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Here are the main challenges that hold back manufacturers that are still using outdated CPQ technology and processes.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:
Multiple pricing models: The more pricing models a business uses, the higher the chance of using an incorrect model to calculate a customer quote.
Operating with several product lines and SKUs: Manufacturers with large product lines can have millions of possible configurations to offer. Each configuration will have several SKUs to account for within the quote, providing even more opportunity for error.
Managing complex discounting codes: Depending on memory to apply discounts can lead to underselling or missed discounts for customers. Calculating quotes manually can also mean that even if the discount rate is correct, the calculation is not.
Tax and currencies: The applicable tax and any needed conversions based on currency can vary based on the customer’s location and business classification. For manufacturers that operate globally, there’s a higher probability of applying the wrong tax percentages or making errors in conversions.
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.