What is Salesforce CPQ: A Beginner Guide [2024]

What is Salesforce CPQ?

CPQ (configure, price, quote) is Salesforce’s tool to make sales faster, more intelligent, and more effective. Companies that sell complex products or services can use CPQ in Salesforce as a viable solution for various tasks, including:

• Pricing automation to calculate product pricing based on their configurations, pricing rules, and any discounts being applied.
• Product configuration to quickly and easily configure products based on customer requirements, i.e., accessories, options, and bundles. 
• Quote generation for professional quotations that contain essential information like payment conditions, pricing, and contract terms. 
• Contract management to keep contracts, renewals, and amendments uniform on the Salesforce platform.
• Order processing to streamline sales with automated order creation, record update, and order fulfillment.

Salesforce CPQ can increase sales efficiency by reducing time and errors with quotations, improving customer satisfaction with faster order processing, facilitating quicker deal closing, and enhancing data management. 

Partner with a Salesforce certified partner to optimize implementation and ensure seamless integration of Salesforce CPQ into your sales process. Reading ahead, we cover the 

How Does Salesforce CPQ Work

We’ve covered what Salesforce CPQ is in the previous section, but how does it work? Here’s a simplified view of how Salesforce CPQ works and what it does:

Features Of Salesforce CPQ:

Product Configuration 

Sales representatives start by picking a base product or service in the system. Next, they are presented with different options, features, and add-ons based on the system’s predetermined parameters. 

Sales reps configure products or services based on customer needs and requirements. Additionally, products and services are organized based on their unique attributes, options, and pricing. Salesforce CPQ allows you to define business rules that dictate product configuration and pricing. 

Pricing Calculation 

The system calculates product pricing based on configuration, predetermined pricing rules, applicable discounts, and relevant taxes. Salesforce CPQ can account for list pricing, tiered pricing, and volume discounts, among other pricing models.

Quotation Generation 

The CPQ system lets companies generate professional quotations that include product details and pricing information, terms and conditions, and all necessary approvals. Quotations are essential to the sales process, and Salesforce CPQ streamlines them.

Contract Management 

Sales teams using Salesforce CPQ can track customer contract status, contract renewal dates, and amendment status if amendments are being made. CPQ also automates contract generation and renewal to accelerate contract dispersion and progression. 

Integration with other Salesforce modules (sales cloud, service cloud, marketing cloud) helps sales teams gain a holistic view during the contract process. All the proper departments are notified and can even use quote templates with company branding.

Order Processing 

The Salesforce CPQ system generates an order in Salesforce CRM whenever a quote is approved. This triggers various processes, such as inventory management, shipping labels, and fulfillment. One action leading others is a testament to the power of automation and how much can be done with the right tools. 

Product Bundles & Product Rules

This allows sales teams to combine similar products and services into one package, making selling and pricing easier. They can define the actions and conditions required to control the product configurations and pricing. 

Configuration Attributes

Products can be segmented based on attributes such as product size, color, and material. Additionally, relationships between attributes are built to ensure only valid combinations are selected. This prevents simple errors that hold up the supply chain.

Subscription Products

Let the Salesforce CPQ manage subscription-based products and services using automated billing and contract renewal. These tools help calculate and send accurate subscription billing at the beginning, end, or between terms. 

Price Rules & Discounts

Salesforce CPQ helps set different pricing rules and discounts for products. For example:

• Tiered pricing can offer customers discounts based on purchase quantity or volume.
• Applying promotional product discounts based on unique discount codes. 
• Using dynamic pricing to adjust product prices based on market conditions, customer behavior, or various other real-time factors. 

Contract Amendments & Renewals

Salesforce CPQ offers version control features for sales presto, including tracking contract changes and managing multiple versions simultaneously. CPQ can also automate contract renewals to reduce the need for manual renewals and follow-ups. Additionally, CPQ can track contract amendments and when they’re live. 

Price Optimization

To improve sales performance, CPQ can identify better pricing opportunities and evaluate potential profitability. When optimizing their pricing strategies, they can compare their prices with the competition and predict future product demand. 

This leads to more accurate pricing and enhances client engagement, as customers feel they are receiving fair and competitive pricing for products and services.

Guided Selling

A guided workflow with step-by-step instructions can be developed to help sales reps navigate the configuration process. These instructions can include suggested products and options that account for preferences and past purchases. There’s no better way to optimize performance than by using customer feedback to see what works and what doesn’t. 

Quote Generation

The best ways to use Salesforce CPQ quote  generation include:

• Customization with branded quote templates using the company’s logo and terms.
• Versioning by tracking changes on quotes and managing multiple quotation versions.
• E-signature that allows customers to electronically sign quotes, reducing contract turnarounds. 

Benefits of CPQ in Salesforce

Salesforce CRM integration with CPQ comes with various benefits. The most essential benefits of CPQ in Salesforce include:

Accelerated Sales Cycle

A streamlined process helps sales reps create and send accurate quotations in a fraction of the time. Businesses value time and automated quotation generation gives them minimal configuration errors and precise pricing and quoting. Automating mundane, repetitive tasks saves time and gets exponentially more work done simultaneously. 

Improved Quote Accuracy

Using a CPQ ensures accurate and consistent quotations based on updated pricing rules. The system follows every instruction and parameter, leaving no room for error and sending precise quotations to customers. Additionally, the CPQ system can find inconsistencies or errors during configuration, ensuring only accurate quotes are sent. 

Enhanced Sales Productivity

Automating pricing and configuration helps sales reps focus on finding new customers, building working relationships with them, and closing deals. They no longer spend time filling out forms and ensuring accuracy because Salesforce CPQ does that for them. The Salesforce CPQ also offers reporting and analytics to help sales teams make more informed decisions. 

Increased Revenue

• CPQ makes more accessible products or service recommendations simpler and complements the customer’s initial purchase, i.e., upselling and cross-selling and increasing the revenue per sale.
• The Salesforce CPQ data model helps businesses optimize pricing to maximize revenue by analyzing pricing data and market trends. 

Improved Customer Satisfaction

• CPQ helps sales reps provide quick, accurate quotes with faster response times, improving customer satisfaction.
• Personalized offers for customized product configurations and pricing help meet specific customer needs.

Salesforce CPQ Challenges

We’ve raved about CPQ for Salesforce features and benefits, and while the platform does a lot, it isn’t without its challenges. Here are the most common Salesforce CPQ challenges:

Complex Product Configurations

Building complex product configurations takes time and can be error-prone. It requires the right skill set and accuracy to ensure the entire workflow does what it needs to. The Salesforce CPQ might struggle with complex product attributes due to existing attribute limitations. If a product has unique features or characteristics, adding it to the system could be challenging. 

Data Quality and Integration Issues

Data accuracy and consistency must be met for the process to work, or the system will get an error. Taking care of data quality and integrating CPQ with an ERP or CRM requires technical understanding and experience to work as required.

User Adoption and Training

Salesforce CPQ integration comes with a learning curve, especially for sales reps used to manual processes. A new system will likely elicit resistance to change or fear of job loss. A common consequence of automation is no longer needing as many people on board. 

Limited Scalability and Flexibility

• CPQ must be upgraded or customized to handle more complexity or product volume when a business grows.
• Customization constraints may be limitations in tailoring it to particular business requirements.

Change Management and Resistance

• Implementing CPQ comes with significant organizational change that faces inevitable resistance from existing employees.
• Effectively communicating the benefits and changes associated with CPQ is crucial for successful adoption due to the intimidation of CPQ implementation. 

Drive Salesforce CPQ adoption with Spekit:

Spekit is a tool to improve the adoption and usage of Salesforce CPQ. What does Spekit do in Salesforce CPQ? Here’s what you need to know:

• Sales teams are guided and trained in-app, allowing CPQ users to understand and use its features as intended.
• Spekit tailors content based on user role and experience to ensure every member gets the proper training. 
• Spekit helps sales teams monitor user adoption levels and find areas where additional support is required.

More about Salesforce CPQ

If you’ve gotten to this part of the blog, you know most of what there is to know about Salesforce CPQ. However, we’re not done yet, and knowing the nitty-gritty of the platform allows businesses to better understand what it can do for them.

Salesforce CPQ Pricing

Accurate Salesforce CPQ pricing can depend on the business’s number of users, storage requirements, and specific functionality required. Here’s what Salesforce CPQ pricing looks like:

Feature	Salesforce CPQ	Salesforce CPQ+
Monthly Cost (Annual Billing)	$75	$150
Basic Configurations	Yes	Yes
Pricing	Yes	Yes
Quotation Software	Yes	Yes
Doc Generation	No	Yes
Advanced Approvals	No	Yes
Order Management	No	Yes
CALM	No	Yes
Other Features	Limited	Extensive

Maximizing Revenue with Revenue Optimization Pricing

Revenue-optimized pricing involves data analytics to provide accurate pricing for your products and services. Salesforce CPQ helps revenue-optimized pricing by:

• Pricing data analysis to collect and study data on market demand, product costs, and competitor pricing. You want pricing to be competitive but convince customers to pick your product.
• Finding new revenue-generation areas with pricing adjustments and promotional offers. Getting the right fit requires trial and error, which is essential for businesses regarding a winning formula. 
• Finding a revenue strategy that maximizes revenue generation potential without compromising customer satisfaction. Finding a balance is difficult but essential for short and long-term success. 

Expanding CPQ Capabilities

Salesforce CPQ continuously evolves and grows with new features and additions, regularly improving various aspects. Sales teams can adequately benefit from Salesforce CPQ by:

• Checking for the latest CPQ updates and releases. CPQ updates include new features and functionality, performance improvements, and bug fixes.
• Salesforce CPQ can be tailored to specific business needs, allowing sales teams to use a platform that solves their problems. 
• Integrating Salesforce CPQ with other Salesforce applications and third-party systems to improve functionality.

Conclusion

Salesforce CPQ revolutionizes sales by automating and streamlining quote generation, pricing, and product configuration. Its integration with Salesforce CRM ensures that sales teams have immediate access to accurate data, allowing them to respond swiftly to customer needs. By reducing the time spent on administrative tasks, sales representatives can focus on building relationships and closing deals, ultimately driving revenue growth for their organizations.

As businesses adapt to the demands of a fast-paced market, implementing Salesforce CPQ becomes increasingly essential. This powerful tool enhances efficiency and accuracy and empowers teams to deliver personalized quotes that resonate with customers. Embracing Salesforce CPQ positions organizations for success in 2024 and beyond, making it a critical component of any modern sales strategy.

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