CPQ software Salesforce tools support and speed the sales process


CPQ tools market gains traction in front office

While the CPQ market is consolidating, its importance in expediting front-office processes and enhancing the customer experience is growing.

Customers expect the businesses they interact with to meet their needs, regardless of the channel they communicate in or the products and services they want to purchase. These individual interactions bring added complexity to businesses looking to provide their customers the right price at the right time and ensure a sale.

Due to this customer transformation, companies have begun using configure price quote (CPQ) tools to help navigate the customer journey and be prepared for a quote. "Think about that experience of buying something and that process -- there's a lot of back and forth between buyer and seller," Forrester Research analyst John Bruno said. "The value of CPQ is the ability to streamline that engagement and understand what the buyer needs and align to meet those needs."

The increased emphasis on customer experience has driven the need for CPQ tools, moving the configuration, pricing and quoting functions from mostly back-office software to the front office and closely connecting with CRM systems, which value customer experience. Combine customer experience with technology that continues to get smarter and faster and CPQ is a near-requirement for companies selling products and services.

"Buyers expect a seamless experience," Bruno said. "It's up to the seller to deliver it, and one way they are doing that is with CPQ."

CPQ a critical component of CRM

Since 2010, the CPQ software market has seen tremendous growth, with CRM industry leaders investing in tools from CallidusCloud, IBM, Oracle and Salesforce. Other companies such as Apttus continue to update their CPQ tools to integrate with CRMs and provide intelligent insight.

According to a 2016 Accenture study, 83% of the 800 sales professionals surveyed use CPQ software. Gartner predicted 20% annual growth in the market through 2020, as companies continue to replace legacy applications with cloud-based CPQ software.

The value of CPQ is the ability to streamline that engagement and understand what the buyer needs and align to meet those needs.
John Brunoanalyst, Forrester Research

Last year, Salesforce acquired SteelBrick, a CPQ software company that was built on the Salesforce platform. The acquisition consolidated the CPQ market and provided the CRM company with its own CPQ application offering to continue the shift of CPQ software entering the customer experience space. "With Salesforce being a household brand in the CRM space, when they make a decision, folks take notice of it," Bruno said. "One of the things Salesforce looked to do when acquiring SteelBrick was look for a solution that was built on the Salesforce platform that leveraged the same out-of-the-box functionality, largely because it would accelerate their time-to-market. And it did not take long."

Just a couple of months after purchasing SteelBrick, Salesforce rebranded it as Salesforce CPQ. "What we're doing as part of CPQ is taking that extreme customization it allows and [democratizing] it," said Will Spendlove, vice president of marketing for Salesforce Quote-to-Cash. "We are taking this difficult process of configuration, pricing and quoting and [making] it available to many more customers."

The SteelBrick acquisition sent shockwaves through the CPQ market. Apttus is also built on Salesforce's platform and partners with the CRM company frequently -- and now has to compete against its part-time partner. "We're focused on insuring that we're aligned and leveraging as many of those partners as we can, ... but there are times that we potentially get into a situation where we cross over a little bit," Spendlove explained.

Kamal Ahluwalia, chief revenue officer at Apttus, snickered that he "would love all these competitors to disappear," but acknowledged that the competitive CPQ software market is driving demand and innovation -- and the $40-billion market is large enough for several software choices. "When you define it, CPQ becomes a critical foundation piece on how you go to market and how you are agile in creating offerings," he said.

What's driving the CPQ market?

The way customers interact with companies has drastically changed over the last 10 years, as many more touchpoints and mobile have made the selling process more complicated and convoluted. "Omnichannel sales are driving the CPQ market forward," Bruno said.

Bruno described a scenario in which CPQ tools could benefit customer service reps during a customer complaint. By feeding CPQ information into a CRM system, service reps can quickly see if the customer has all the products they need, and if not, then quickly diagnose and fix the problem.

"A service rep can always troubleshoot the issue, but with CPQ, they can see what you ordered and correct your purchase," Bruno said. "Maybe the customer didn't buy all the products needed. CPQ injected into customer service can help the service rep."

CPQ is getting smarter

The CPQ process is complex, especially when factoring in all the various discounts, rules and channels customers encounter. To help manage this process, CPQ will benefit greatly from artificial intelligence (AI) capabilities and smarter computing.

"CPQ will see some of the biggest impact with AI and machine learning," Bruno noted. "When using machine learning or AI, you need two things: clean data and a lot of it. For most organizations, the cleanest, largest sets of data come from transactions and what you sold, how much you sold and to whom."

AI functionality in CPQ software would be able to leverage the knowledge residing within contracted revenue, the indicators driving quotes and the impact on conversion rates to provide insight for sales reps. "CPQ has a very complete picture across all channels of what the business is doing, what has worked in the past and what trends are going forward," Ahluwalia said. "You can take that context and develop algorithms that can recommend a certain bundle and tell you the likelihood of closing this deal is 90%."

The AI insights aren't quite there yet, but Bruno expects the market to start implementing AI capabilities into CPQ software in 2017. Salesforce has been slowly integrating its AI platform, Einstein, into its various products, and while Spendlove was quiet about specific AI upgrades for Salesforce CPQ, customers should expect intelligent upgrades in 2017.

'Everyone wants to be the next Amazon'

Improvements still need to be made for CPQ tools, including making it more user-friendly for nontech-savvy administrators. "One of the things vendors want to do is ease the burden of administrators for supporting products, and one area is around quotes," Bruno said. "Whether it's Salesforce or other products, we're still a little ways away for them to mature their administrative offerings so a nontech user could make necessary enhancements to quoting, pricing or configuration processes."

CPQ software's importance in B2B selling and processes is becoming more paramount, especially as consumers continue to get more comfortable buying and communicating in multiple channels. "Everyone wants to be the next Amazon," Bruno said, "and whether you think you want to or not, your customers will now have that expectation that you're going to deliver those kinds of recommendations because when [B2B] sellers take off that suit and tie and go to buy something as a consumer, that's the experience they get. The only difference between a B2B buyer and a B2C buyer is how much they spend on dry cleaning."

Next Steps

SteelBrick adds Einstein and rebrands as Salesforce CPQ

Salesforce extends its CPQ application to the Service Cloud

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