Avoid the Pitfalls in CPQ Programs

Avoid the Pitfalls in CPQ Programs

CPQ pitfalls

Configure, Price, Quote (CPQ) investments are gaining momentum, with Gartner predicting a yearly growth rate of above 20% well into the 2020s. A well-executed CPQ implementation is seen as a key source of commercial advantage, particularly since a 2019 study by Capstone Insights found that two thirds of your competitors are likely stuck with multiple CPQ platforms with incomplete integrations that are fraught with manual intervention.

When implemented properly, CPQ has the potential to help meet your sales and operational objectives whilst significantly increasing profitability.  The core CPQ business drivers can be classified into three elements: 1) Financial Performance, 2) Worker Experience (WX) and 3) Customer Experience (CX). The specific objectives we typically see against each driver are summarised below.

CPQ blog

CPQ programs should be viewed as major transformational initiatives with a plethora of moving parts.  Yet all too often the technology is perceived as a silver bullet to solve all points of friction in the quoting and pricing experience.  The truth is that the CPQ business drivers do not neatly align.  Whilst there is likely considerable overlap between WX and CX objectives (i.e. actions to drive improvement in WX will often result in a better CX), as the diagram illustrates, there is far less alignment in terms of Financial Performance objectives. Indeed, over-concentration on the latter can actually work against your desired WX/CX outcomes.

Let’s consider a couple of examples:

  • A global medical device supplier wished to increase its average delivered margins by installing pricing floors equal to each country’s average sales price. Thus, any requested price below this floor required senior approval at their global HQ. This resulted in almost 50% of quotes being subject to multiple levels of approval, a large increase in the time to quote each deal (senior personnel were not always available to approve/reject deals and demanded chapter and verse as to why the requested price had to be below average), and a significant reduction in customer responsiveness.
  • A multinational software and IT company wanted to improve its sales forecasting accuracy. The Product Management team insisted that any sales deal reaching Stage 3 of their 5-step opportunity process should have a fully detailed CPQ configuration in order to more accurately predict demand. However, due to the huge number of configuration options and time taken to execute CPQ, the sales team were very reluctant to perform this task unless they had a strong commitment from the customer to proceed. Consequently, sales deals would sit stuck at stage 2 until they were close to closure. Far from an improvement in forecast accuracy, deal visibility actually decreased and frictions increased between Sales and Product Management.

So what steps can you take to avoid the pitfalls in CPQ programs? At PolSource we embrace a very simple but very powerful Customer Success Framework, comprising 10 essential ingredients (our Keys) to unlock the value in your transformation initiative.

PolSource 10 Keys to Success Framework

10 keys

Let’s take a look at how the keys can help create the right foundations for your CPQ program:

Align on your CPQ Vision. Gather the right stakeholders to determine the business drivers and objectives for your CPQ program. Important to remember here that your CPQ program should not be narrowly focused, as often such transformation initiatives are one component of a broader lead to cash lifecycle. Align on a ‘strategic purpose’ – a short elevator statement describing the who, what, how and value proposition, focusing on the desired business outcomes rather than the technology per se. Identify the guiding principles (components that are necessary to bring your vision to life) and the program KPIs (Value & Metrics) for each principle.

Understand current state Experience. Identify friction points in WX and CX, and identify the financial impacts of your existing CPQ tools and processes. Ensure that you supplement subjective worker, customer, and channel feedback with objective measurement, such as time and motion studies, win/loss analysis, pricing anomalies, invoicing errors due to misquoting etc. Turning attention to future requirements, ensure that you get the balance right between your desire for financial improvements and delivery of better WX/CX, and layout a practical, sequenced Roadmap that will provide both user and business benefit at every stage.

Solutioning: Process before Technology. Map out the future-state business processes, taking care to understand the likely impacts, behaviours and experiences that the processes will drive. Put the user at the heart of the design, and ensure that CPQ is fully in sync with both your sales process and customer purchase journey. Whilst you should have the system capabilities in mind during the mapping phase, don’t be seduced into believing that the technology alone will deliver your CPQ outcomes, else you will simply end up automating broken processes.

Data Strategy: Get the data model right. Effective CPQ often calls for tight integration with ERP, and has perhaps the most intensive and complex data requirements of all CRM components. This requires a clear master data management structure for Products, Pricing, and Customer elements. Time taken up front to rationalise, simplify and cleanse data, coupled with the right Governance framework to ensure you follow best practices, will reap considerable rewards at launch. Also, take care not to hard code anything that relies on data structure – chances are your surrounding systems, pricing models, product, and customer structures will change over time, so flexibility needs to be inherent in the design.

Plan for Evolution through iteration. Regardless of how much careful preparation and Change Enablement have been put into your CPQ launch, allow for iterations once the program has been implemented in the field. Create feedback loops that encourage honesty and transparency, and be directed by your metrics to uncover suboptimal components in your design and enablement. In particular, look for points of friction resulting from an incorrect balance in the core business drivers. If channel partners are key users of your CPQ infrastructure, try and stagger the launch between internal teams and your channel to allow for early issues to be ironed out. Remember to leverage the guiding principles from your vision as a scoring mechanism to help prioritise course corrections and enhancements to ensure the Realization of your ROI.

trust fall


Finally, in addition to our 10 Keys, place Trust in your Sales Team. Too often we see stringent policing mechanisms and financial controls embedded in CPQ that kill the desired improvements in WX/CX. Poor sales behaviour is typically the result of a lack of leadership/coaching, ineffective compensation schemes, and defective process. If you don’t trust your Sales Team, then you’ve recruited the wrong people. Strike the right balance between automated approval escalations (gates in the process for those that are profit responsible) and visibility (reports for other stakeholders), and make sure that your core Sales users are properly represented in your program Governance. Try to keep it simple for initial releases and add automation based on experience rather than theory – we often see organisations trying to add too much control in the first release without understanding the consequences.

Whether you are just beginning your CPQ journey, or are struggling to extract the value from your existing implementation, come and talk to PolSource about our Customer Success Framework. We can help you balance your CPQ priorities to embed these transformational processes at the heart of your business.

Article written by Greg Bohlen, VP Global Consulting & Change Enablement at PolSource. Greg has over 20 years of CRM experience, and has been helping clients drive value from the Salesforce platform for over a decade.

*Capstone Insights, Configure Price Quote Benchmark Survey 2019