13 Apr Revenue growth starts with CPQ—here’s why
Decades ago, companies could afford to go to market based on intuition and without needing to collect copious data. That era is long over. To remain competitive in the modern marketplace, every company needs a disciplined, data-driven strategy to develop its product lineup and then methodically track and analyze how customers respond. Building these capabilities requires help from robust, cloud-based solutions; indeed, the results for companies that invest in this technology consistently speak for themselves. Businesses that implement the industry-leading Salesforce platform, for example, experience a 28 percent increase in forecasting accuracy after investing in the platform, according to a 2021 Salesforce customer survey.
Increasingly, finance teams are recognizing that platforms like Salesforce are critical to transforming the entire quote-to-cash lifecycle in their organizations. With Salesforce’s Revenue Cloud solution (inclusive of CPQ—configure, price, quote), finance teams can eliminate many of the common pain points businesses face on their journey to stabilizing and growing revenue. Ultimately, CPQ transforms how organizations manage their entire sales lifecycle and the customer experience. Let’s explore five key ways that CPQ technology has become instrumental in supporting finance teams as they work to strategically manage the quote-to-cash lifecycle and achieve revenue stability and growth:
CPQ enables companies to reshape the customer experience
Every customer wants a smooth, frictionless buying experience, from receiving an initial quote to getting all of their questions answered to being billed correctly. Unfortunately, most companies’ quote-to-cash processes are riddled with bottlenecks, error-prone manual steps, and inaccessible customer data sets. CPQ streamlines and automates the entire quote-to-cash lifecycle: Sales teams can use user-friendly tools to generate quotes accurately and rapidly. Customers can get their questions answered and billed correctly. Moreover, CPQ constantly analyzes customer data and can recommend cross-sell and upsell opportunities to sales teams in real-time, further extending customers’ lifetime value. The end result is a seamless customer buying experience that engenders loyalty and repeat business.
CPQ guards against non-strategic, counterproductive sales activities
Most companies sell products via custom-packaged bundles or use complex pricing structures, including discounts. Consequently, they cannot control how their sales team puts together quotes: Sales reps over-discount, push items that aren’t a strategic company priority to sell, and offer contract terms that are out of line with the company’s guidelines. Ultimately, the company loses money on many of these deals. CPQ puts guide rails on every sale, preventing sales teams from structuring quotes and contracts however they choose, and automatically populates appropriate, accurate language into every contract. As a result, CPQ guards against non-authorized, non-preferred sales activities that can drag down revenue. Instead, CPQ ensures sales teams stay focused on selling only the products that the company is strategically pushing at appropriate price points and with appropriate sale terms. Revenue will be optimized when the entire company is moving in lockstep on all of these fronts.
CPQ helps companies develop optimal configuration and pricing strategies
Many companies spend considerable time on R&D to create new products but comparatively little time figuring out how to optimally price products to boost revenue. With modern CPQ solutions, companies gain access to powerful, highly relevant data analytics that take the guesswork out of product pricing. Using hard CPQ data that’s being analyzed automatically and in real-time, companies can answer critical questions about how much a product will likely resonate with customers (i.e., a must-have vs. a nice-to-have) and what kinds of packaging and add-on options are most likely to be popular with customers. Companies can develop optimal configuration and pricing strategies that maximize revenue with these insights.
CPQ stops companies from making knee-jerk pivots
As much as companies would like to think they consistently make rational, long-term decisions about how to configure and price products, the reality is that companies can easily be spooked when the marketplace doesn’t immediately respond as the company hoped. If the original decision was made based on instinct or politics, the company becomes much more likely to pivot its strategy in a knee-jerk fashion. CPQ helps take these knee-jerk reactions off the table by offering a more data-driven path forward. When configuration and pricing strategies don’t resonate with customers, CPQ enables the company to drill down into precisely why customers aren’t responding. Companies can look at performance metrics like the win-loss ratio, the amounts the final price is deviating from target price, and the portion of deals that are being escalated for higher-level internal approvals. Consequently, companies become more likely to stay the course, even when customers aren’t responding, making configuration and pricing adjustments only when the data drives a compelling case.
CPQ helps companies improve revenue forecasting
One of the most frustrating aspects of revenue forecasting is figuring out why revenue trends are up or down. This information is essential to the company’s ability to intervene effectively—either to support and strengthen an upward revenue trajectory or to reverse a downward revenue trajectory. While companies have traditionally taken their best guesses at the reasons why, CPQ’s emphasis on data analytics ensures that companies can get definitive answers. For example, revenue forecasting teams can see precisely where credits and discounts are being applied or identify common traits among customers who are underutilizing products they’ve already purchased. These insights help companies take informed action to protect and grow their revenue streams.
Finance teams have a crucial role in pushing their company in strategic directions that promote revenue stability and growth. CPQ is at the heart of this push. With CPQ, companies can reshape their customer experience, guard against undesired sales activities, develop optimal company strategies for configuration and pricing, and use data analytics to avoid knee-jerk pivots and improve revenue forecasting.
Simplus specializes in partnering with finance teams as they work to optimize revenue growth opportunities for their organization. To learn more about how Simplus can help your organization take advantage of powerful, cloud-based technology to transform the revenue trajectory, please reach out to Simplus today. We can’t wait to show you how CPQ can completely reset your organization’s expectations for long-term revenue growth.