The manufacturing landscape is changing rapidly. Customers no longer want off-the-shelf solutions. They expect organizations to offer products that fit their needs –products that are built just for them. This demand for customized solutions propels the Configure-to-Order or CTO model into the spotlight. It allows organizations, especially manufacturers, to deliver customized products to their customers.
However, offering Configure-to-Order solutions at scale isn’t easy. It brings complexity in pricing, configuration, as well as quoting. To cope with these challenges, organizations turn to CPQ software to make processes work smoothly.
Let us look at how the CTO model helps organizations meet their customers’ needs and how CPQ software helps organizations succeed with the CTO model.
What Is the Configure-to-Order (CTO) Model?
The CTO approach lets manufacturers combine pre-designed components to create custom products. That means organizations already have the pieces, they just arrange them in the right way for each order as per the customer’s demand. This speeds up production while still offering customization.
Configure-to-order model works well in industries like:
- Specialty vehicles: In the specialty vehicles industry, customers may want to choose engine types, interiors, or technology add-ons to customize the vehicle for their special needs.
- Industrial equipment: Customers in the industrial manufacturing industry may have precise requirements, like the size or material of a specific tool or adding an attachment.
- HVAC – In the HVAC industry, customers may demand highly customized systems with complex variants and required services to meet their specific requirements.
Why Are More Companies Turning to CTO?
Customers Want More Choices
Customers want products that match their needs. Configure-to-Order helps deliver that without long wait times.
Faster Response to Market Shifts
It lets organizations adjust quickly when demand changes. Just change a few parts to meet specific needs and ensure customer satisfaction every time.
It Sets You Apart
Being able to offer products and services configured to customer needs shows that your organization adopts a customer-oriented approach. It can make a big difference compared to other competitors.
However, without the right tools, it’s easy to make mistakes or miss deadlines. That’s where CPQ software helps.
The Manufacturer’s Guide to Successfully Selling Complex Products with CPQ
In this whitepaper, learn how CPQ can supercharge your sales process, increase efficiency, and drive profitability.
How CPQ Software Supports Configure-to-Order Operations
In Configure-to-Order, every customer order can look slightly different. The sales team must ensure valid product configurations, calculate accurate pricing, and generate quotes. CPQ acts as a central system to handle this complexity and make the process fast and accurate. Here’s how CPQ software supports each stage of the CTO journey:
1. Feasible Product Configuration for Custom Orders
In CTO product configurations, things can get complicated quickly due to different features, sizes, or accessories. CPQ software uses built-in logic and rules to guide users through valid configuration options. For example, if a customer wants a specialized industrial pump, CPQ ensures that only compatible motor types, casing materials, and control systems are selected together. With CPQ in place, organizations can not only save time but also ensure the final product is feasible.
2. Real-Time, Customer-Specific Pricing
The pricing calculations in CTO solutions can be dynamic. It can change based on the chosen configuration, quantity, and materials used. CPQ software calculates prices in real time, using pre-defined pricing rules. Moreover, if the configurations change, the CPQ tool can update the total price instantly. It can also apply approved discounts, bundles, or specific terms.
3. Fast, Error-Free Quoting
Quoting the final product in the Configure-to-Order model can be a tricky and lengthy process. Sales reps must piece together technical specs, pricing data, and customer terms. Mistakes are common, and errors lead to revisions and lost time.
CPQ software automates quote generation based on the configured product and pricing details. Quotes are generated in minutes—not hours—and include all the necessary technical documentation, pricing breakdowns, and delivery terms.
The result? Clear, professional quotes that give customers confidence and help close deals faster.
What to Look for in CPQ Software for CTO
Not every CPQ solution is made for CTO environments. Some lack the flexibility or features needed to manage complex product lines. Here’s what to look for:
1. Configuration Rules That Handle Complexity
The CPQ software you choose should have logic-based rules that guide users through valid combinations. This is essential when products have lots of options, dependencies, or limitations.
2. Guided Selling
Guided selling for CTO helps salespeople ask the right questions. It walks sales reps as well as customers through a structured configuration process with helpful and guiding prompts. This helps customers match the product to their actual needs, even when the salesperson isn’t a product expert.
3. Integration with ERP and CRM
CPQ software should work with the systems you already use. It should pass data to ERP systems for production, and it should pull customer details from CRM platforms to personalize the quote. This removes duplicate data entry and keeps teams aligned.
4. Scalability
Choose a tool that can scale with your processes and workflows. Look for cloud-based platforms, flexible rules engines, and tools that support different product lines or international pricing. Configure-to-Order models evolve as businesses grow, and your CPQ tool should be able to grow with it.
Why CPQ Software Is a Smart Investment for CTO
CPQ software changes how your teams work with customers. Here are key benefits that CPQ offers:
Better Buying Experience
With a CPQ solution in place, organizations offer quick responses and clear communication to customers, which enhances their experience. When they get accurate quotes and personalized solutions, they are more likely to move forward with the purchase.
Less Back-and-Forth
Sales, engineering, and operations often struggle to stay on the same page. CPQ integrates with existing systems to act as a shared source of truth. Everyone sees the same details, and changes are tracked effectively.
Better Flexibility
CPQ software gives organizations flexibility to deal with changing customer needs, market shifts, and competitor strategies when it comes to pricing and quoting processes. Consequently, organizations can grow without breaking processes or adding layers of manual work.
Final Thoughts
The Configure-to-Order model offers a competitive edge to organizations. However, it also brings complexity that traditional tools can’t handle.
CPQ software helps manage complexities by guiding product configurations, calculating pricing, and delivering professional quotes quickly and accurately. It helps teams avoid errors, reduce delays, and focus on what matters, building the right product for the customer.
FAQ
1- What is Configure-to-Order?
Configure-to-Order is a sales model where products are built using pre-designed components based on specific customer requirements.
2- What is Configure, Price, Quote Software?
Configure, Price, Quote software helps organizations manage product customizations, pricing, and quotes efficiently. It allows sales and engineering teams to create tailored configurations based on customer needs.
3- How does CPQ support CTO manufacturing?
CPQ software supports CTO manufacturing by simplifying product configuration, automating complex pricing, and generating accurate quotes.
4- How to choose the right CPQ for complex product configuration?
When selecting a CPQ solution for complex product configurations, look for:
- Advanced configuration rules
- Guided selling functionality
- Integration capabilities with ERP and CRM systems
- Multi-channel support
- Scalability and flexibility
5- What are the benefits of using product configurator software for CTO solutions?
Using product configurator software in a CTO environment offers several advantages, such as faster sales cycles, improved pricing accuracy, feasible product configurations, and elevated customer satisfaction.
