In our previous blog post, we explained how sub-optimal configure-price-quote (CPQ) processes negatively impact the main aspects of a service provider’s B2B revenue. In this blog post, we present three more.
- Mergers & Acquisitions
Historic M&A is often one of the main causes of a complex and inefficient legacy infrastructure –particularly around CPQ processes, and it can cause chronic problems. But since these inefficiencies are not seen as a priority or are perceived as being too difficult to fix, staffs create workarounds and the problems persist. Since it’s often easier to get budget to buy a new system for delivering new functions or supporting a new product than it is to fix complex process-driven problems, staffs may not even bring these negative impacts to senior executives’ attention. Addressing this issue not only optimizes CPQ, but also increases the volume and effectiveness of M&A activity.
Sub-optimal CPQ processes make it hard for CSPs to compete. They hinder a service provider’s ability to compete on prices, while also ruling out any other competitive edges. When an organization has poor CPQ, it needs to raise its prices to cover the heavy price of maintaining legacy systems, extra staffing, and other problems. If prices were to be based instead on sound information about what the customer wants, as well as other information that poor CPQ obscures from senior staff, they could be lower.
Pricing aside, customers can clearly sense discrepancies among various SP’s CPQ performance, observing that one organization takes weeks to do a process that takes other organizations mere hours. Lack of agility hinders salespeople’s ability to sell, and customers will naturally gravitate to the more agile and accommodating organizations that can deliver price quotes faster. Finally, poor CPQ prevents innovation. Salespeople lack real-time product catalog views and automated systems and cannot keep up with the complex, fast-changing nature of B2B pricing and products. This stops them from effectively selling B2B products fully optimized for both customer benefit and SP revenue.
When CPQ processes are inefficient, salespeople make less sales and morale plunges. They tend to focus on bigger and more complex deals, instead of the smaller and simpler deals that would spread risk and boost revenue, in order to meet their targets. In such conditions, the best salespeople will leave to better-performing companies. This results in high churn among both staff and customers and high recruitment and training costs for expensive, high-demand new staff that has the required skill and experience to bypass poor CPQ.
CSPs may try to fix poor processes by bringing in more staff to solve the problem –raising costs even more, and potentially introducing even more complexity and potential errors to the process. Improving CPQ would give staff the tools to improve their performance and increase customer satisfaction, which would in turn improve morale, lead to higher employee effectiveness and satisfaction, and reduce staff churn rates.
It’s important to note that none of the compromised business aspects discussed above exist in a vacuum. They influence each other and overlap, continuing the cycle of pan-organizational damage indefinitely. SPs therefore need to address CPQ to prep every area of their organization for B2B changes.
To learn more about the damage that poor CPQ causes, tune into our webinar on September 21.