The typical engineer-to-order manufacturer produces a vast array of configurable products at a variety of price points.
For a salesperson, presenting such a sizeable mix of products can be immensely challenging. A significant amount of time and effort goes into coming up with a workable configuration, pricing everything out, and then putting together a compelling quote.
Fortunately, there is a more efficient and error-free way to sell and quote the many products you manufacture: a CPQ system. Read on to learn how a robust CPQ system operates and why your company should invest in one.
This article provides answers to the following questions:
What is a CPQ system?
How is CPQ used in manufacturing?
Why do engineer-to-order manufacturers benefit most from working with CPQ companies?
What is a CPQ System – and How is It Used in Manufacturing?
CPQ stands for Configure, Price, Quote, three essential phases in the sale of engineer-to-order products. A CPQ system is a piece of software that automates these three phases, letting sales reps configure customizable products for customers, price products as they're being configured, and then create a custom quote for the customer.
The sales process without CPQ implementation looks like this:
A sales rep helps customers choose from various product options (like size, color, construction, materials, and accessories.) The rep looks up each option in a catalog, writes down product codes on a quote form, makes quick sketches, and takes it back to the office to look up prices.
The sales rep then has to write up a formal quote or proposal for the customer. This task means tethering themselves to the computer for a prolonged period, during which they’re unavailable for active selling duties.
Creating a custom quote takes an average of 2.3 days. It can take considerably longer if the rep has to obtain prices from other departments, seek approvals, or run configurations past engineering. There's a risk of human error at every stage, and if a customer wants to renegotiate, the whole rigmarole starts over.
The sales process with CPQ implementation looks like this:
CPQ streamlines and automates the entire configure, price, quote process.
Instead of looking up options and features in a catalog, sales reps walk customers through an on-screen visual product configurator. Using the configurator, reps can scroll through available product options and drag and drop to configure colors, sizes, textures, parts, and more. As they make changes, a lifelike, interactive 3D product rendering updates in real-time.
As the rep helps the customer configure the product, the CPQ system dynamically calculates all associated prices, displaying them instantly on-screen. And when all this is done, the CPQ system automatically generates a detailed custom quote containing everything the customer needs to make a final decision – terms and conditions, delivery schedule, and more.
Once the customer agrees to the purchase or cuts a purchase order, the CPQ system sends detailed information about the configured product to your engineering and manufacturing departments. Highly accurate technical specs are sent to your CAD platform for prototyping or manufacturing, and production begins immediately.
Why Manufacturers Need Top CPQ Software
A CPQ system accelerates the entire engineer-to-order process, from sales to production. It eliminates the potential for human error, accelerates sales cycles, reduces labor costs, and results in higher conversion rates (40% higher for KBMax customers.)
Here are ten important reasons why your company should invest in CPQ:
CPQ Streamlines Your Sales Process
Putting CPQ software in the hands of your sales reps dramatically streamlines the sales process. It reduces time-to-order to mere minutes. Sales reps close more deals faster, giving them more time to pursue new customers. Customers appreciate getting to the ordering process immediately without waiting for days or even weeks to receive a quote.
CPQ Standardizes Pricing
Old-school selling often resulted in sales reps going "rogue" to create special pricing for customers. CPQ standardizes pricing, ensures that customers receive the best combination of bundles and discounts, and guarantees that every deal earns your company the maximum margin.
CPQ Eliminates Unrealistic Projects
Traditional sales methods often resulted in reps putting together product configurations that simply weren't realistic (sound good in theory but won't work in practice). Engineers had to make changes to designs, wasting everybody's time. Product rules coded into the backend of a robust CPQ system ensure every configuration is optimized for engineering efficiency. Users can only select options that are available and feasible.
CPQ Reduces Engineering Workload
You can integrate your CPQ system with CAD software to cut out much of the most menial, repetitive engineering work. A visual CPQ like KBMax generates CAD drawings automatically based on configuration specs. Engineers need only approve or tweak designs.
CPQ Enables the Production of Exciting New Products
Undoubtedly, you’ll sell combinations of products and features that you’ve never physically manufactured before. With a visual product configurator, you can show prospects lifelike 3D renderings of “hypothetical products,” massively extending product lines without investing in additional photography or prototypes.
CPQ Improves Accuracy and Reliability
By automating all aspects of the configuration, pricing, and quoting process (and a large chunk of the engineering process, too,) CPQ software virtually eliminates the possibility of human error.
CPQ Speeds Up Time to Manufacturing
With sales streamlined and tech specs automatically sent to engineering, the time to manufacturing is dramatically shortened. For example, KBMax’s manufacturing automation solution can cut the time-to-manufacturing to just 12-48 hours. There's less waste, and customers get their products that much faster.
CPQ Improves Customer Satisfaction
Customers appreciate seeing their designs on-screen before they place an order. It means less purchase anxiety, enhanced decision-making, and no surprises when products arrive. What’s more, they appreciate the rapid sales process, the faster lead time, and the ability to take ownership of the configuration process.
CPQ Increases Sales
Satisfied customers buy more – and more often. CPQ has been proven to increase order frequency and deal size.
CPQ Reduces Costs
Finally, by streamlining the entire process and reducing a significant amount of human labor, a CPQ system cuts cost significantly. Reducing errors also helps your bottom line while improving retention.
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