Not long ago, a manager at a medium-sized manufacturing company asked me the following: “Say, Mr Moran, why is that software of yours so expensive? All you do is copy it onto a disc for me, surely that costs next to nothing, doesn’t it?” Well actually, it takes considerable investment to develop, maintain, and manage software. Many books have been written about it.
CPQ (Configure, Price, Quote) is a term often used to denote the sales quote generation process at companies offering a complex range of products and/or services. Other terms that are used in this same context are ‘Quote to Cash’ (QTC) and ‘sales configurator.’
This is something you’ll have experienced! You work on a quotation with several colleagues from different departments for days on end, only to call the interested party and learn that the order had already been placed days earlier. Your quotation was simply too late.
Guided Selling is a process that assists a potential buyer in the selection of a product or service, or a combination of both, that meets their functional needs. The software that supports this process functions as a guide to help sales staff direct the customer through the often complex selection and configuration process, ultimately to a purchase.
Over the past few weeks, I’ve had many discussions with companies involved in (special-purpose) machinery manufacture. Although the markets and products were slightly different, there were similar challenges when submitting quotations: customer requirements are often too individual and multifaceted to be met by standard products. This realisation forces the companies into a conflict of objectives involving quotation quality and deadline pressure.
The Excel spreadsheet lurks around every corner of your sales quotation process.
It’s big, it grows rapidly and, beyond a certain complexity, it also presents its unruly side at the expense of the productivity of your sales unit.
Your team has built it up for years and fed it with data, making its replacement or the use of other methods very difficult.
A quotation is the way to answer a customer's questions. Obviously, a customer wants to minimise any risks involved in making a purchase. That applies even more in the case of a customised product or service, such as software-based solutions or machinery. The customer will then have a number of concerns:
Up till now in my professional career, I’ve had the opportunity to work with many interesting companies and industries, for which I am very grateful. Over the years, however, I’ve found that my sales and project management successes are increasingly driven by modern work processes and digital tools which, as an employee, I cannot always influence. For example, I more or less had to learn that companies can lose sales potential and jeopardise market share by taking wrong decisions and investing in processes late.
Have you seen the diagrams illustrating the actual size of an iceberg? Most of it is hidden below the water. Misjudgements can then be catastrophic - as we all know since watching the film about the Titanic or learning about the misfortune involved in the original event. In the following discussion, I would like to clarify the reason why I see parallels to quotation preparation in this respect.
The solution used as a link between customers, sales and production is called CPQ (Configure Price Quote). Particularly in mechanical and plant engineering, this solution makes it possible to digitally map the business processes, substantially shorten the quotation process, and create ‘clean orders’ by means of error-free configurations.
An oft-heard misunderstanding is that Configure To Order (CTO) leads to a less diverse range of products on the market than Engineering To Order (ETO). The truth is quite the contrary: CTO leads to less internal diversity – fewer different article flows, fewer different engineering activities, and therefore lower costs and shorter delivery times – but to more external diversity. That has everything to do with the working of the human mind; in this case, the mind of sales.