What is Quote-to-Cash?
A successful quote-to-cash process is all about execution. Failure to execute delays revenue. An effective quote-to-cash process speeds the receipt and realization of sales revenue.
Quote-to-cash is that all-important portion of the buy cycle that begins when the customer decides to buy and ends when the seller receives revenue associated with the sale.
CPQ (configure-price-quote) software accelerates the entire contract-to-cash process flow.
For the seller, the quote-to-cash phase of the sale is critical because this is where promise transitions to performance and where the seller must go beyond “we will do this or that” to actually start delivering on the promises. Successful quote-to-cash is all about execution. Failure to execute delays revenue. Effective quote-to-cash processes speed the receipt and realization of sales revenue.
For the buyer, this is where hope is confirmed and confidence is affirmed. Effective execution and performance after the sale is what the buyer needs to see before payment is rendered. This is the salesperson’s opportunity to turn the buyer into a hero.
Execution Drives the Quote-to-Cash Process
What the buyer sees and experiences during quote-to-cash will define their overall impression of the product, the sales rep and the seller, in general. Pitfalls and screw-ups during quote-to-cash are common, and the seller must react immediately to offset any negative effects from those anomalous events.
Common failures during this phase of the sale include:
- Realization of product misalignment with actual need
- Adjustments to the selling price
- Order-entry errors
- Production delays
- Production errors
- Delivery failures or miscues
This is certainly not an all-inclusive list, but addressing and preventing these execution missteps certainly covers many of the most common issues that occur after the sale. Let’s look at how these issues can be effectively mitigated.
CPQ Mitigates Sales Issues and Pain Points within Quote-to-Cash Transactions
Product Misalignment
Buyers expect the product or service they are purchasing to actually fix the problem or pain points they are experiencing. That sounds like an easy concept, but in reality, many pains and problems are complex in nature, and the solutions are equally complex.
CPQ software will help address this issue by ensuring that the seller and buyer have a complete understanding of the problem and the solution required. CPQ accomplishes this within the context of the discovery interview that queries the buyer to supply detailed and complete information about the issues they are experiencing.
The product that is ultimately offered to the buyer is essentially designed by the buyer. The buyer sees a physical representation of the product being purchased. This delivers assurance that the product specified, configured and built aligns with the problem described.
Price Increases
Nothing spoils the punch like an unexpected price increase. Buyers move forward in buying cycles only when they feel the price matches the value delivered. Once a decision is made and once the solution is fully specified and configured, the price should be fixed. A CPQ quote assures the seller and buyer that the selling price for any solution is correct.
CPQ solutions utilize product, part and pricing tables that reflect product content, transaction location and customer status, in terms of special discounting and any promotional pricing that may be in effect at the time.
A CPQ-managed quotation process flow ensures that quotes are timestamped and detailed, as well as accurate.
Order-Entry Errors
Manual processes that require transcribing sales notes onto order-entry forms provide a great opportunity to mess up an order. Part codes, SKUs, quantities, descriptions and pricing information are all subject to fat-fingering or transposition errors.
A CPQ tool eliminates this by automatically creating a detailed part list, a bill of material and pricing as the product is configured. This data is automatically transferred into the order-entry system, thus ensuring an error-free order. Order acknowledgements are provided to all parties for the purpose of confirming that the data is indeed correct.
Production Delays
Promise-by dates are frequently missed because the seller simply doesn’t have adequate inventory to fill the order entered. Other factors such as changes in production scheduling can cause this as well.
CPQ sits astride of the entire order-to-cash process. It is built with interfaces that allow visibility into inventory and supply-chain data to ensure that adequate parts and supplies will be on hand to meet any required promised-by date.
CPQ also communicates delivery requirements to the production scheduling system to ensure that production slots are available for the order. Production dates are locked in upon order entry.
Making the wrong thing or making the right thing in the wrong way is avoided by making sure the required product specifications are properly communicated to the production process. CPQ provides a detailed bill of material that was created during the configuration process. It details all of the required variations and modifications required to ensure that the product being built aligns exactly with the product purchased. There is no guesswork during the production process. When does the customer expect the product? Where is delivery to be made? How is the product packaged? Customers have all manner of unique requirements related to the delivery of products. Some customers require delivery after normal business hours; others expect delivery to a centralized receiving facility or directly to the point where the product will be used. Whatever the customer requirements, CPQ can make sure that these instructions are included in the original order information. Carriers can be specified and clearly stated, as well as delivery times and locations and special handling instructions. Getting the execution right is critical to keeping the deal and ensuring that the customer’s expectations are met or exceeded. Quote to cash is all about doing what you promised to do. The benefits are certainly not limited to the quote-to-cash portion of the transaction. CPQ vendors interface CPQ with CRM and other marketing tools to accelerate the entire lead-to-cash cycle. The entire customer experience is elevated with CPQ.Delivery Failures and Miscues
CPQ Benefits Go Beyond the Quote-to-Cash Process
