report: trend the cro’s guide to sales acceleration with configure price quote · 2018-01-08 ·...
TRANSCRIPT
REPORT: TREND
The CRO’s Guide to Sales Acceleration with Configure Price QuoteCloud-Based CPQ Solutions Deliver Strong ROI
and Sales Cycle Acceleration
Cindy ZhouVice President and Principal AnalystContent Editor: Courtney SatoCopy Editor: Maria ShaoLayout Editor: Aubrey Coggins
Produced exclusively for Constellation Research clients
June 22, 2017
© 2017 Constellation Research, Inc. All rights reserved. 2
TABLE OF CONTENTS
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B2B SALES CYCLES ARE LENGTHENING AND GROWING IN COMPLEXIT Y . . . . . . . 4
CONFIGURE PRICE QUOTE BECOMES ACCESSIBLE THROUGH THE CLOUD . . . . . . 5
THE 10 BENEFITS OF CONFIGURE PRICE QUOTE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
THE HIDDEN “COST” OF MANUAL QUOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
CPQ SUCCESS STORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FIVE KE Y QUESTIONS TO ASK WHEN E VALUATING CPQ PROVIDERS . . . . . . . . . 16
FOUR PITFALLS TO AVOID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
WHAT’S NEX T FOR CPQ? AI BRINGS DE AL , PRICING AND
PERFORMANCE INTELLIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
REL ATED RE ADING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ANALYST BIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ABOUT CONSTELL ATION RESE ARCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
E X ECU TIV E SU MM ARY
This report examines how cloud Configure Price Quote (CPQ) software can help organizations
accelerate sales cycles, increase margins and streamline processes so sellers can focus on selling. CPQ
software automates the process of delivering price quotes to customers and prospects by using a
company’s product offering information, customer data, terms and business rules to generate accurate
quotes in minutes, compared to days or even weeks in some cases.
Constellation found that the process of formulating a quote manually can take upwards of 10 business
days, lengthening the sales cycle and introducing new risks to the deal. When a competitor can move
in an instant, the last thing sellers need is to be hindered by internal red tape that slows the delivery of
accurate quotes to prospects and customers.
Cloud-based software makes CPQ, previously a costly technology out of reach for many organizations,
a viable solution for many sales organizations large and small. As Business-to-Business (B2B) Chief
Revenue Officers (CROs) and sellers face longer sales cycles and an increasingly complex sales
environment, solutions such as CPQ that streamline the sales process can be a significant advantage
for organizations.
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© 2017 Constellation Research, Inc. All rights reserved. 3
Business ThemesDigital Marketing & Sales Effectiveness
Next-Generation Customer Experience
© 2017 Constellation Research, Inc. All rights reserved. 4
B2B SA LE S C YCLE S ARE
LEN G THENIN G A ND
GROWIN G IN CO MPLE XIT Y
Here is what happens in a typical Business-
to-Business (B2B) sales scenario: A sales
representative qualifies an opportunity,
assesses the prospect’s need and then must
provide a price quote. While the price quote
is being prepared, days can go by with nothing
sent to the prospect, allowing new variables
to threaten the deal. At the point of delivering
a price quote, the organization has already
been down selected, thus crossing one of the
toughest hurdles in the sales process. Sending
a price quote should be straightforward,
so why do organizations botch this critical
last mile?
Constellation sees the B2B sales quoting
process taking upwards of 10 business days.1
Reasons for this long delay involve the highly
manual process of coordinating with multiple
disparate systems and people for product
configuration, regional pricing and currency
type as well as the complexity of applying the
correct discounts and commercial terms before
presenting a quote. This manual quote delivery
process is error-prone, full of internal friction
and slows deal momentum. Compounding the
problem is the lengthening of the B2B sales
cycle driven by the buyer’s aversion to risk.
Today’s buying organizations are including
more individuals from other departments to
sign off on purchase decisions. Constellation’s
research indicates that over the past two
years, the average number of decision makers
involved in a B2B purchase has increased
from five to seven people.2 Add in other
complexities such as regional price lists,
stock keeping unit (SKU) proliferation (when
multiple SKUs exist for the same product)
and specialized contractual obligations, and
it becomes clear why the quote generation
process is so complicated.
Organizations must take every opportunity
to reduce the time it takes to produce an
accurate and professional quote for prospects.
Organizations that do not use technology to
automate the quote and pricing process are
at a significant disadvantage. With overall
B2B sales cycles trending longer, selling
organizations would do well to ensure their
© 2017 Constellation Research, Inc. All rights reserved. 5
response times are as quick as possible.
Reducing the internal “red tape” for quotes
can mean the difference between winning and
losing deals.
CO NFIGURE PRICE QUOTE
BECO ME S ACCE S SIBLE
THROU G H THE CLOU D
A decade ago, quoting tools were only available
at a high cost to large enterprises through
their legacy on-premise Enterprise Resource
Planning (ERP) software or financial pricing
solution. The cloud changed the Configure
Price Quote (CPQ) market by both lowering
the costs and removing many implementation
barriers, thereby making cloud CPQ solutions
accessible to organizations of all sizes.
Constellation receives many inquiries from
organizations interested in either adopting or
moving to a cloud-based CPQ solution for its
flexibility, speed and cost-effectiveness. As the
world of sales becomes more complex with
global pricing, regional price lists, differing
product availability, various currencies and
regulations on commercial terms, automating
the process between opportunity and cash
moves from a “nice to have” to a “must have”
for sales success.
CPQ software automates and simplifies the
configuration, pricing and quoting process in
sales opportunities. With cloud CPQ, sellers
can easily pull relevant information from
product bundles, collateral assets, discounts,
commercial terms and visuals to present a
professional and accurately priced series of
solutions to prospects.
The implementation time frame is also up to
36 percent faster for cloud CPQ solutions with
native or integrated customer relationship
management (CRM) software. That is
because much of the role-level security and
basic workflow rules are already built into
the solution.3
THE 10 BENEFITS O F
CO NFIGURE PRICE QUOTE
Constellation’s research and interviews
with CPQ users and providers found 10
primary benefits the software can deliver to
organizations (see Figure 1):
© 2017 Constellation Research, Inc. All rights reserved. 6
1. Accelerate the Sales Cycle
By reducing the amount of time spent to organize
and obtain quotes internally, organizations can
accelerate the overall sales cycle. Constellation sees
clients realizing time savings upwards of 300 percent
with CPQ.4 One client, a global design firm, stated
that its sales quote process went from three days
to less than one hour. CPQ workflow rules enable
sellers to quickly progress through each step of the
quote building process. Additionally, integrating
business rules into the CPQ workflow minimizes
the internal back-and-forth with product or finance
experts that traditionally has slowed down the quote
generation process.
CPQ streamlines and automates the approval
process with centralized business rules and
workflows that intelligently route approvals for
speed. Sellers can also save time on processing
existing customer renewals and reorders, with
the CPQ system saving the prior quotes as
reusable templates.
Figure 1. The 10 Benefits of Configure
Price Quote
Source: Constellation Research
© 2017 Constellation Research, Inc. All rights reserved. 7
2. Increase Deal Size and
Maximize Profit
CPQ fosters up-sell and cross-sell
opportunities to increase deal sizes and
maximize profits by influencing desirable
seller behavior. CPQ’s opportunity tracking
and management functionality enable sellers
to identify related products and optimum
pairings for up-sell and cross-sell scenarios.
Guided selling processes ensure that sellers
will not overlook available products and
solutions to bundle. Bundling software can
increase the overall deal size and improve
customer satisfaction by proactively offering
complementary solutions at a discount.
CPQ’s ability to automate pricing guidance
and place ceilings on discounts based
on seller profile can help organizations
preserve margins. Automated workflows
can speed discount approvals and eliminate
pricing mistakes. The system can also
automatically default to higher tiers of service
or maintenance packages, thus increasing
recurring revenue for the organization without
the seller having to remember to make
those selections.
3. Improve Customer Experience with a
Unified View of Activity
If organizations use a native CRM CPQ solution
or a CPQ solution that tightly integrates with
CRM, a unified view of all customer activity
can be obtained. With a few clicks, sellers can
access customer and prospect engagement
history, prior quotes delivered, and pricing data
as well as review discounts without having to
start from scratch. A unified view of customer
data can lead to better pricing decisions and
ensure the accuracy of quotes.
One Constellation client, a sales executive from
a manufacturing company stated, “Before CPQ,
one of our sales reps sent a prospect a quote
with last year’s pricing and the error wasn’t
discovered until we were in negotiations.
Unfortunately, the discrepancy was large
enough that we had to notify the prospect and
resend the quote. Needless to say, the prospect
was angry and we lost the business. Now with
© 2017 Constellation Research, Inc. All rights reserved. 8
our CPQ solution, business rules and approval workflows
prevent mistakes like this from happening again.”
Other organizations Constellation spoke with stated they
often chose to forge ahead with the erroneous quotes and
take the margin hit, resulting in unprofitable deals due to
the mistake.
4. Increase Seller Productivity
According to the members of the Sales Enablement
Society, one of the top hindrances to sales effectiveness is
the amount of time sellers spend on administrative tasks
compared to actual selling. Automating the repetitive
administrative steps in the sales process reduces the
headaches sellers experience with manual data entry,
quote formation and internal negotiations for pricing and
quote delivery.
Specifically, CPQ software can increase seller productivity
in the following areas:
• Guided Selling Eliminates Errors: Leading CPQ solutions
provide guided selling intelligence to assist sellers in
formulating accurate quotes. The step-by-step, question-
driven process helps sellers avoid mistakes caused
by product pairings or pricing due to regional or local
"Before CPQ, one of our
sales reps sent a prospect
a quote with last year’s
pricing and the error wasn’t
discovered until we were in
negotiations. Unfortunately,
the discrepancy was large
enough that we had to
notify the prospect and
resend the quote.
Needless to say, the prospect
was angry and we lost the
business. Now with our
CPQ solution, business rules
and approval workflows
prevent mistakes like this
from happening again.”
– Manufacturing company sales executive
© 2017 Constellation Research, Inc. All rights reserved. 9
nuances. The CPQ solution suggests the
right product based on the criteria entered,
thereby avoiding risks of incompatible
products or services. Once the quotes are
produced, CPQ solutions will retain the
information and provide templates for
future activity with the prospect.
• Collaborate on Quotes Dynamically:
When sellers need to collaborate with
other internal stakeholders such as solution
experts, sales engineers or legal personnel,
the CPQ solution serves as version control.
This eliminates the need for sellers to
manually collect and consolidate feedback
from others.
• Mobile Solutions for Field Seller Flexibility:
For organizations with highly mobile field
sellers, a CPQ provider with robust mobile
capabilities enables sellers to quickly
configure quotes, deliver proposals and
track quote status on-the-go. Integration
with e-signature providers can speed quote
approvals and contracts.
• Generate Professional Quote Documents:
Leading CPQ solutions include dynamic
document generation functionality to
produce branded professional quotes.
Organizations can pre-configure templates
with cover pages, company descriptions
and other standard elements while allowing
customer-specific elements such as
terms to dynamically populate into the
quote document.
• Easily Attach Sales Collateral: CPQ
solutions streamline the attachment of key
sales collateral, such as case studies, solution
briefs and ROI reports, to quotes for the
prospect’s reference. Having the collateral
readily available in the CPQ solution
ensures that sellers are using the most up-
to-date content.
5. Simplify Partner and
Reseller Management
Leading CPQ solutions support the creation
of quotes across multiple channels, including
distributors, resellers and other partners.
© 2017 Constellation Research, Inc. All rights reserved. 10
Providing these channel partners and resellers
access to CPQ through a portal/community
allows organizations to have a truly integrated
multi-layered sales teams. These extended
sales teams can, in turn, use the same
processes, business rules, discounting policies
and approvals, increasing their efficiency.
Organizations can also collaborate on quotes
with partners and resellers without worrying
about version control.
6. Improve Internal Sales Team
Commissioning and Quota
Management Process
By automating the Quote-to-Cash process,
CPQ software streamlines the task of
commission payments. Organizations can
refer to the data housed in the CPQ solution
to quickly and accurately calculate seller
commission payments and factor in margin
calculations by referring to CRM updates with
defined categories of products and solutions.
As growth occurs in product lines or solutions,
organizations can also use the data to make
decisions to increase or decrease selling
team coverage.
7. Ensure Regulatory Compliance
CPQ workflows can be established to help
organizations that conduct business with the
government comply with regulations such as
Sarbanes-Oxley auditing requirements and
ASC 606 revenue recognition rules.5 Product
documentation and standard commercial terms
can be stored in the CPQ solution to help trace
and identify problem areas in the event of
regulatory claims or litigation. This traceability
benefit can also help with compliance tracking,
assist in resolving customer complaints and
identify weak spots in the process.
8. Improve Financial Accounting
CPQ solutions can improve a company’s
financial accounting in three ways:
• Subscription Management: CPQ centralizes
pricing in one system. CPQ can manage
subscriptions, streamline the application
of pricing changes, help introduce
new solutions and manage customer
amendments, cancellations and renewals.
© 2017 Constellation Research, Inc. All rights reserved. 11
• Increase or Preserve Margins: CPQ’s
automated role-based discounting controls
ensure sellers offer correct discounts,
which in turn preserve margins. CPQ can
also suggest key bundling strategies or
opportunities to increase margins.
• Automate the Billing Process for Faster
Receivables: CPQ enables organizations to
manage new one-time or recurring customer
billing processes, including freemium to
premium upgrades and setup charges and by
billing terms such as annual, quarterly
or monthly.
9. Make Contract
Management Efficient
The ability to add commercial terms to quotes
is a feature of leading cloud CPQ solutions. This
helps organizations speed through the contract
generation phase and reduce duplicate data
entry. Pairing contract management solutions
with CPQ enables a smooth transition from
the delivery of the quote to the signing of the
contract for faster completion of orders.
10. Gain Deal Intelligence
through Analytics
CPQ solutions enable organizations to
analyze sales data post-closure, which leads to
improvements in future deal size, margins and
more. Understanding the most/least profitable
opportunities, the most effective combination
of products and the correlation between
discounts and win rates provide valuable
insights on how to improve deal strategy in the
future. When combined with native or tightly
integrated CRM, data is captured across all
customer touchpoints, enabling a unified view
into customer and prospect engagement.
In addition, the emergence of Artificial
Intelligence (AI) embedded in CPQ solutions
enables organizations to process vast
amounts of data in order to generate insights
that organizations can use to improve deal
efficiency and profitability.
Advertising executive William T. Moran once
said, “Pricing strategy always has been more
of a poker game than a science.”6 Times have
© 2017 Constellation Research, Inc. All rights reserved. 12
changed and the advanced pricing intelligence
AI provides shatters this notion.
With AI, pricing strategies are driven by
science. This provides organizations a data-
driven method to correlate pricing with win
rates, recommend product bundles, find
patterns in customer engagement levels and
predict the likelihood of deal success.
THE HID D EN “COS T ” O F
M A N UA L QUOTE S
Organizations often have a false sense of
confidence in how well their existing process
works without automation or they feel their
sales teams are not large enough to warrant
a CPQ solution. The cloud reduces the
purchase and implementation costs of CPQ
solutions, making them much more accessible.
Organizations that do not use CPQ have
experienced missed opportunities, sent error-
prone quotes and wasted days of effort by
continuing with manual processes.
Here are few of the hidden “costs” of
manual quotes:
• Competitor Traction: Expect competitors to
use CPQ and other automation technologies
to encroach on deals. In this digital age
of instant response time, a competitor
providing a quote instantly or in hours
compared to days can gain a competitive
advantage. Prospects also equate a fast
response time to higher service levels and to
better post-sales responsiveness.
• Missed Opportunities: CPQ can
automatically surface cross-sell and up-
sell opportunities often missed by sellers.
Without CPQ, organizations could be
missing out on potential product bundles
and cross-sell, up-sell opportunities with
related services. In addition, the more
complex a deal, the more opportunities
exist to deliver an erroneous quote that
can potentially kill the deal. CPQ solutions
Constellation recommends that organizations with global complexity, multiple distribution channels or 25 or more sellers consider investment in a CPQ solution.
© 2017 Constellation Research, Inc. All rights reserved. 13
can reduce the complexity stemming from
pricing, reseller and partner discounts and
specialized commercial terms so that sellers
can deliver accurate quotes.
• Poor Customer Experience: Inaccurate
quotes can diminish the customer
experience and derail deal progress.
Upon discovering the presentation of an
inaccurate quote, organizations often
absorb the margin impact or contact the
customer with a mea-culpa before resending
a new quote.
These hidden costs are some of the factors
that led several CPQ users to comment that
they wished they had started sooner.
CP Q S U CCE S S S TORIE S
Highlighted below are case studies from three
organizations of different sizes with unique
business challenges. These customers used
their CPQ software to achieve business-
transforming results, including revenue
growth, profit increase, process time reduction,
elimination of errors and increased customer
and channel partner satisfaction.
High-Growth Technology Company
with More Than 150 Sellers Globally
The Problem: A rapidly-growing technology
company with over 150 sellers globally
generates more than 25,000 quotes per
quarter. The company quickly outgrew the
price book feature in its CRM software as
it expanded operations globally. Increased
complexity with local and regional pricing,
different currencies, discount policies, in-
country regulations and individualized
commercial terms were all contributing to
delays and frequent quote errors.
The Solution: After selecting a cloud CPQ
solution, the company took the opportunity
to re-evaluate its entire sales catalog to
streamline offerings and eliminate outdated
or unused SKUs. Working with the vendor’s
implementation team, the company created
business rules on product and service pairings,
standardized commercial terms, automated
© 2017 Constellation Research, Inc. All rights reserved. 14
approval routing and it designed templates
to create a professional presentation of the
quotes to prospects.
The Results: The technology company
achieved the following results within months of
implementing CPQ:
• Reduced quote development time by
50 percent, enabling more quotes to be
delivered with a 10 percent acceleration of
sales cycles.
• Increased average deal size by 15 percent
by pairing premium support with software
licenses as a standard default.
• Eliminated pricing errors with regional price
lists and commercial terms.
Global Manufacturer with Multi-
Layered Direct, Indirect and
E-Commerce Sales
The Problem: A manufacturer of building
materials with a large network of retail
partners and direct and indirect sellers, such as
dealers and resellers, wanted to streamline its
sales channel operations. With over 100,000
quotes generated each year (primarily through
phone calls), the company wanted to provide a
self-service quote solution for its large network
of sellers and offer consumers the
ability to directly request quotes for
customized products.
The Solution: The company selected a cloud
CPQ solution that integrated with both its
ERP and e-commerce systems. The company
structured a quote generation system that
could handle pricing and discounts by channel
to ensure margin protection for itself and
its network of dealers. The company also
provided consumers the ability to create
quotes and order products directly on its
website by integrating the CPQ software with
its e-commerce system.
The Results: The manufacturer achieved the
following results with its CPQ solution:
• Achieved a 20 percent increase in quote
volume and accelerated sales cycles due to
the self-service CPQ solution’s ease of use.
The company stated that with CPQ, close to
150,000 quotes were created in 2016. With
CPQ, sellers, dealers and consumers can
create quotes and complete orders in the
© 2017 Constellation Research, Inc. All rights reserved. 15
system themselves through the
e-commerce integration.
• Increased customer loyalty due to the self-
service features, enabling the customers
of the manufacturer’s customers (dealers,
reseller and partners) to receive product
quotes quickly. Reduced order errors with
visualization of the actual products and their
dimensions prior to ordering.
• Prior to CPQ implementation, a single quote
would require an average of two to three
phone calls between the dealer or customer
and the company’s inside sales team to
complete. After CPQ, the company saw
a substantial reduction of 80,000 calls to
inside sales last year.
Personal Security Products
Manufacturer Expands Business to
New Areas with CPQ
The Problem: This manufacturer of personal
security products was expanding its business
to new areas, including body and fleet cameras
requiring subscription services. As the
company serves law enforcement agencies and
the military, accurate and compliant quotes are
critical. The company was wasting many hours
manually producing quotes with spreadsheets
and experiencing frequent errors.
The Solution: The company selected a cloud
CPQ solution that integrated with its CRM,
ERP and contract lifecycle management
software. The quotes from CPQ automatically
create the contract, subscription terms and
related assets, then populates the information
into the CRM and ERP software.
The Results: The manufacturer, which
increasingly became a technology and
services provider, achieved the following
results with CPQ:
• It reduced the total amount of time spent
building lengthy quotes from nearly 10
hours to 10 minutes. The company routinely
configures complex quotes with up to 500
line items.
• It increased efficiency by using a CPQ
solution native to its CRM provider. With
standard data models, validation rules and
the familiar user interface, the company
significantly decreased the learning curve
for its sellers.
© 2017 Constellation Research, Inc. All rights reserved. 16
FIV E KE Y QU E S TIO NS TO
A S K W HEN E VA LUATIN G
CP Q PROVID ERS
Once the decision is made to evaluate
CPQ solutions, organizations can review
market and industry analyst reports such as
Constellation’s CPQ ShortList™ to narrow the
list of providers. Understanding the existing
technology stack compatibility, amount of
sales enablement, the provider’s customer
references, market reputation and the ongoing
investment required are all important factors
for organizations to consider. Constellation
recommends using the following key questions
when evaluating CPQ solution providers:
1. Is the solution native to your CRM software
or how tight is the integration? Your goal
is to find a solution that is either native
or tightly integrates with your company’s
CRM system to achieve a single view of the
customer. This also eliminates the need for
your sales team to do manual data entry
to track deal activity as the quote process
will auto-generate milestone activity and
provide a record of deal history.
2. What is the learning curve for sellers? With
any technology, adoption rate and usage are
the measurements of success. Evaluate the
user interface (UI) and assess how easy it
will be for your sales team to learn. The best
CPQ solutions have intuitive interfaces and
ask a few questions to guide sellers to the
right quote template. If the solution is native
or integrates with your CRM software, the
UI familiarity will help sellers.
3. Do you have similar organizations as
customer references? Ask for customer
references from organizations similar in
sales team size, sales channel structures,
geographical coverage, vertical markets
or target customer market. The goal is to
assess experiences in managing business
processes and nuances similar to those of
your organization.
4. What is your customer renewal rate? Your
Net Promoter Score? These questions
pertain to customer satisfaction and help
you understand the vendor’s post-sales
support. NPS or Net Promoter Score is an
industry standard for customer satisfaction
© 2017 Constellation Research, Inc. All rights reserved. 17
determined by asking customers on a scale
of 1-10 how likely they are to recommend
the solution/product to others.7 Also, track
the responsiveness of the CPQ provider. Are
its responses to questions complete? Similar
to providing quotes in a timely manner,
vendor response time can be viewed as
indicative of post-sales support levels.
5. How much ongoing configuration and
maintenance are required? Investment
in product research and development? As
organizations continuously incorporate
new products or solutions, update pricing,
adhere to new regulations and make other
changes, the CPQ solution needs to be
simple for administrators or sales operation
teams to update and maintain. Evaluate
CPQ solutions with an eye on how easy they
are to update and maintain. Alternately, if
you prefer to outsource, ask if the vendor
offers ongoing services packages directly
or through service partners. Continuous
investment by the CPQ provider into
research and development ensures the
solutions stays current.
FOUR PITFA LL S TO AVOID
CPQ can be a transformative technology
that speeds up sales cycles, improves deal
size and powers revenue growth. But to
ensure a successful implementation of CPQ,
organizations need to be open to changing
their business processes based on best
practice suggestions from CPQ providers and
services experts during the implementation
process. Missteps during implementation can
cause unnecessary delays and hurt ROI results.
Constellation recommends avoiding
the following four common CPQ
implementation pitfalls:
1. Communication Silos
The communication between sellers and
the various departments involved in the
quote, (including product, financial, legal and
sales operations) is critical to a successful
implementation. CPQ should not be viewed as
purely a technology implementation.
© 2017 Constellation Research, Inc. All rights reserved. 18
A Constellation client, vice president of sales
operations at a mid-sized technology company,
stated, “We did not view the CPQ project
as implementing software. We were re-
engineering our quote-to-cash process.”
Establish a steering committee to select the
CPQ provider and to facilitate decisions during
the implementation process. Committee
members can include individuals from the
following areas:
• CRO Office: Sales operations or an
individual representing the “voice of sellers”
• CFO Office: Senior finance team member to
guide financial processes
• CMO Office: Demand generation lead to
address lead-to-sales transition
• CIO Office: Technical implementation
project manager
• General Counsel’s Office: Sales contracts
approver or reviewer
• Head of Pricing: Typically the head of
product marketing
• Customer Success: Senior customer support
team member
The committee member representing the
sellers should have the final say on tie votes
or should hold the largest vote. If sellers
find the CPQ solution cumbersome to use, it
will jeopardize the entire project. A steering
committee can mitigate this risk.
2. Custom Processes Requiring Code Changes
Implementation success for cloud-based
solutions hinges on using the products as they
were designed. Leading cloud CPQ software
includes process configuration workflow
to customize processes with clicks rather
than code. Unique processes that require
code changes break down the integrity
of the software and can diminish system
performance. Constellation recommends
clients stay open minded to adapting existing
processes to fit the CPQ system workflow
design and avoid custom code development.
“We did not view the CPQ project as implementing software. We were re-engineering our quote-to-cash process.”
- Vice president of sales operations at a mid-sized technology company
.
© 2017 Constellation Research, Inc. All rights reserved. 19
3. Low Prioritization of Mobile
Do not resist providing sellers mobile access
to the CPQ solution. Today’s sellers are on-
the-go and providing them access to mobile
CPQ capabilities gives sellers the flexibility to
quickly generate, modify and approve quotes
on mobile devices. Also consider integrating
e-signature capabilities to the CPQ solution
for faster quote approvals. Mobile access can
provide organizations with an additional edge
in sales cycle acceleration and improve seller
productivity.
4. Garbage In, Garbage Out
Avoid importing outdated, unclean data into
your CPQ system. Before importing existing
business rules, pricing structures, SKUs,
commercial terms and other information, take
the opportunity to review pricing structures
and policies. Are these policies still relevant
and applicable? How clean is your product and
discounting data? Prioritize data cleanup as
part of the implementation process. The better
the data, the better the insights.
W H AT ’ S NE X T FOR CP Q?
AI BRIN G S D E A L , PRICIN G
A ND PERFORM A N CE
INTELLIG EN CE
The shift to data-driven decisions leads to
embedded analytics across the sales cycle to
drive insight on how to improve the selling
process and increase profit. With every
interaction captured, the solution learns and
brings to light recommendations, predicts
outcomes and prevents deal risks.
A few leading CPQ providers have started
to embed Artificial Intelligence (AI) into their
software to further automate and speed
the quote delivery process. The advanced
guidance generated by AI before, during
and after the sales process helps sellers
continuously improve their win rates. Natural
language commands help sellers save time in
recommending products, offering discounts,
creating pricing and providing the appropriate
commercial terms.
Some of the AI solutions Constellation
evaluated offer chatbot functionality for sellers
© 2017 Constellation Research, Inc. All rights reserved. 20
to start the quote or check the status of a
quote on-the-go. These solutions enable sellers
to use voice commands to ask key questions
about existing deals without having to dig
through reports or search the CRM or CPQ
solution for answers. The AI-enabled solutions
also suggest quote templates from the cache
of similar deal templates to help sellers speed
through the quote creation process. Pattern
recognition through machine learning enables
the analysis of quotes to spot areas where
sellers can improve. The same technology
collects insights about top-performing sales
representatives and delivers those insights
as suggestions to other reps across the sales
organization.
Constellation expects AI to become a core part
of CPQ over the next 12 months, leading to
improved opportunity, win rates and deal sizes.
© 2017 Constellation Research, Inc. All rights reserved. 21
REL ATED RE A DIN G
For a list of leading cloud CPQ providers, please see the Constellation ShortList™
for CPQ: http://bit.ly/2p36MsO.
ACKN OW LED G MENTS
Constellation thanks the many clients and members of the Sales Enablement Society who shared their
insights and experiences with CPQ solutions.
END N OTE S
1 Based on Constellation interviews of 100 B2B sellers and marketers from June 2016 to May 2017.
234 Ibid.
5 ASC 606 revenue recognition standard, https://www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/RevenueRecognition/DownloadableDocuments/FRC_Brief_Revenue_Recognition.pdf.
6 Pricing Resources, http://pricing-hub.com/resources/quotes/#sthash.gcTvCq9P.dpbs.
7 Net Promoter Score introduction, http://www.netpromotersystem.com/about/measuring-your-net-promoter-score.aspx.
© 2017 Constellation Research, Inc. All rights reserved. 22
ANALYST BIO
Cindy ZhouVice President and Principal Analyst
Cindy Zhou is Vice President and Principal Analyst at Constellation Research covering Digital
Marketing Transformation and Sales Effectiveness. With over 18 years of practitioner experience
in corporate marketing, product marketing, product management, and sales operations, Zhou has
spearheaded marketing transformation at multiple technology companies. Her role is to advise
Constellation’s clients on strategies to light up demand generation, prove revenue contribution, and
maximize sales productivity.
Prior to joining Constellation, Zhou was Global Senior Vice President of Marketing and Sales
Operations at BackOffice Associates, a global provider of data quality and information governance
solutions to the Fortune 1000 and a SAP Solution Extension (SolEx) partner. Before BackOffice
Associates, Zhou led worldwide demand generation for the procurement, supply chain, commerce
and merchandising lines of business for IBM's Smarter Commerce initiative. She joined IBM from
the company's acquisition of Emptoris, Inc., where she led corporate marketing and global demand
programs. Prior to Emptoris, Zhou was the 25th employee of Rivermine and helped grow the company
into a telecom expense management industry leader with a successful exit to Emptoris. She’s also held
a variety of product marketing, product development and marketing roles at China Telecom and MCI
Telecommunications. A recognized revenue marketing executive, Zhou was recently honored as one of
four finalists for the 2016 “Marketing Executive of the Year” Marketo Revvie Award.
@cindy_zhou | www.constellationr.com/users/cindy-zhou | www.linkedin.com/in/CindyZhou
© 2017 Constellation Research, Inc. All rights reserved. 23
A BOU T CO NS TELL ATIO N RE S E ARCH
Constellation Research is an award-winning, Silicon Valley-based research and advisory firm that helps organizations
navigate the challenges of digital disruption through business models transformation and the judicious application of
disruptive technologies. Unlike the legacy analyst firms, Constellation Research is disrupting how research is accessed, what
topics are covered and how clients can partner with a research firm to achieve success. Over 350 clients have joined from an
ecosystem of buyers, partners, solution providers, C-suite, boards of directors and vendor clients. Our mission is to identify,
validate and share insights with our clients.
Organizational Highlights
· Named Institute of Industry Analyst Relations (IIAR) New Analyst Firm of the Year in 2011 and #1 Independent Analyst Firm for 2014 and 2015.
· Experienced research team with an average of 25 years of practitioner, management and industry experience.
· Organizers of the Constellation Connected Enterprise – an innovation summit and best practices knowledge-sharing retreat for business leaders.
· Founders of Constellation Executive Network, a membership organization for digital leaders seeking to learn from market leaders and fast followers.
www.ConstellationR.com @ConstellationR
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