What does CPQ mean in 2020? The right question to ask might be What does CPQ mean, period?
If you haven’t heard already, CPQ is configure price quote software typically used as an extension of a CRM or ERP system to automate the sales proposal process.
Business buzzwords are typically “of the moment.” But once the technology that built the buzz becomes a standard practice, last year’s buzzword often becomes this year’s addition to the OED.
While CPQ may not yet have made the OED’s 2020 cut, it has certainly established itself as the de facto technology — and approach — to creating, sending, and tracking sales quotes.
In 2020, we don’t expect too much to change in how people define CPQ. What we DO expect to change is how MANY people use CPQ, and how they extend its use into overall sales analytics, sales team management, and pipeline reporting.
CPQ as your analytics workhorse
When CPQ first came on the market, most vendors offered little more than a collection of sales proposal templates you could connect to your CRM. Instead of asking your sales reps to be “designers,” you could direct them to your CPQ solution which had a bunch of “professional proposals” (essentially, gussied-up Word docs and Excel spreadsheets).
In 2020, however, more and more people will use CPQ to gather analytics on products and pricing: What are the most effective bundles? What pricing structures are optimal for both customer and vendor?
The data delivered by each closed proposal can impact every quote that follows, and more and more sales leaders are pulling real-time data from the product and pricing configuration engine — which, in our opinion, is the true heart of CPQ — and ensuring each sale is as profitable as possible.
“Managing by proposal”
If you’re an effective sales manager, you have probably tried more than one approach to get the best from your team: contests, compelling commision structures, surprise bonuses, firing low performers (alas, sometimes it’s the stick instead of the carrot).
Forward-thinking sales managers are now using their CPQ software to actually manage their teams!
Rather than the old “9 to 5” set-up with weekly check-ins as a means of tracking performance and staying in touch, some managers have made their jobs wildly easy by tracking quotes. E.g., “Every rep must send at least 100 quotes every quarter and have a close rate of 20% or more” is a pretty simple management directive to a sales team.
And when you think about it, why measure anything else? Provided you’re not hearing complaints from customers or colleagues, and your CPQ system shows a rep has the right amount of quotes in circulation, why bother managing by any other metric? “You got quotes closing? Great! Talk to you later.”
Improving pipeline visibility and viability
In addition to managing a sales team via CPQ (i.e., via quotes in circulation), you can use the software to improve visibility into the most critical step of your sales process — when a quote moves from sent to signed.
As any rookie rep can tell you, sales is all about pipelining. But as any seasoned manager knows, it’s really all about a viable pipeline. Anyone can fill a pipeline with 100 leads and widen the top of the funnel, thereby creating a wide range of possibilities.
But… so what? “Possibilities” are ok, but probabilities are better. And when the rubber hits the road — when the quote is sent! — the people in your pipeline start to become probabilities and your whole pipeline becomes more viable.
CPQ lets you get the granular data you need from this part of your pipeline that enables a more complete understanding of your close rates, which is by far the most important pipeline metric. Heck, it’s the most important business metric.
So what does CPQ mean in 2020? It means more data, improved sales management, and more closed business. And it means 2020 is going to be a sales year like no other.
