Here’s How CPQ Users are Enabling Faster Fulfillment and Increased Capacity
I spent quite a bit of time early in my career planning projects for property and casualty insurance companies.
During one of these planning sessions, we were discussing how to identify the type of policy we were handling. My contact explained that in addition to a unique identification number for each policy, a prefix identified the specific type of coverage involved.
Most of these prefixes were self-explanatory; PA stood for personal auto, HO for homeowners and so forth.
My contact then informed me that there were several thousand types of insurance policies to be identified. Why so many? I wondered.
Insurance companies can’t afford to be vague. They are not just insuring an automobile, they are insuring an automobile that is driven by an adult with no recent claims, driving about 80 miles per day and predominantly on a freeway. The car is parked in a garage during the day and at home. The car is newer, and it is worth over $35,000.
Other conditions require different auto policy types such as rental cars, high-mileage cars, high-risk drivers, low-mileage drivers, etc. All of these variables apply to other property as well—homes, apartments, boats, art collections, jewelry and so forth.
Insurance is complex.
This type of complexity extends beyond insurance to include manufactured products as well. The ability to create basic products and customize or configure them in a unique way that addresses many, differentiated needs is the gold standard for any enterprise; mass customization facilitated by mass-production economies and delivered with specific product tailoring to meet the unique requirements of the buyer.
Business is on a never-ending quest to find new ways to expand markets, gain new customers in existing markets and introduce new products for all markets. This puts a great burden on sales and distribution channels to accommodate new solutions and new markets with competence, confidence and effectiveness.
So, how do you equip your sales force to handle that kind of solution diversity? How do you communicate to your prospects that their needs may be effectively met by an obscure or unique configuration of one of your solutions?
We Just Can’t Sell like We Used to?
One of the biggest challenges for sales today is velocity. The day, the quarter or the year; none of these are getting longer. Yet expectations for accomplishment within those fixed intervals increase constantly. Clearly, the old way of doing things will not work.
For so long, customers and sales would engage in a sort of charade game where the seller would try to offer a solution based on a small amount of information. The buyer would reject the solution and provide another tidbit of information that the seller would use to select another solution. This back and forth might go on for months.
Clearly this process does not adequately serve either party. As the iterations of the conversation pile up, frustration mounts and so does the cost of the sale. By the time product and pain are finally harmonized or aligned, both parties are thoroughly disgusted if not outraged with each other.
Worse yet, the solution ultimately provided may have been accepted out of fatigue rather than evaluation against clear specifications.
On the sales side, this type of selling is where the temptation to push things along becomes so tempting. A close-enough solution offered at a discount might be perceived as an acceptable outcome.
A slightly better solution just might be the perfect answer and present a much higher perceived value to the customer.
The biggest issue with this model from the standpoint of selling is the duration involved. Sales can’t build a pipeline by constantly working on the same deals; a different way is needed.
The CPQ-Empowered Selling Cycle
CPQ eliminates all of the back-and-forth, try-this, now-this conversation. The prospect and the seller meet on equal terms and discuss the prospect’s needs in a deliberate, guided fashion. A recent study shows CPQ-empowered sales forces close deals averaging 105% larger volume and 26% faster closing speed than their non-CPQ-empowered counterparts.
The technology is equipped with scripts that are built to bring the buyer and seller into a conversation made up of the right questions and asked in the right order that use the subsequent answers to drive further questions and to ultimately build a full understanding of the prospect’s needs.
Additionally, the product solution is gradually built out using the scripting questions and answers to eliminate or include this or that part, feature, material, configuration or model. This conversation assures both parties that the need described and solution proposed are aligned.
No assumption is made, and no “try this out” is suggested. In this model, the process is built to establish exactly what is needed and build exactly what is required.
The conversation phase may not complete itself in 10 minutes, but it doesn’t run out of control over weeks or months. It is a deliberate, one-way path to mutual understanding and success.
The benefits are clear for both parties. The buyer doesn’t have to mess around with a repeat process to find what is needed to address their pain. As soon as the nature of the problem is understood, the solution is almost right behind.
For sales and for selling organizations, the benefits are immense: shorter, more productive selling cycles, happier customers and more time available to prospect or work other deals.
CPQ delivers great benefits to selling organizations that are looking to take the knowledge monkey off the backs of their sales channels.
Building the smart interview process for configuration, pricing and proposal generation into the CPQ solution frees up the rep’s time to look for other opportunities.
Individually, the rep can handle more opportunities and more variation in those opportunities—variation that might have previously required specialization.
These benefits also apply to the prospect and customers. Ultimately their buying experience is much more positive, and they come away with a greater respect for your ability to solve their problems or address their issues.
In the quest for growth, many variables come into play. Key to the growth process is the ability to handle more opportunity without incurring greater expense. This is where CPQ gets the job done.
In the end, it is the customer that will tell you if you are succeeding by buying and rebuying product from you. Making customers happy is all about being responsive to their needs and delivering effective solutions. CPQ is the key to making this happen.