A CPQ System Removes the Complexity from Selling Complex Products

Brett Ames, Senior Outbound Product Manager

September 20, 2022

A configurable product might be as simple as a bicycle or as complex as a hydraulic pump. What’s always true is that selling goods that comprise many different systems, each with their own parts and corresponding attributes, requires advanced quoting capabilities.

B2B businesses are continually working to improve their sales processes, speed up their sales cycles and boost revenue. However, makers and sellers of configurable products face challenges because of the very nature of their offerings — when customers can customize, that adds complexity. Available attributes might include common characteristics such as dimensions, weight,  color, material and style. Industry-specific attributes range from carats for jewelry to engine size for vehicles.

The unique nature of custom products presents challenges for the people charged with making and selling them. They include:

Manual quoting costs time and cuts into revenue. Because each iteration of a quoted product is custom, it can contain many possible attribute combinations, each with a specific price as well as potentially unique bulk and customer-specific discounts. A manual quoting process that relies on antiquated tools like spreadsheets and price books is far too slow and unreliable. 

Inaccurate quotes and orders. Most makers of custom products do not and cannot support all possible attribute combinations. For example, a given vehicle chassis may only support a few engines and drivetrains. The systems and processes that support salespeople must prevent them from quoting a product that contains an invalid asset combination. Otherwise, these erroneous quotes may make it to the assembly line and get kicked back to sales to be reworked. To avoid that, many organizations add additional approval layers to manually double check quotes before converting them to orders, slowing sales velocity. 

Customer Story: Continued expansion and a desire to deliver a better customer experience led Platinum Stairlifts(opens in new tab), a leading manufacturer of residential stairlifts, to upgrade its sales and manufacturing systems. The company implemented NetSuite CPQ to help sales reps quickly build custom quotes and branded proposals that are easy for senior citizens to understand. Since CPQ was tied to advanced manufacturing processes, salespeople were able to ensure all the right parts were ordered and pricing was competitive. As a result, Platinum Stairlifts’ sales reps produced quotes twice as fast as with the old system, while cutting the error rate to zero.


Over-discounting and profit-margin loss. Another challenge is how to determine the price of a one-of-a-kind item. Without predetermined pricing rules in place, sales organizations must determine a list price and discount for each order or pull in engineering resources to vet and approve their quotes. Neither choice is optimal: Allowing sales reps to set their own pricing usually results in over discounting and lower margins. While involving engineering resources may keep sales honest, it also hurts margins by increasing the cost per quote. 

Inefficient sales-to-delivery handoff. Most manufacturers’ quote-to-production process is linear and cumbersome. Once a customer contacts sales to request a quote for a product with a specific set of options, a sales rep will collect requirements and send these specs to an engineering team to assess the feasibility of making the requested product option combination. Engineering then creates a bill of materials (BOM) containing all the items needed to make the product, as well as routings to define the steps needed for production. If any part of this process requires a change along the way, such as the customer wanting a different material, then the process must begin anew. This often means weeks of back-and-forth before manufacturing can even begin. 

Configure, Price and Quote (CPQ) Software Solves These Problems

To mitigate these sales challenges and better engage increasingly more sophisticated buyers, companies need to adopt automated business systems to do the heavy lifting. Configure, price and quote (CPQ) systems help makers of complex products automate their sales and manufacturing processes to improve both revenue and profits.  

With a CPQ solution, salespeople use a web interface to create quotes by selecting from available attributes for a given product based on their customer’s needs. Pre-determined business logic ensures only commercially viable, valid attribute combinations can be selected, assuring only deliverable products are quoted. As the product is being configured, pricing is adjusted in real-time using the same business rules. Salespeople can focus on selling, resulting in a dramatically improved customer experience, more quotes per rep and higher close rates.

Establish A Fast, Error-free Quoting Process with NetSuite CPQ

NetSuite CPQ enables sales teams to quickly configure, price and quote complex products and services with complete accuracy and reliability — directly in NetSuite. The ability to create 3D product visualizations and automatically generate sales proposals further enhances and accelerates the sales process. The CPQ software works seamlessly with NetSuite ERP, CRM and ecommerce solutions using NetSuite pricing, inventory and profitability data and connected workflows that automate the transition from sales to delivery, generating BOMs, routings and work orders.

Register(opens in new tab) for the Suite Fundamentals product demo webinar to learn more about NetSuite CPQ.

 

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there's continuity from sales to services to support.

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