What Is Configure-Price-Quote?

Learn about CPQ and some of the differences between B2B and B2C Configure-Price-Quote.

John E. Kosar, III

If you are considering ways to improve your existing bidding and proposal management process, then you should be considering Configure-Price-Quote (CPQ). CPQ is a powerful way to automate the onerous, mundane, time-consuming tasks, also propelling proposals to the next level of professionalism, convenience, and efficiency. I would like to explain what this technology does, and how it helps sales organizations, and particularly complex B2Bs, in profound ways.


CPQ Example: NIKEiD

For a concrete example of how CPQ works, look at NIKEiD. Nike uses a configurator to automate the entire quote-to-cash process, enabling customers to design their shoes, starting with a shoe type and customizing color scheme and a few other superficial qualities. Not only is this a compelling service, allowing the company to reach fans of personalization like Millennials, it also drives sales through nike.com because the website provides unique capabilities that retailers and distributors, like Amazon, cannot. 

The quote-to-cash system is built on deft coordination of front-end and back-end business functions. Configuration, pricing, and quoting is finished with payment directly through the website, while the order is generated and distributed to Operations for manufacture. Data from the transaction is then structured for immediate analysis by Finance, Marketing, and Operations. 

It should be noted that this direct connection to customers is a standout for Nike, as traditional distribution channels involve multiple transactions, many of which are made outside the company. If Nike wants to track what designs are selling with any kind of granularity, the company would find it extremely difficult or impossible to do so through its network data. However, all sales through NIKEiD are tracked instantly and completely.

B2B CPQ: Success Metrics

Although NIKEiD has been an excellent example of the basic functionality of CPQ, the example breaks down for our purposes here, because self-service is not practical for many B2Bs. If a consumer designs a shoe poorly, the fallout is much less than if a business were to order the wrong machine. With deal sizes high and function critical, B2Bs need to ensure the buyer receives the right product, at the right price, and at the right time, every time.

B2Bs might not use self-service, but even when sales reps use CPQ to help buyers, similar benefits apply. The advantage lies in the platform, which facilitates the sale in a transparent environment, where each transaction is automatically added to the system with as much detail as the company wants.

But exactly what the advantage is depends on who you ask. Sales reps leverage CPQ to focus less on busywork and more on selling; they can enjoy a more streamlined, professional purchase experience in which they focus more on the relationship than on conveying or managing information. CFOs tend to focus on pricing accuracy and transparency of the sales pipeline; COOs focus on the ability to trust orders coming from sales, on order accuracy; CMOs focus on insights coming from the buyer journey in the final stages of the sales pipeline, as well as the enhanced ability to control messaging through the sale. 

Every stakeholder might define the value of a facilitated buyer-seller relationship differently, but each does see value both in terms of benefit to the business and in the information they receive, information that will help them steer the organization in the right direction, in a direction that is aligned with buyers.

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