

When challenges hinder the sales team, they impact the manufacturer’s overall revenue. Solving those challenges quickly can make the difference between meeting and falling below revenue targets.

Here are the main challenges that hold back manufacturers that are still using outdated CPQ technology and processes.

 

Challenge #1: Pricing calculation errors

Pricing errors in customer quotes not only takes up time, but they can also result in lost revenue if the errors are customer-facing. When teams are burdened with manual processes like generating quotes with spreadsheets, several factors may lead to incorrect quotes, such as:

 

Challenge #2: An unrealistic and unreliable process

Without the help of modern CPQ solutions, sales representatives often have to memorize product specifications and catalogue information—that is, if they want to be able to create configurations and quotes quickly when an opportunity arises for upselling or cross-selling products. For new sales representatives, this adds to the amount of information they need to know and retain to get started.

If new team members are relying solely on their memory, there’s also a chance that they’ll provide inaccurate information to a customer, an error that will need to be corrected later. This can damage trust, and even diminish customer retention.

 

Challenge #3: Lack of collaborative tools

Quote generation is not a one-person show. It requires collaboration between people from multiple teams to support better data management and consistent customer-facing documentation. 

This results in a smoother customer experience, which is critical for successful B2B sales. Data shared by a team from CEB (now part of Gartner) in Harvard Business Review stated that suppliers with easier buying processes are 62% more likely than other suppliers to win a high-quality sale.

Integration between CPQ systems and CRMs is especially important for keeping up-to-date records. So is integration with other systems like ERPs, which support the creation of required agreements such as MSAs and NDAs.

Teams that lack this integration have to deal with scattered and duplicated records for opportunities, leads, and customers. This makes it more difficult not only to produce quotes with accurate customer data, but also create and manage contracts, invoices, and proposals.

 

Challenge #4: Limited bandwidth for sales teams

To achieve significant financial growth, businesses have to be able to increase revenue without adding to the workload of their sales teams. 

However, sales representatives find it a struggle to meet their goals. According to research from Sales Insights Labs, only 24.3% of sales reps exceeded their quotas in 2019. 

While working to meet quotas, the sales teams often find themselves loaded with tasks and hard-pressed for time. For instance, data from Gartner shows that it takes 18 dials to reach a buyer. Considering that a single member of the team could be working to reach dozens of buyers at a time, this leaves little time for other tasks the team needs to focus on to close deals—including preparing quotes.

As businesses grow product lines, SKUs, and configurations, sales teams using manual CPQ processes have even more admin tasks to manage to close deals—not to mention frustration and headaches. 

 

Challenge #5: Legal concerns and lack of compliance

While errors in manual CPQ processes can lead to lost revenue, they can also have another serious result: legal troubles. Pricing malpractice, which is when manufacturers charge customers different prices for the same products, can have legal ramifications if the mistakes are discovered.

Compliance with other legal, discounting, quoting, and pricing rules can also be difficult for internal teams to adhere to manually. This includes guidelines for internal security, such as making sure only certain internal parties have access to legal and other sensitive documents that must be stored securely.

Implementing a deal desk to support large and complex contracts is one way to handle compliance concerns and keep different departments (sales, legal, operations, etc) on the same page to progress deals quickly. However, when old technology is being used to manage quoting, this process can have the opposite effect. Instead of quickly turning around quotes and closing deals, teams can end up passing spreadsheets back and forth and using outdated information as the basis for providing internal approvals.

Without the proper technology to guarantee industry regulations are followed, organizations put themselves and their employees at the risk of stepping afoul of the law.

A 3-Step Roadmap for Implementing a Modern CPQ

A 2020 McKinsey & Company report focused on how sales automation can reduce business costs and free up the organization’s time from admin tasks. In the report, they found that more than 40% of the configuration, pricing, and quotation activities within a business can be automated.

The role of modern CPQ solutions is to replace manual processes with automated ones to give the sales team more time in their day for revenue-generating activities. These solutions let organizations set up rules for calculations and automate the creation of accurate and consistent template-based quotes in real-time.

Lastly, these tools unify the different departments involved in proposals, quoting, invoicing, and contracts so that customer records are consistent and always up-to-date. 

The benefits are undeniable, but implementing a new CPQ system is a big investment, both financially and time-wise. Following an implementation roadmap makes the process less stressful for teams.

 

Step 1: Understand the “why” behind your implementation

Start by identifying what you want to accomplish with the new system. Although there are a lot of benefits to implementing a new system, not all of them will be top priority for your business. 

Consider the problems your team regularly faces. If calculation errors in quotes are the biggest concern, then reducing the number of errors that make it into quotes should be a goal for your implementation. If generating quotes takes so long that you miss out on responding to RFPs and RFQs, then shortening the quote generation process should be your primary goal. If you’re noticing a high volume of orders but small order sizes, then increasing the average order size can be a goal for your business. 

Identify one to two primary goals and two to three secondary goals based on the challenges in your CPQ process. Then, determine the KPIs you’ll need to track as you work to reach them.

Step 2: Match your new CPQ solution to your current processes

To implement a new CPQ solution, you’ll need to know everything about your current sales workflows and pricing information. Take some time to locate or document the following:

Once you’ve located this information, you can configure your CPQ solution to match these processes and see which ones can be automated. Your CPQ provider’s support team will likely be there to guide you through the process.

 

Step 3: Initiate your new system and monitor performance

Once your system is set up, you’ll need to:

Test the system to make sure it is working properly.

Train internal teams to use it. Partners of the CPQ vendor can provide support and resources to help with this.

Make sure the teams know the points of contact in the partner and vendor teams to address any roadblocks they may run into.

Once this is done, you’re ready to start using your new system and tracking the performance of the goals you set at the start of implementation. Depending on your team’s objectives, you may decide to track:

4 signs it’s time to implement a new CPQ solution

Now that you know how to implement a CPQ solution and how it will benefit your business, when should you make the switch from legacy products and processes? 

If your organization isn’t using a modern CPQ solution, here are a few signs that it’s time to get started:

Time management: Your sales team spends too much time on data entry or other administrative tasks related to quote generation and creating other documents like contracts and invoices. That time can be better spent talking to leads or existing customers to make sales.

Inaccuracies: Your quotes often have errors in parameters such as pricing, or a significant amount of time is spent correcting such mistakes.

Silos: Frequent disconnect or miscommunication between sales, finance, and legal teams on customer records and sales-related next steps, indicating it’s time for those teams to work from a unified platform.

Scaling: If the organization has plans to expand, including increasing the available product lines and SKUs, then it’s time to implement a modern CPQ solution. A solution that helps sales teams quickly configure and send quotes is a necessity in a high-growth environment. Instead of manually building quotes and performing admin tasks like obtaining approvals and securing signatures, the team will be free to prioritize efforts like lead generation and client meetings—which are priorities for scaling businesses.