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How CPQ can make the complex contract cycle simple

Aug 27, 2018 | Admin, High Tech Page 3, Latest News, Salesforce CPQ

By now, you probably know that CPQ increases sales productivity by 33%. In my almost 20 years working to implement CPQ with many different companies, I’ve noticed that an underrated action that is a major part of increasing sales productivity is the contract process, especially for a SaaS company.

As the SaaS business model took off, recurring revenue became more and more important, and the need to track data specific to such revenue stream became even more critical. Not only do you need to track the period of time during which your clients are entitled to receive the service, but you need to make sure these clients will renew their purchase at the end of such period.

This is where the contracting process becomes so important. Your transactions are no longer an isolated event. They have a life of their own, and you need automation to trigger the renewal process at the right time and quoted at the right price.

I’m going to walk through the contract portion of the CPQ process to illustrate what happens after your quote is accepted, as well as some advanced tactics and best practices for Salesforce CPQ, especially for the SaaS business model. I’ll cover the four major phases of the contract lifecycle in the CPQ process, namely, create the installed base, generate the renewal opportunity, create add-on quotes, and process the renewal.


1. Create the installed base

This first step consists in creating asset records (an object created by Salesforce) on the quoted account for each non-subscription product or service purchased by the end customer. You can actually control whether such asset records should be created on a product per product basis. For example, some companies do want asset records for their perpetual software license, but not for the training classes they have sold. At the same time, Salesforce CPQ will create subscription records for each recurring product purchased by the end client. These subscriptions are linked to a contract record, which acts as a wrapper around the subscriptions. This entire process is triggered by selecting a checkbox on the opportunity, which allows you to automate it with a simple workflow rule that could, for example, execute when you close/win the opportunity.


2. Generate the renewal opportunity

Generating the renewal opportunity applies to subscription products because you want to renew those subscriptions. Once you activate the contract in Salesforce, you should have a renewal opportunity that is expected to close on the contract end date. The revenue represents the recurring revenue you expect to receive from the subscriptions you sold in the context of that contract, assuming that your client will renew everything. Because the creation of the renewal opportunity is triggered by selecting a contract on the checkbox, it is considered best practice to automate this part of the process with a simple workflow rule. The renewal opportunity will be populated with opportunity products corresponding to the subscriptions, and the renewal opportunity will be priced by CPQ in respect of all the pricing logic you have implemented in your CPQ solution.


3. Create add-on quotes as needed

During the term of the contract, your client will (hopefully) call you for additional products and services. This is the amendment process in Salesforce CPQ. Salesforce CPQ automates the creation of the amendment quotes from the installed base data stored in assets and subscriptions. Your sales reps only need to modify the quote by increasing or decreasing quantity of existing products or add net-new products altogether. When the amendment quote is contracted, new subscriptions will be attached to the existing contract, and the renewal opportunity will be automatically updated to reflect the changes in the contract. Your pipeline and forecast remain accurate at all times. Of course, you can repeat this amendment process as many times as you want during the contract term. This out-of-the-box automation is a significant time saver for your sales team since it’s a no-touch process.


4. Process the renewal cycle

Shortly before the end of the contract term, you will call your customer and make sure they will renew their services. This is an ideal opportunity to try to upsell them as well. You already have a renewal opportunity, but what you need now is a renewal quote. There again, Salesforce CPQ can automate the process of creating the renewal quote by selecting a simple checkbox on the contract record. Most companies automate this process with a workflow rule triggering 30 or 60 days before the contract end date. The system-generated renewal quote will contain everything CPQ needs to correctly price all the renewable items in the contract, saving significant time for the sales rep. Indeed, they only have to propose potential upsells or modify quantities on existing subscriptions.


Once you’ve renewed with your customer, the entire contract cycle starts all over again. The closer your current processes are to this contract lifecycle model, the more you will be able to automate the entire process. The productivity gains you can expect from this automation can be significant. You also get invaluable peace of mind, knowing that the system controls all the repetitive aspects of the process—consistently and without errors. Your sales reps can now really focus on selling more and providing additional value to your customers.


To tap into our many years of experience with Salesforce CPQ, contact Simplus today.


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Gilles Muys
Gilles Muys
Vice President of Customer Solutions at | + posts

Gilles Muys is VP of Customer Solutions at Simplus and an experienced executive. He knows CPQ across various industries, has extensive startup experience, and was one of the first three SteelBrick employees. Gilles is the only Salesforce CPQ Black Belt in the world.