Configure Price Quote (CPQ) was one of those anonymous pieces of technology that nobody really cared about. It’s wasn’t obviously glamourous like its counterparts from marketing or sales or any other front end applications, for that matter.
The name Configure Price Quote itself sounds weird, doesn’t it?
In fact, until 2017, leading research firm Forrester hadn’t even released its signature Wave report on CPQ.
But, that was until now.
Suddenly, there seems to be a surge in interest in this sector which is justified considering the heavy lifting that CPQ solutions can do.
CPQ has gone from hiding in oblivion to being one of the hottest enterprise applications that there is.
Even Salesforce entered the market acquiring Steelbrick in what seemed like a classic Game of Thrones backstabbing moment – it has multiple CPQ partners in its ecosystem – but the discourse has totally changed.
And now there are more than 25 CPQ vendors in the market and the SaaS based cloud model has caught up too.
But why is that? What makes CPQ so attractive and in-demand?
Let’s put forth the arguments.
One of the prime reasons CPQ is getting noticed so much is because of it’s growth numbers. We’ve quoted the same numbers in another post but just to put things in context, we’ll do it again.
According to Gartner, in 2015, the CPQ applications market was worth $570 million growing at 20% year-on-year. Gartner also estimated that this growth rate will continue at least till 2020. That means, the CPQ market is probably worth a lot more at this point in time. EndeavorCPQ, though, claimed at the end of last year that the market was worth $700 million and is expected to grow at a whopping 50% each year.
That’s something. But, there’s more.
CPQ market leader Apttus itself was worth around $1.3 billion after its last funding round in 2016. So, brace yourselves.
On the other hand, Gartner also expects the CRM market to be worth $37 billion by 2017. CRM growth has been in the 10-15% range but the point is the contrast between the CRM and CPQ market sizes. The obvious inference is that CPQ market has a lot of room to grow.
The intersection of professional and personal spaces is a very common discussion subject. But it always comes the profession encroaching upon the personal space.
Interestingly, the opposite is happening. Personal habits and preferences are encroaching the professional space leading to a marked shift in even B2B researching and buying habits.
Obviously, that means B2B customers are attracted to better experiences, better personalization and ease of use in a complex environment. CPQ is probably the most important of products to be affected by this behavioral change.
After all, business leaders are also consumers in a B2C sales cycle. One great experience and expectations rise like rockets. It is only only obvious that expectations from the B2C sales cycle spill into the B2B sales cycle.
— Apttus (@Apttus) June 28, 2017
And, that’s happening now.
B2B buying is getting strikingly similar to B2C buying which is also one of the prime reasons why Customer Experience is becoming so critical to B2B deals. It’s not just the product that matters anymore but also how well, how efficiently and how pleasant the purchase process is. CPQ is going to play a critical role in there.
There was a time when CPQ was a sales tool. There was a time when the purpose of a CPQ application’s existence was to help sales reps prepare custom quotes and hence the name.
But that’s in the past. CPQ is in the third stage so preparing custom quotes based on a number of permutations and combinations has just become run of the mill.
The real job now is to provide a solid Customer Experience throughout the buying process. As Forrester puts it, CPQ is neither about engineers nor salespersons. CPQ is about ensuring your teams and the buyer have effective conversations.
“CPQ is now a key enabler to delivering a high quality customer experience,” Forrester analyst John Bruno wrote in his CPQ Wave blog.
And that experience must now be delivered across multiple channels without any form of latency. While reducing the time to create a sales quote is still the central idea, letting B2B customers do it by themselves without any assistance is the latest expectation. CPQ is absolutely allowing both sides of a B2B sales process to cut down the back and forth communications enhancing the experience.
Buyers expect a seamless experience,” Bruno told Techtarget. “It’s up to the seller to deliver it, and one way they are doing that is with CPQ.”
At the same time, CPQ solutions must receive and distribute real time information through integrations to ERP and CRM products in order for the customer to be able to exercise options without having to wait for the systems to sync.
This way, CPQ software products aren’t backend tools anymore. They are at the forefront of sales. They are at the forefront of the B2B Customer Experience.
Mobile-first was a B2C slogan a little while ago. But, in more evidence of B2B converging with B2C, core enterprise SaaS apps are also focussing on the mobile. Salesforce has long released its Salesforce1 app.
It may not be mobile first in B2B yet but the anytime, anywhere approach is clearly going to be a big trend, more so in the CPQ domain. Almost all vendors are looking at this approach as they see the economy moving towards mobile devices in the near future. Being ready is the least that companies can do.
The future we are all envisaging is the where deals can be cracked on mobile devices (not totally calls). If CPQ applications allow an interface where a simple menu to place a complex purchase order could build them an instant quote, right on their mobile phones, that would be the experience everyone is begging for.
It’s not just mobile but personalization and a multi-channel approach that CPQs already provide. But, yes, there’s so much more yet to do. Omnichannel is something CPQs will definitely do helping create a single customer view for sales teams. Throw in a bit more personalization and it would be a great quote.
How can anyone miss out on this? There are hardly any domains left where Artificial Intelligence is not being used. But CPQ is one area where Machine Learning and Artificial Intelligence can play a crucial role.
Salesforce seems to be slightly ahead despite being the last entrant in the CPQ market (just because it was the last entrant). It is already delivering predictive analytics and Artificial Intelligence to its CPQ module through the Einstein platform.
CPQ leader Apttus recently announced its approach to using Machine Learning in the Quote to Cash process. Oracle has done the same too with its CPQ Cloud.
AI is expected to make CPQ better from both the seller and buyer ends. For the sales team, it means better product recommendations that are likelier to be purchased while from the buyer’s perspective, it just means a more personalized experience.
Artificial Intelligence can sometimes change the focus but not with CPQ. The focus is still on providing quantifiable results for businesses. The aim is still about reducing the time to quote like Apttus says it does by 68%.
Apttus also claims, in its Quote to Cash Impact Study this year, that its product helps improve Deal Closure time by 34%, reducing rogue discounting by 32% and so forth.
The company also says that it helps improve quote quality by 51%. So, the core purpose and benefits are still going to be the same.
It’s just how these core benefits are going to be delivered to the customer is what will be the differentiator.
Telus has cut down the time taken to complete a contract from 41 business days to less than 5 days with Vlocity and DocuSign.
CPQ is still going to provide these massive improvements in productivity but it is going to be alongside providing a connected Customer Experience.
The faultlines between B2B and B2C are being bridged and CPQ is making it happen at a breathtaking pace.
CPQ software is inherently complicated just like CRM making their adoption slow and difficult. Whatfix can help you get the maximum out your CPQ investment. See how we can do it for you.