A detailed guide to CPQ for marketers
By Yahong Zhang |Table of contents
What is CPQ?
If you are looking for a CPQ definition, you should know that CPQ stands for “configure, price, quote”. It is a technical solution that allow sales professionals to customize an offer and provide real time prices for clients.
A simplified 3D CPQ demonstration provided by luxury brand Lolo Chatenay and tech startup Hapticmedia.
CPQ software enables marketers to create quotes effectively right on the spot, saving time and ensuring correctness.
At first, configure price quote solutions were used for business-to-business industries, where complex and configurable products were sold. Later on, as demands for personalization largely increased and mass customization became an important tool of retail, its usage expanded to business-to-consumer sectors.
Nowadays, a CPQ tool might be used on direct-to-consumer platforms which sell anything from beauty products, to jewelry, apparel, clothing, shoes, accessories, furniture and so on.
The CPQ software, thus, simplifies the procedure for pricing and product presentations, making the sales process much more effective and transparent, while also allowing consumers to play with different configurations, compare costs and make the best decision for them.
How do CPQ solutions work?
Premium brands are using CPQ software to offer a personalized and interacive shopping experience for clients, solutions provided by Hapticmedia.
CPQ solutions rely on the same data and formulas that sales professionals usually use from their spreadsheets.
Difference is that the tool employs computer science to build a database, establish a set of rules, automate the calculating process and present results clearly and efficiently to the sales force and clients, thus optimizing the delivery time and ensuring accuracy.
From configuration to quoting, a CPQ software is able to integrate rules for many a scenario including discounts, special requests and approvals from supervisors, which largely reduces the manual efforts required from the sales person.
To de detailed, for B2B businesses it means that the sales agent may now focus on actually persuading the customer and presenting necessary arguments, instead of calculating costs and getting managerial approvals.
Moreover, a CPQ tool reduces human resources costs and allows integration with other e-commerce platforms and apps to offer more functionalities for users.
Nowadays, configure price quote solutions are becoming a popular tool for luxury marketing to provide personalization to higher end clients.
What are the elements of CPQ software?
1. Configuration
Configuration refers to the process each customer chooses to customize the products, to add or remove functional and aesthetical features.
With the advancement of Industry 4.0 and smart factories, mass customization has been winning terrain among both brands and consumers.
Possibility to offer configuration or customization brings in more revenues and boost loyalty
Based on Statista, 57.2% of Millennial responded that they would pay more for personalized luxury goods, while only 7.6% said they wouldn’t. Companies that set up this best practice understand the value of customization in attracting, engaging and upselling as well as building loyalty among customers.
As Aberdeen research shows, brands that offer mass customization are witnessing an increase in revenue and efficiency while a reduction in costs, as they are now able to produce millions of personalized goods in record time.
This feature of CPQ offers buyers a high range of options and allow them to custmize each product according to their preferences and tastes.
To provide an even immerse shopping experience, we, at Hapticmedia, are able to combine CPQ with 3D technology and Augmented Reality, which allows users to customize the product in 3D and virtually try on the item.
Guerlain fans, for example, can create their signature perfume and lipstick through a 3D product configurator, choosing sizes, colors, cases, accessories, engraving their initials and so on.
2. Price
CPQ software use a set of rules to calculate the final cost of an customized item. For users, all that needs to be done is check the option boxes. Based on previously integrated formulas, the system will automatically calculate the offer and simultaneously display the price.
3. Quote
Sales professionals used to spend a significant amount of time on drafting quotes to showcase various configurations and explain consumers from where the price differences come, especially for complex products and services.
With the help of CPQ, this is done instantly. A dedicated CPQ solution reduces the delivery time and issues a beautiful and standardized presentation for clients, with respect to the company’ branding and marketing strategy.
Even more, when integrated in e-commerce platforms, CPQ enables shoppers to understand how each feature contributes to the final price and therefore to choose options that make the most sense financially.
Huge market potential and applications of CPQ
CPQ tools are getting increasingly popular, as the market is expected to grow by 13% each year with a big leap of $1.14 billion from 2019 to 2024, according to Technavio figures. Industries that embrace configure, price and quote tools include:
Automotive: Car dealers enable consumers to customize everything, from the color of the vehicles, the engine power, to additional features such as parking sensors.
Fashion and Apparel: Customized bags that include the buyer’s name or message, t-shirts with custom prints - all these are quickly selected and priced using CPQ.
Jewelry and luxury: With the help of CPQ, users may choose between multiple designs, materials, sizes and colors, create a personalized signature piece and purchase with just a few clicks.
Beauty: Those passionate about beauty may customize packaging and engraving.
Furniture: direct-to-consumer platforms enable potential buyers to create and purchase on the spot pieces that fit their existing spaces and demands.
F&B: Online food delivery platforms enable users to choose the ingredients that go in their pizza, sandwiches, salads, or even to create dishes from scratch.
Transportation: Where plane and train tickets are purchased from online vendors.
Hospitality: As hotel rooms may be chosen, booked and paid online, brands begin to offer guests the opportunity to also opt in for additional services.
What are the main benefits of CPQ?
Make quotes rapidly and accurately to drive efficiency
CPQ software reduce errors while efficientizing the costs associated with human resources.
Sales professionals used to spend a significant amount of time on drafting quotes to showcase various configurations and explain consumers from where the price differences come, especially for complex products and services.
With the help of CPQ, this is done instantly. A dedicated CPQ solution reduces the delivery time and issues a beautiful and standardized presentation for clients, with respect to the company’ branding and marketing strategy.
Increase e-commerce conversion rates and customer satisfaction
As mentioned above, possibility to offer configuration or customization to clients brings in more revenues and boost loyalty. This strategy works even better in the luxury industry, where personalization and exclusiveness are core values.
CPQ solutions offer power to the consumer, who can now interact with the product, play with the configurator, see instant prices and make an online purchase 24/7. They are able to customize the item according to their choices and do so on their own, without having the trouble to discuss with a sales professional.
This technology also encourages on-the-spot acquisitions, since it takes only a few clicks from design to quotation. This makes it an excellent tool for direct-to-consumer websites, where payment solutions are integrated.
Encourage consumers to access a wider range of products
In today’s hectic world, convenience is key.
According to the 2020 Retail Industry Outlook by Deloitte, shoppers perceive convenience as “easy access to more offerings”, “special access to services that meet my needs” and “easily see the added value I’m receiving”.
Therefore, a high array of mix-and-match products is an excellent way of creating a convenient and personalized shopping experience.
Facilitate digitalization in the context of Luxury 4.0
In the context of Luxury 4.0, CPQ is an excellent tool that brings added values to the relationship between brands and consumers, by giving the latter the power to create exactly what they want, without be limited to the standardised manufacturing procedures of companies.
Impacts become even more important, when companies are able to digitize and automate their businesses, while reducing the involvement of human workers in actual processes, thus increasing both productivity and profits.
Ensure consistency in pricing
Consistency in pricing is extremely important for consumers and difficult to attain, especially when each sales professional is required to create their own quote while juggling margins. A CPQ solution, on the other hand, ensures shoppers that pricing is correct and consistent.
Contribute to brand trust and loyalty
Configure, price, quote softwares offer transparency and personalization, enabling consumers to see in real-time how each element and option impacts the final pricing. This increases their trust in the brand, contributing to their loyalty.
Real world case studies: Lolo Chatenay and Edenly
Edenly
Founded in Geneva, 2008, Edenly is a diamond jewelry maker who sells high end pieces on its direct-to-consumer platform. The brand works with France’s greatest jewellers to create signature and memorable jewelry items.
Hapticmedia developed for Edenly a 3D jewelry configurator, which enables worldwide consumers to create their own product by choosing from various designs, materials, cuts, weight, colors and so on.
This is an excellent CPQ tool, to ensure that shoppers get an instant and accurate quote of their personalized item, while also enabling them to play with configurations and see how budgets vary.
The project is extremely appreciated by the client and their customers, as it led to an increase in sales and generated word-of-mouth, which further helps to attract audiences who are less familiar with the brand.
Lolo Chatenay
“Lolo-Chatenay no longer views handbags as single items, but as a combination of several detachable parts. The aim is therefore to change the look of the bag depending on fashion trends, as well as the user’s mood and style,” said Laurence Carry, founder of Lolo Chatenay.
This high end brand wanted to offer clients an appealing user experience that helps bag aficionados to co-create items, which would fit their own unique lifestyle.
To achieve this goal, Lolo Chatenay cooperated with Hapticmedia and launched a 3D bag configurator.
With this advanced 3D CPQ tool, bag lovers can now start their digital shopping journey by choosing preferred sizes and styles and then focus on colors, fabrics and adorning elements. With each change, the price adjusts, enabling users to see how each choice affects the overall quote and to decide accordingly.
During this process, with 3D technology consumers can also interact with the item, look at the product from a 360° angle, while rotating, zooming in, zooming out and analyzing each detail. Once everything is done and the customer is pleased, they can order and pay in just a few clicks.
Resources
https://www.statista.com/statistics/781698/luxury-goods-personalized/
Contact Hapticmedia now to see our successful user cases and the visible improvement we have brought to our clients. You will be amazed.