First-class and high-quality products alone are not (anymore) enough.
The good news at the beginning: Customers can still be won with first-class, high-quality products. However, hard performance figures and mechanical functions alone are no longer the most important arguments for the purchase decision.Criteria such as availability, energy efficiency, or total operating costs are playing an increasingly important role – and the provision of first-class services that are perfectly tailored to the product and intended use.
In addition, the growing importance of the service business for corporate success and (once again) some trends spilling over from the consumer goods world mean that many machine and plant manufacturers have to rethink and adapt their traditional business model:
The focus is not on the product or its ownership, but on its use.
Benefit-based sales models are on the rise.
Machine and plant manufacturers not only have to develop, manufacture, and sell their products – they also have to own and operate them if necessary.
To put it bluntly: Customers are no longer interested in the product or in the functions
They are interested in the results they want to achieve with the product. The right answer for machine and system manufacturers are therefore powerful sales tools with which they:
Be able to configure the ideal solutions for customer requirements error-free and application-oriented, without getting lost in technical details
Be able to offer the right service offerings based on the current product configuration right from the start
Can optimize the service offerings according to the product configuration made
Different pricing models (one-off costs, monthly subscription costs, usage-dependent) can be flexibly selected.
Application-oriented product configuration and “best price” guarantee from a single source
The new subscription or “X as a Service” world has a catch: In many companies, it takes place in different systems. Offer and sell capital goods together with services? A real challenge for companies, caused by isolated, decoupled systems and processes. This has negative consequences:
Offering the right services for highly variable products is a lengthy and costly process.
Service offers cannot be optimized for the characteristics of the customer-specifically configured product
Product configuration and service offerings have to be configured in different systems.
Double, error-prone data maintenance
Subscription pricing for Tacton CPQ extends
Tacton’s configuration engine to optimize products during configuration not only according to specific customer requirements (such as operating costs, consumption or performance characteristics) – but also the possible service offers that match the currently configured product.
The result is a central CPQ system with which sales and distribution partners can configure customer-specific products and services without errors, price flexibly and create comprehensive offers at the push of a button.
Flexible pricing of service offers (one-time payment, monthly costs, depending on usage)
Offer tailor-made services based on the currently configured product.
Want to automate and accelerate manual processes in sales and distribution.
Want to increase the success rate of your offers.
Want to reach and convince your customers on digital sales channels.
Tacton CPQ is the control center for all sales-related information, such as B. the offered product configurations, the created offer documents including the associated CAD documents, prices, and reliable delivery dates.Create the optimal offer based on reliable data and offer your customers the best product for their specific requirements.No matter which criteria are important for your customer: Our CPQ solution enables the configuration of tailor-made, customer-specific products and solutions. Application-based and error-free.
Working with contracts and subscriptions introduces some new nomenclature and to make it easier to understand and follow, the most common abbreviations are explained below. In contract and subscription, the content is about value rather than price and the reason is that when contracts are signed the payment will not be upfront, it will be paid over time and thereby bring value to the company. Service pricing comes with a lot of abbreviations, we’ve compiled a helpful list below.
TCV = Total Contract Value
ACV = Annual Contract value
SV = Subscription Value
PV = Period Value
OTC = One Time Charge
MRR = Monthly Recurring Revenue
ARR = Annual Recurring Revenue
TCO = Total Cost of Ownership
EaaS = Equipment as a Service
CPQ = Configure, Price, Quote
Total Contract Value (TCV)
Total Contract Value or TCV is the total value of all subscriptions over the length of a contract.
Annual Contract Value (ACV)
Annual Contract Value or ACV is the value per year within a contract. For a 1 year contract, the ACV is the same as the TCV. The TCV is the sum of all ACVs. The ACV is not the TCV/”Number of contract years” due to the fact that all One Time Charges (OTC) will be part of the Year 1 ACV and that over the contract length different periods can be present.
Subscription Value (SV)
The total value of one Subscription including all Recurring Charges and One Time Charges.
Period Value (PV)
The total value of recurring prices including discounts for a given period.
One Time Charge (OTC)
One Time Charges are charges that will be billed at one single occasion at the start of a subscription.
Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is the revenue that this contract will have on a monthly recurring basis.
Annual Recurring Revenue (ARR)
Annual recurring revenue (ARR) is the revenue that this contract will have on an annual recurring basis.
Equipment as a Service (EaaS)
Equipment as a service or (EaaS) is a model where the producer of a product rents out equipment to end-users while collecting payments on a monthly, or yearly basis for the usage of the product.
Configure, Price, Quote (CPQ Software) is a sales tool that helps companies produce 100% accurate pricing and quotes for highly configurable products. CPQ helps drive revenue growth by making it simpler, and faster to sell complex products. Improve efficiency with CPQ by automating processes and eliminating errors.
How does CPQ help optimize subscriptions?
Creating new, predictable revenue is the desire of all businesses, and now leaders in your industry are finding new revenue streams to achieve that outcome. Implementing a proper CPQ with the ability to incorporate subscriptions—whether bundling the optimal deal with services or moving towards an equipment as a service model—is the only way to sell the highly customizable products that are essential to your business. Your customers want to purchase the outcome of uptime and you must prepare to deliver this experience to stay relevant to their business needs.
Channel Sales is a well-understood strategy. When a product is complex to build, configure, and sell, manufacturers turn to channel sales to handle the groundwork of commercializing and distributing your products. In doing so, you get to focus on the development of the product, while your channel partners focus on finding and signing new customers.
Why are channel partners important?
Channel Sales partners tend to be closer to the customer both geographically and in terms of establishing relationships. A great channel partner is one that is able to translate customer needs and match them with the products and solutions you offer. By making the task or the channel sales rep simple, efficient, and effective, you can win more deals. In other words, it is your job as a manufacturer is to make your products and solutions easy for sales to match them with the customer’s needs.
If you are using channel sales you probably have dedicated teams ensuring that their channel partners are working from them. For example, Pelco a Motorolla Company specializing in security cameras, and nVent talk about how they are working with channel sales to configure, price, and quote their products.
How can manufacturers ensure that their channel Sales delivers more sales?
Your responsibility towards your channel partner is to help them sell. If the channel partner is not exclusive, as in it is also offering you competitor’s products, you need to ensure that you are the go-to solution.
How can you ensure that channel sales offer your products above your competitor’s? Certainly not by being the cheapest, nor by offering higher commissions and payouts. This is a race to the bottom, and one that you certainly don’t want to win.
Instead, you should focus on making your offer easier to sell to the end customer. One of the ways to do this effectively is using visual configuration.
Visual configuration is a feature of Configure, Price, Quote software (CPQ), that shows customers the product as it is being configured. It uses realistic 3D and AR technology that is not only visually impactful but also 100% accurate to the configured specs.
A closer look at the sales process with Visual Configuration
The elevator industry is a great example. This industry typically relies on channel sales partners to sell their equipment worldwide. It is also a great example because elevators must not only meet stringent regulations to ensure safety, they must also be appealing in terms of design and finishing details.
Safety first: product configurator as a failsafe
How can we ensure that the designers, sales teams, and customers configuring the elevator do not prioritize design over safety or operational feasibility?
Visual configuration is based on the configurator (constraints-based, AI-powered algorithm) that ensures that each product selection is 100% compatible with technical requirements, and thus buildable. It also ensures that all regulatory, and design requirements are also accounted for.
Without a robust CPQ behind the sales tool, manufacturers would require sales engineers to go through, in detail, the configurations that resulted from a customer meeting or a sales order. Sales engineers were the original failsafe.
However, given the amount of time it would require a team of sales engineers to control each configuration, sales teams avoided deviating too much form the standard offering, leaving the customer to choose basic standard options. This all changes with Tacton’s Visual Configuration.
The start of the Visual Configuration Process
Step 1: Capacity and Dimensions
First, you need to decide and define how big the room, or the elevator cabin should be. The elevator needs to fit in a pre-designed space or place and therefore defining and adjusting the width, height, and depth of the cabin and the resulting constraints like the possible load.
(Images of different cabin dimensions)
Step 2: Materials and Finishings
After deciding on the dimensions, the next step is to design all surfaces in the room or in this case the cabin. From floor materials, over wall designs to ceiling colors. A wide range of materials and colors are available for different use cases that need to fit and work well together when combined.
On top of the design additional room or cabin accessories and products like bumper rails, hand roles, mirrors, different door types, entrance sides and glass walls are available to be placed at different positions and in different configurations.
(Images of different cabin designs and accessories)
Step 3: Lighting
Lighting also plays an important role in the design of a room or an elevator interior. Different light types, forms, and alignments create different moods and illumination. Regulations change from region to region as well.
(Images of different lighting configurations)
Step 4: Buttons Panels and Controls
One very important product and part of a cabin configuration is the operation panel to use the elevator. Configuring a complete operation panel is a complex task as well with a wide range of different buttons, displays, information plates, communication devices, and other components that can be selected and that need to be placed and arranged on the panel surface.
(Images of operation panel configuration)
Spatial configuration is a complex task that is best solved by human interaction, reflecting individual preferences and needs. Dragging and dropping the individual elements on the panel, rearranging them in real-time, and getting instant feedback about possible geometrical constraints and resulting conflicts is an essential function in any configuration process.
(Images of spatial placements and conflicts)
Visual Configuration delivers more Channel Partner Sales
As we have discussed, visual configuration carries two primary advantages for Channel Partner Sales. First, it makes the sales process easy, and effective for the salesperson. A sales rep can trust the configuration is 100% correct, and therefore can assure the buyer every step of the way. Second, accurate and real-time visualizations can transform an ordinary sales meeting. Customers can see renderings of their options in 3D as well as in Alternative Reality. This short video drives this point home.
If you are depending on Channel Partners to sell your configurable products, Visual Configuration is a safe bet to drive more sales.
The Benefits of Equipment as a Service for Manufacturing
Manufacturing is changing faster than ever; we’ve seen how the industrial equipment makers are trying new ways to disrupt the typical sales model and capture more value by creating subscriptions and keeping ownership instead of selling products on a one-off basis. This move has been fueled by the Internet of Things (IoT) connecting nearly every piece of equipment in the factory.
With IoT, many manufacturers have started the slow journey to selling their equipment as a service (EaaS). This movement is the next step for manufacturers looking to transform their business, let’s look at what EaaS is, the history, and some exciting examples of companies doing it.
What is Equipment as a Service (EaaS)?
Equipment as a service or EaaS is a model where the producer of a product rents out equipment to end-users while collecting payments on a monthly, or yearly basis for the usage of the product.
This is beneficial to manufacturers because it delivers reliable streams of revenue if the machines are working, they can collect their payments. EaaS also enables both the manufacturer and end-user to collect data on how the product is used, which helps both understand how the product is used, and how.
What are some common pricing models for EaaS?
There are two major models for EaaS, outcome-based, and time and usage models. These are usually based on how the seller envisions the equipment being used.
Using an outcome-based model enables companies to charge based on operational or financial achievements. This model can be challenging if the manufacturer doesn’t fully understand the value of the equipment. If the value isn’t calculated correctly, it can be difficult to properly charge for a single piece of equipment.
A time-based model is just what it sounds like, a payment plan based on a fixed period. A great example of this is German power tool manufacturer Hilti. At Hilti it’s possible to pay a monthly subscriber fee for over 1 million tools. With Hilti Tool Fleet Management, there is no upfront capital investment to tool up for projects. Instead, Fleet tools come at a fixed monthly rate.
This benefits customers by giving them controlled costs. The monthly fee covers unexpected costs, repairs, and even theft protection. Hilti also benefits from this relationship by letting the customer trade up to the latest tech without renewing at the end of every term. This increases the customer’s reliance on the product while making them less worried about costs, and unexpected spending.
Usage models are tied to how much a product is used. One of the most famous examples of this is the Power by the Hour model by Rolls-Royce. Power by Hour is a way to manage engine maintenance for Rolls-Royce plane engine users. This removed the burden of engine maintenance for the customer and transfers it to the management of Rolls-Royce.
This plan is exciting to many customers of Roll-Royce because the plan is charged on a fixed per hour basis, making it critical for the engines to perform. Creating a reliable product keeps Roll-Royce on the top of their game while keeping their easing worries of the customer on Maintenace and other challenges that airlines are accustomed to. Creating a joint focus on minimizing operational disruptions between buyer and seller really does go further than you’d think.
The benefits of EaaS
More revenue share
This new, flexible way of working enables companies to subscriptions based on a bundle of services and products. This enables flexibility to both seller and user. Imagine how much easier it is to predict revenue as a business, while the customer only must click one button to get tools delivered to their job site as Hilti does. Check out just how much an ongoing service relationship can reduce the operating expenses for customers while also returning more revenue to the vendor:
That’s right, the total lifetime value of the products using EaaS can deliver 50% more of the revenue to the vendor while staying in the traditional sales model only nets a possible 25% of revenue.
This is a major selling point of EaaS, predictable costs for the user. Knowing how much each piece of equipment costs per month or year will allow for more flexibility in spending on other parts of the operation. Maintaining the product is also an important part of the cost factor. If a tool breaks down it can be quickly replaced without an additional charge to the user. This also includes updating software which is now the responsibility of the equipment provider.
EaaS comes with a lot of data on how pieces are being used, this gives the provider an idea on how to best maintain the equipment to maximize the product and keep the customer happy. Keeping track of this will also reduce the chance of product failure, or disruption for the end-user, while also helping the provider learn new ways to give better product support.
CPQ and Equipment as a service
Configure, Price, Quote (CPQ) software is helping many manufacturers begin their journey to create these subscriptions essential for EaaS success.Manufacturers can create the product that their customer wants and include maintenance, service, and more all directly in a quote.
CPQ also enables users to combine one-time, recurring, and usage-based charges to optimize pricing structures. This is especially important for manufacturers who sell based on usages such as mileage, services, and more. It’s even possible to forecast the monthly recurring revenue (MRR) and annual recurring revenue (ARR) using CPQ.
The shift is scary but worth it
Companies can no longer rely on one-time deals to keep customers happy. That’s a scary thought, but a change is necessary for manufacturers to succeed in today’s market. Factories need to be connected from the front office to the back and then to the customer. Taking advantage of ways to remove the worry from the customer through upgrades, and predictivemaintenance will keep them connected to your subscription offering. This also creates what all companies want, reliable products and predictable revenue. Adopting the EaaS model is essential undertaking manufacturers are considering across industries. Discover how Tacton is helping these disruptors create value with EaaS and CPQ by scheduling your demo today! Or check out our latest eBook The Future of Manufacturing Subscription Models
You asked so we put together a quick and helpful CPQ Software FAQ that can help you learn more about Tacton CPQ and much more!
At Tacton we’re here to help with all your questions. Below you’ll find answers to the questions we get asked most about Tacton, CPQ, visualization and Smart Commerce. Check out our quick CPQ Software FAQ:
What is Configure, Price, Quote (CPQ)?
Configure, Price, Quote (CPQ Software) is a sales tool that helps companies produce 100% accurate pricing and quotes for highly configurable products. CPQ helps drive revenue growth by making it simpler, and faster to sell complex products. Improve efficiency with CPQ by automating processes and eliminating errors.
How does CPQ help my manufacturing business?
CPQ enables 100% accurate quotes ensuring delivery of the right product, at the right price, at the right time, every time, accelerating your sales and enhancing the customer experience.
What is visual configuration?
Visual configuration is a way to interactively showcase your products to customers. The smallest product option can be customized to your customer’s unique needs. Through self-service, your customer can begin the process on their own or work side-by-side with your sales rep.
How does visual configuration improve my sales?
Display your entire product portfolio in an attractive, intuitive format with Visual Configuration. ‘Seeing is believing’ make your products come to life in front of your customers. Visual Configuration also creates a mutual understanding between you and your valued customer. Costly miscommunications are significantly reduced by providing more accurate expectations.
How does CPQ and Visual Configuration work together?
Visual configuration creates detailed products that react to configuration changes from CPQ in real-time. This gives a visual understanding of the product to customers who may. Real-time visuals allow your buyer to understand how different features change the configuration of their product. With visuals, your customer, even non-technical, can get a better understanding of your products.
What is Design Automation?
Design Automationlets you configure, design, and deliver custom products faster than ever before. Automatically create detailed production and assembly drawings from within your CAD tool.
How can design automation help my engineers?
Design automation radically reduces the time from design to fulfillment, freeing up engineering teams and improving operational efficiency. By automating routine and repetitive CAD tasks, you can design more in less time, freeing up resources for innovation. Minimize disruptive change orders and delays. The configurator-powered tool will always propose an optimal solution.
What is CAD automation?
CAD automation is the use of tools and technology to automate manual, administrative tasks. This adds value by promoting innovation for your engineers while helping your sales team provide accurate product drawings.
What are Tacton’sCPQ integrations?
Tacton’sCPQ integrates into Salesforce, Microsoft Dynamics and SAP. In addition to Tacton CPQ integrates seamlessly into any CRM or ERP system
Salesforce CPQ and Tacton CPQ are different platforms when evaluating CPQ platforms for manufacturing, there are several considerations that must be taken into account.
First, Tacton Smart Commerce CPQ solution for Manufacturers extends Salesforce Manufacturing Cloud (CRM) with powerful capabilities that make selling custom manufactured products easy. Developed specifically for the manufacturing industry, Tacton helps the sales organization configure and price even the most complex products and generate accurate quotations.
Tacton is uniquely positioned to solve configuration challenges for highly customizable products due to our 20+ years of manufacturing expertise. Our solution uses a constraints-based rule engine combined with AI to ensure that anyone can configure a buildable product—no matter the complexity. This unique capability enables Tacton to stand out as the best solution for manufacturers.
What is CPQ Analytics?
CPQ gives a wealth of data that is often overlooked by customers. This data can change how your operation does business by utilizing CPQ analytics. Analyzing how your product portfolio sells and how customers buy can make a world of difference when selling your product.
How does CPQ analytics me understand my customer better?
Customers are as unique as the parameters of the products you sell. Analytics can give you a better understanding of the evolving needs of your customers that can help you create a competitive product portfolio based on facts, not assumptions.
How does CPQ analytics help optimize pricing and discounting structures?
Maximizing profit is an important aspect of any business, and analytics can help do exactly that. Discounting should be your last option; analytics enables you to see which option is most likely to win and why it won. Being able to see these trends will help you offer discounts sparingly.
What is an omnichannel experience?
An omnichannel sales experience offers your customers a seamless way to interact and buy your products across multiple channels at any time, this allows for your business to be in touch with them throughout the buying journey.
From the first search of your product to the final purchase, all channels must be in sync. Creating a seamless opportunity to move from one channel to another can make all the difference. Your partners, dealers and resellers won’t need to adapt to one blueprint through an omnichannel approach.
What is eCommerce for manufacturers?
Manufacturing is quickly changing, from typical in-person meetings with sales reps and engineers to an omnichannel online experience for customers. With so much change, highlighted by the ongoing pandemic shift to remote selling, manufacturers are looking for answers to questions they should have been asking years ago. How to provide an online, B2C buying experience as retail stores and Amazon do. eCommerce for manufacturers is an untapped chance to work with new solutions that enable a truly customer-centric operation.
B2B vs. B2C for manufacturers, what’s the difference?
Manufacturers who rely on in-person meetings, calls, and emails will quickly lose business to the competition who enable items such as self-service for their customers, where they can configure, price, quote, (CPQ) and get product info at any time. These customers want to have every piece of information they can, product details, discounting info, and much more. Manufacturers have long created a B2B experience for their customers, focusing on product logic and its features. While this has worked in the past with the analytical buyer focusing on the core competencies of the product. This leads to a long, slow buying journey that would take time to complete a purchase.
The rise of companies like Amazon has made customers less likely to wait for satisfaction, they want to know the benefits of your products in seconds, not days or weeks. B2B customers are behaving like B2C customers meaning they want products fast, accurate, visually, and across channels. They refuse to wait for your long sales pitch. Even after the purchase, to keep customers coming back manufacturers must give an excellent omnichannel eCommerce experience. With 74% of customers researching half of their purchases online (Accenture) it’s critical to be able to showcase products directly to them without direct contact.
What makes Tacton CPQ stand out against the competition?
Tacton has unparalleled expertise in manufacturing from working with the most advanced manufacturers in the world for over 20 years.
This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Tacton. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner, Magic Quadrant for Configure, Price, Quote Application Suites, Mark Lewis, Dayna Ford, 28 September 2020. Gartner Critical Abilities for Configure, Price, and Quote Application Suites, Mark Lewis, Dayna Ford, 28, September 2020. Gartner is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and is used herein with permission, all rights reserved.
Why is the Gartner Magic Quadrant important for selecting a CPQ solution?
The Gartner Magic Quadrant research methodology provides a graphical competitive positioning of four types of technology providers in fast-growing markets: Leaders, Visionaries, Niche Players and Challengers in the CPQ space. In the latest Magic Quadrant, Gartner recognized Tacton as a Visionary in its 2020 Gartner Magic Quadrant for Configure, Price, and Quote Applications Suites. This is the third time running that Tacton was named in Gartner Magic Quadrant.
Why is this important for manufacturers?
The last year has taught us all that we need to be nimble, and adaptable to any situation. Manufacturing customers are not different. These customers demand fast, scalable buying experiences. With this demand, innovation is needed for the seller of highly-configurable manufacturing products. Manufacturers across the globe are searching for ways to transform their operations to engage with customers when and where they want. With Tacton’s omnichannel approach to reaching the manufacturing customer, it is easier than ever to enable self-service for your customers to buy from anywhere.
In addition to our solutions, we believe making the Magic Quadrant affirms the great relationships and learnings we’ve had with the top manufacturers in the world. Manufacturing is changing rapidly, customers demand a B2B buying journey that mirrors their daily purchases.
What do real Tacton users have to say?
Check out a sample of real-life answers from our customers!
“Tacton is not only software but will optimize the workflow for sales processes and order execution.”
“Especially on the sales side, my company has seen such efficiency improvements since using Tacton, that working without it would no longer be acceptable. The time required for a sales representative to create a complicated technical offer has been reduced from days to minutes.”
“It is a powerful rule-based configurator for solving simple to complex problems.”
This CPQ Implementation guide was designed to give a general overview of the process from start to finish and how to navigate challenges, and optimize your CPQ project.
Implementing a Configure, Price, Quote (CPQ) solution for manufacturers is an exciting time for everyone involved. The business is heading towards a sustainable, flexible, and scalable future. This future enables smooth quoting processes while also focusing on exact customer requirements they have come to expect in their everyday purchasing, speed, ease, and accuracy.
This is a truly exciting time for many customers, but of course, there are worries and fears of a CPQ implementation going wrong. Let’s take a deep dive into how Configure, Price, Quote software projects can be started on the right foot in our CPQ implementation guide. We’ve broken it down into three categories, define, develop and deploy. In addition to an implementation guide, we’ve also provided some challenges companies have faced when implementing and how to address them!
The CPQ Implementation Guide Step 1: Define your project
Setting your teams up for success by defining goals before the project starts is an essential way to clearly state where the project should head and even timelines. All implementation projects need to start with planning and definition. The objective of the first phase is to reach a joint agreement about the project. It consists of one or more workshops to determine the functional needs of the solution, and it also forms the basis for the project budget and timeline.
Creating a roadmap for success
For CPQ implementations, there’s no one size fits all solution for manufacturers. Projects are unique based on several different factors. That’s why it’s critical to start the project with realistic expectations. Defining pain points, targets and business benefits are some normal expectations. A common issue for manufacturers with CPQ projects is starting with too large of a scope. In a roadmap workshop creating the minimal viable product (MVP) is important. The MVP usually starts by planning a phased rollout where it begins with one integration, one product, or one market.
Another key process for a successful roadmap is talking to the different users of the CPQ. For instance, sales and engineering will probably use the product in different ways, making it important to take into consideration their insights for a successful rollout. Including someone who understands the inner workings of the various systems you use will also help enable a smooth process.
Going beyond the typical quote to cash journey involves enabling not only sales to use CPQ but others. Your marketing team can use visual CPQ, often called visual configuration, or visualization directly on your website to provide photo-realistic images of your product, engaging the buyer before even speaking with a sales rep.
Engineers can use CAD Automation to quickly generate drawings and files based on any configuration. Even non-technical sales reps will be able to configure products using guided selling and needs-based questions. Knowing who will be the end-user of your CPQ solution will enable you to select features that are best suited for how you do business.
Define your KPIs
A logical step in your CPQ implementation would be to pick some key performance indicators (KPIs) to map out major goals. Some common goals we see with our manufacturing customers:
Sell highly configurable products faster
Reduce order errors
Increase deal sizes
Increase time to production
Give 100% accurate customer quotes
Define possible integrations
Define product features and integrations
CPQ comes with a host of integrations to CRM, ERP, PLM, and more, knowing which of these processes you’d like to integrate with at the start of your project will help you avoid manual work. When selecting a CPQ, make sure they have standard integrations to the essential systems you need to integrate to. Focus only on crucial integrations in the early phases to allow for a quick return on investment. Add the additional integrations in later phases and do separate ROI calculations for the specific integrations.
Additional options may be needed for some but not others, such as visual configuration. For some sellers, a bill of material may not be good enough for an end customer to decide to purchase the product. Some items simply need to be seen before they are purchased, and visualization can speed that up. While others who sell services such as motors are more concerned with the output than the visuals. This and more don’t need to be selected early in the process but can help you convince customers even more.
Documentation can be a slippery slope when it comes to where manufacturers’ data is stored. Common places for data to be stored are in excel sheets and even veteran team members’ heads. A successful CPQ implementation will have all this data in one place, so finding it is critical.
A great way to do this is to start again in increments. Selecting one product for instance, and gathering all the data tables, UI fields, and configuration logic will show how the process should work optimally. Deciding this will help prioritize the scope of the data.
CPQ Implementation Guide Step 3: Launch
The final step in the CPQ implementation is the deploy phase. Planning for a CPQ rollout has some common qualities and should be planned well in advance of the launch. Here are some common questions asked about the rollout:
How will users be trained?
How will you market it internally?
Following up on KPIs
Where do users report issues and get support?
How is success measured?
Avoiding common challenges
CPQ purchases can be an exciting time for manufacturers. Akin to turning over a new leaf from the old way products were sold to a new faster, more efficient way to work. Not only will your team be able to ensure accuracy but also enable your customers to get their products fast as their accustomed to.
So why are there so many horror stories of failed CPQ projects? Those failures can mean a lot of things too expensive, data issues, technology limitations and more. Luckily, we’ve got a whole blog on why they fail, (Read: 10 Reasons why CPQ Projects Fail), but let’s highlight some of the main topics.
Management isn’t fully invested in the product
Involving different parts of your organization isn’t easy but addressing the requirements of each group will help the project succeed. CPQ being a knowledge-based tool needs the knowledge from different departments to succeed. Backing from senior management is essential, to allow for prioritization of the implementation of the CPQ over the day-to-day business tasks for all these organizations, including the busy experts.
Lack of user adoption
Let’s face it, if your investment isn’t being used by your team, your CPQ project is very likely to fail. Some common causes of this is the new project not being well integrated into their workflows or the configurator is confusing and slower than how they were selling before. Making sure all these concerns are addressed will help your users feel comfortable working with CPQ. Training with CPQ is a great way to get your team to acclimate to the project and show the benefits of using the software in real-time.
Scope creep is an uncontrolled growth in a project’s scope after the project has begun. This is very common in CPQ projects as you learn about and define processes that quite often were never documented before. Therefore, it’s important to define project objectives early in the project and refer to them as much as possible when deciding on changes to the project. It’s also important to have a defined change control process, with a steering group that has backing from senior management. There’s no easy solution to scope creep but being aware of the problem is essential.
Losing focus on customer–centricity
CPQ enables you to get more out of your internal processes, faster quoting, better accuracy, and a better sales pitch. This is great, but sometimes companies lose track of how it can help customers.A well-designed CPQ project helps enable your company to utilize not only CPQ but visual configuration and Design automation to keep the focus on expediting the customer buying experience while providing realistic expectations that keep them coming back.
Bad data quality
A good sales configurator will use your product data existing in current systems. But how good is the quality of that data today? Do you have an organization in which all knowledge is stored in people’s heads and documentation is missing? As stated above, the output from the configurator will never be better than the input, which means you need to make an inventory of your product data and documentation. You might need to structure and systemize your product data before selecting or implementing sales configuration software. If you don’t, the implementation will probably take much longer than expected, and changes in the tool will be done multiple times back and forth before being able to release.
Underestimating the rollout
Not planning the rollout phase is a challenge that can be avoided by planning the rollout at the beginning of the project. Not having qualified support, or measurable KPIs can lead to challenges during the rollout phase of the project.
A CPQ implementation with proper guidance can make all the difference
CPQ can be the first step in your journey to a truly customer-centric digital buying and selling journey. The best way to implement this process is with software experts like the ones at Tacton who have a proven track record of engaging not only your employees but your customers and maximizing your investment in CPQ.
We hope this CPQ implementation guide helped you narrow down your search. Whether you’re at the beginning of the process of searching for CPQ or getting ready to implement, Tacton has you covered from start to finish. If you’d like to learn more schedule your personalized demo and creatingyour roadmap to successful product implementation.
The cost of a bad customer experience is more costly than you think
The customer journey can be a long, winding road from the first contact to a final sale. Optimizing this experience has come easy for some industries, but manufacturers still struggle with providing a fast, accurate, and sustainable approach. Sacrificing a good experience can cause customers to leave or manufacturers to give big discounts just to keep customers around. Let’s take a deep dive into what customer experience is, and how to avoid a bad one.
What is customer experience?
A great Hubspot definition: Customer experience is the impression your customers have of your brand throughout all aspects of the buyer’s journey. It results in their view of your brand and impacts factors related to your bottom-line including revenue.
This includes every touchpoint with your team, from marketing, sales, engineering, and the factory floor. Every interaction leads to the customer perception and relationship with your unique business. To sum it up, a great customer experience is integral to the continued growth of any company. A bad experience will have customers leaving for cheaper options, while a good one keeps customers loyal and coming back for more.
How important is customer experience to manufacturers?
The COVID-19 pandemic has made many manufacturers rethink how they interact not only internally, but with customers as well with a renewed focus on digital transformation. When we asked C-level, vice presidents, and directors of manufacturing operations about the most important strategic areas to remain competitive and bolster economic growth, the customer experience was an important aspect.
With 49% of respondents noting the importance of customer experience it’s time manufacturers begin taking a deep look at how to improve this aspect of their digital transformation. Driving sales and revenue is directly impacted by the customer experience.
What are some common challenges in creating a great CX for manufacturing customers?
Outdated technology- Many manufacturers are still relying on outdated tech to provide products, quotes, and delivery. Some aren’t even offering an online self-service option to buy products which is where more and more buyers are at.
Inefficient processes: This comes with using outdated technology, quoting is a long, error-prone process that leaves the customer annoyed and your sales and engineering teams scrambling to offer discounts to make sure customers don’t go to the competition.
No omnichannel strategy: Let’s face it if you aren’t offering an online way to buy products, with multiple touchpoints you’ll lose to the competition who can. The modern buyer wants products fast, error-free without talking with your sales staff. This sounds like a bad thing at first but enabling an online store will help your sales team focus on bigger deals while leaving smaller ones to configure their products online and help when needed.
What is the cost of a bad experience?
A bad customer experience has a direct impact on your bottom line. According to PWC: “Even if people love your company or product, in the U.S. 59% will walk away after several bad experiences, 17% after just one bad experience.”
Losing these customers can be the difference between rapid growth and a slow decline in your profits. So, making sure every experience is fast, accurate, and exciting will go a long way in growing your business. Loyalty goes a long way in creating predictable, recurring revenue making it important to really understand your customers’ wants and needs.
A bad reputation
Think about the last time you purchased something, shoes, clothes, anything. If you weren’t buying from a place you’ve bought from before you more than likely read reviews on the company to see if the products were worth getting. With so many options it’s a necessity to give a good experience, with customers telling more than 15 people of a bad experience word travels fast and profit can decrease.
New buyers require new solutions
The race to reinvent the manufacturing customer experience is on and has been accelerated in the past year, causing industry leaders to consider new solutions to keep up. Delivering a one-of-a-kind experience for customers and keeping a healthy bottom line sounds too good to be true? It’s not when using Configure, Price, Quote (CPQ) software. Let’s take a lot at what CPQ is and how it improves the customer experience.
What is CPQ?
CPQ platforms help manufacturers use self-service, guided (and remote) selling to accurately configure complex products and services for prospective customers. CPQ solutions help manufacturers ensure correct pricing, deliver personalized and highly customized quotes. CPQ also seamlessly integrates into eCommerce, CRM, CAD software, and more a smooth buying and selling process.
How does CPQ create a great customer experience?
Speed counts with CPQ
Today’s buyers simply won’t wait for a quote on your products anymore. They want to know exactly what they will get ASAP. Making configuration and pricing choices in used to take manufacturers days, with CPQ it only takes minutes. Even complex quotes can be created faster than ever.
CPQ captures the customer’s usage and commercial needs, and the configuration engine does the rest. Everything is considered – your latest product and pricing updates, local regulations, as well as your margin requirements. The software can find the solution that best matches the customer’s needs and your business goals. With advanced pricing models and built-in approval workflows, your team will position and sell the right product at the right price – every time.
Accurate, high-quality proposals with supporting documentation are generated automatically. This speeds up the quotation process dramatically, keeping you one step ahead of the competition.
Meet customers anywhere
Buyers are used to being able to buy from anywhere, at any time. Providing an eCommerce experience for manufacturers of highly complex products is a nearly impossible task without CPQ. Enabling customers to configure directly on your company website with Guided Selling lets your customers see what products are feasible fast. Giving them self-service options also enables customers to check out quickly and get their products without interacting with anyone.
Many of our manufacturing customers have found ways to shift to an online journey, and they all share one secret, visual configuration. Visual configuration is the combined use of Augmented Reality, 2D, and 3D visualization software in order to be able to configure products fast, and accurately for customers and prospects.
The new customer experience demands visuals of the product, no one is buying products sight unseen in 2021. With these visuals your customer isn’t left with any question marks when they see what their final product will look like, even configured in their real-life environment.
What is an example of how CPQ improving speed and accuracy?
One of our CPQ customers, Siemens had a challenge: Creating each of their highly complex and customizable turbines to their customers’ specific needs. Quoting took on average 8 weeks, requiring specialist engineers for every sales case. Proposals were over 500 pages long and Siemens lacked the ability to quote long-term maintenance costs resulting in poor aftersales services.
With Tacton, Siemens was able to redefine how their sales team configured, priced, and sold their products. Using CPQ enabled them to reduce quote time from 8 weeks to 10 minutes. Leaving the sales team to focus more on customer relationships. Engineers were able to refocus on research and development and jump into only the most complex sales cases. Finally, the shorter sales cycle increased the capacity for sales to find and engage with new prospects.
Your customers’ demands have changed and will continue to as customization becomes the norm for nearly every purchase. Customers also want technology that improves how they get their products, with speed, accuracy, convince, and even visuals. Calculating the cost of a bad customer experience shows just how much a change is needed for manufacturers.
Manufacturing has been looking for the next solution that will enable them to provide a better eCommerce and customer experience. CPQ software is the solution that is bringing many manufacturers into these new and exciting spaces. With CPQ it’s possible to connect every process, from the start of the customer journey all the way to purchase. At Tacton we have over 20 years of experience working with the biggest manufacturers in the world helping them transform their processes. Check out some of our customer stories such as Plus Pack, nVent and Pelco.
In 1847, inventor Werner von Siemens developed the pointer telegraph and followed up in 1866 with a prototype for the dynamo. Today, the company he founded is a household name and Europe’s largest electronics and engineering company. Siemens is also the world’s leading supplier of energy technology.
While renewable energy resources are becoming increasingly important. With pioneering technology, Siemens gas and steam turbines make sure that we can produce this energy in the cleanest, most efficient way possible. But while Siemens leads the way in sustainable energy production, producing customer quotes for its gas turbine units wasn’t such a smooth process.
A complex problem required an innovative solution
The turbines are extremely complex pieces of equipment. Each sits within a wider power plant solution which is tailored to each customer’s unique specifications and site conditions. The air intake assembly alone, for example, has 120 variants. Factor in all the configurations and combinations that come along with that; and things get complicated very quickly.
This complexity posed a challenge for Siemens. Because the turbines are highly customized – and the combination of variables almost endless – producing customer quotes was a lengthy and complicated process. A full customer proposal was often 500 pages long, took eight weeks to produce, and required specialist engineering help on almost every sales case. Siemens wanted to simplify this process. They realized that streamlining product configuration and quote production would save both time and money, and give the company a competitive edge. What they didn’t realize, was just how dramatic the results would be.
With the Tacton CPQ, Siemens quickly saw that they could streamline by creating pre-made assemblies, including standardizing much of the core turbine engine. Simplifying the product architecture in this way has reduced demands on engineering. As Åsa Johansson, who is responsible for global coordination of the Tacton project at Siemens explains, “In our previous system, we had thousands of business rules. Using Tacton’s system, we now have just a few hundred and this has made system maintenance so much easier”.
Sales reps can produce accurate quotes on the fly
The technology also means that the sales team can now configure turbines during customer meetings. Sales reps only need to address the parameters that the customer wants to customize – the configurator automatically optimizes the rest of the assembly. The results Siemens have seen are dramatic. Where it previously took eight weeks to produce a customer quotation, sales reps can now produce accurate, high-quality quotes, with pricing, in a matter of minutes. And product specialists are now only required on the most complex cases.
Jan Nilsson, Senior Engineer CRM Process & IT Development at Siemens explains, “The beauty of the Tacton is that it will guide the sales rep through the sale and get the configuration of the product and quotation correct each time. “It now takes us only five minutes to generate a complete budget offer including pricing. This saves us tremendous amounts of time and money.”
The sales team can now focus on customer relationships and finding new business opportunities, instead of spending weeks chasing product specialists and putting together proposals. While engineers can concentrate on R&D and on supporting the really complex sales cases. Shorter sales cycles mean Siemens has the capacity to engage in more sales cases. And the company is producing accurate quotes in a fraction of the time it generally takes the competition.
And the benefits don’t end there
Regular maintenance and upgrading of parts are essential to helping the turbines run as efficiently as possible. These aftersales services are a critical revenue stream for Siemens. They are also an important cost control factor for the customer – as the more efficiently the turbines operate, the cheaper they are to run. With the Tacton system, the sales team now has insight into where and how they should offer maintenance contracts – while they are specifying the turbine with the customer. The system only prompts service options that are relevant to the particular configuration the customer is ordering. As a result, Siemens has been more successful in selling after-market services.
A dynamic power shift has been happening for businesses across every industry over the past decade. Manufacturers used to rely on ads, word-of-mouth and even promotions to attract customers to their products. This oftentimes was a leap of faith for customers, with little to no peer-reviews or information buyers would have to trust that a manufacturer could do as they promised.
That’s all changed, with review sites and numerous other ways to get info on your company. These changing customer demands make it imperative to change how manufacturers interact and empower their current and prospective customers. This power shift demands that manufacturers enable customers to configure, price and quote highly configurable manufacturing products on their own time without the help from your sales or engineering teams.
What does customer empowerment for manufacturers look like?
The old customer journey took your buyer directly to your sales and engineering teams because configuring products with high product variability was difficult. That process could some times lead to costly misconfigurations and error-filled quotes, making your customer think twice about your product. Manufacturers who use CPQ offer accurate quotes and configurations, but customers are still looking to do the work on their own time. That’s why today’s customers want to be less reliant on your sales team and more create their product on their own time with the same accuracy but still have the same great support from your team if problems do arise. This support and empowerment is a powerful way to foster a great relationship based on loyalty and accurate expectations.
CPQ and Guided Selling empowering the customer and the manufacturer to do more
Customers want to do everything fast, and accurate. Errors aren’t acceptable to the new B2B buyer because if they do happen customers are likely to find an option that can fulfill their needs. Without CPQ many manufacturers struggle with product variance because they use excel sheets and other databases with scattered information. This of course leads to errors and unhappy customers which makes creating a cohesive internal experience even more important. Connecting with existing CRM, ERP and other business-critical systems to CPQ with robust integrations help your company get to grips with the quoting process for internal empowerment.
Now that internal empowerment is accomplished with CPQ your customer will be able to enjoy the same benefits. Customers want to save as much time as possible when searching for products, that’s why CPQ self-service is a key tool you can use to create configurations and even visualizations of their products, all without any assistance from your sales team. Customers want an eCommerce way of buying things similar to how they shop for a new pair of shoes. Enabling self-service helps your customers work with products while enabling your company to create the eCommerce journey they are accustom to. This journey can be accompanied by stunning visuals that are accurate down to the smallest detail. Check out how we helped MAN Truck and Bus give visuals that helped them save time while enhancing the customer experience.
This sounds like a bad thing for your sales team, but in reality, empowering customers to create themselves will save your team time and money by focusing on other potential deals. Self-service can also help with frequently asked questions by providing a knowledge base of questions, and troubleshooting.
What is Guided Selling?
Guided Selling software creates an interactive dialogue about customer wants and needs to find a solution that is both accurate and optimal for their needs. Think of your best salesperson, they have the experience to suggest what would work in a certain situation but still can create mistakes. Guided Selling is like your best salesperson but without the errors. Utilizing Guided Selling creates a personalized experience by showing customers optimal products that they didn’t know they needed. This empowers them to take a deep dive into the products, how do they use them, where do they use them? These questions give customers options that they didn’t even think of that can help them get the most out of their products. Technical knowledge isn’t needed with Guided Selling, making it easy for anyone to use, sales, or customers.
Empowering Customers can take your business to the next level
It’s not a secret anymore, manufacturers are trying to catch up to other industries by creating a cohesive, fast and empowering customer journey. Many have struggled to get the process started because the optimal solution hasn’t presented itself. That time is over, Tacton Smart Commerce, powered by CPQ can shape how your business does work internally and externally. Empowering customers with self-service and Guided Selling is just the beginning. Once they get a hang of that it’s possible for them to enable their partners do work with their customers for a truly omnichannel customer experience.
Sound too good to be true? Check out some of our resources and customer stories to see how top manufacturers are empowering their customers daily.
Sustainable manufacturing with CPQ is an integral way to understand your products better while combating waste
Manufacturers alone contribute over 12% of the total CO2 emissions across the globe yearly. This number is raising global awareness and creating urgency to find ways to become more sustainable either by company choice or by government mandates. With these global imperatives, many corporations are searching for and investing in sustainable technologies.
Configure, Price, Quote (CPQ) solutions are a big part of many companies’ sustainability practices. Being able to provide digital transformative efforts can reduce waste, keep lean manufacturing goals, and more. At Tacton we’ve built our CPQ system to incorporate the environmental impact into our configuration process. While we recognize we have a long way to go to combat climate change, a meaningful digital strategy powered by CPQ is an integral part of that process.
Recently we had a chance to talk with Patrice Arnera, our Director of Sales EMEA and Japan about the shift to sustainable practices across the different industries. Patrice has worked with Tacton since 2017 and enjoys seeing companies transform their digital experience and create business value throughout the process.
Let’s start with an easy one: What is sustainable manufacturing?
Sustainable manufacturing is a way of making products that minimize negative environmental impact, conserves energy, and resources. It also considers the employees, communities and buyers the product effects. This can come from optimizing the product and lifecycle management leading to a smaller environmental footprint and social benefits.
How have you seen manufacturers evolve to more sustainable practices over the years?
Sustainable practices have been, and productions have been building over the past decade or so in some industries. Consumers probably noticed this first in their everyday purchases of environmentally friendly products such as hand soaps, clothing, and packaging.
This topic quickly began taking hold in more industrial areas such as manufacturing as it became clear that the environment was changing at a rapid pace. Reducing harmful emissions while making products and helping employees and the community around the site and globally has made manufacturers rethink their efforts.
What are the objectives and targets of your sustainability and CPQ efforts, and that manufacturers are setting?
A few common ones discussed are items like these:
Reducing the carbon footprint is to reduce carbon dioxide emissions, which contribute to global warming
Responsible consumption, using resources and energy efficiently
Sustainable innovation, better known as using innovation to achieve sustainabilitygoals
How does CPQ help manufacturers become more sustainable?
CPQ in general is a way to put together a valid configuration with approved pricing using a combination of rules and workflow.
Tacton CPQ is a unique solution in the CPQ spaceas it allows users to optimize the configuration of ecofriendly products without compromising the needs of the customer by giving them a full picture of the impact any product will have once it rolls off the production line.
CPQ also enables manufacturers to offer an optimized product that is in line with local regulations on emissions and other sustainability demands in their specific region. With CPQ it’s even possible to allow faster product introductions that are aligned with a changing market.
What canCPQ play in your manufacturer’soverall strategic plans?
Again, in general terms, CPQ will bring efficiency gains in the sales process and will result in much lower costs of sales and higher win rates for its adopters. Here I would like to focus on some of the Tacton specific benefits made possible by its unique combination ofconstraint-based configuration and its solver technology.
Tacton CPQ finds its strength in optimizing the configured products around the end customer-specific needs rather than just being a validator of technical combinations. As such, it is helping manufacturers make and deliver what their customers really need at optimized costs, price, margins, speed, and resource consumption.
CPQ is also a key accelerator in the new product Introduction or new variance introduction process which plays a major role in being first to market and or being able to react to competition, regulations, and market changes.
What business value have manufacturers seen from their sustainability efforts?
When we apply Tacton’s unique features to manufacturers’ sustainability efforts, manufacturers can track certain parameters such as resource consumption and materials to ensure the most sustainable options are provided during the configuration process around the criteria that really matter for their end customers.
By showing such responsibility, manufacturers have also observed some “soft” benefits such as more demand as customers are more and more looking to work with responsible organizations.Constraints and data management also provides a much faster time to market for manufacturers using CPQ which allows them to better adapt to regulatory changes and innovation which again will translate into a larger volume of sales and a reduction in sales lead time.
Describe a customer who has used sustainable manufacturing and CPQ to reduce their environmental footprint?
One of our customers, Plus Pack has been on a century-long transformational journey. Founded in 1914, this Danish pioneer in the food packaging industry has been supplying its customers with innovative and sustainable solutions that help them stand out.
With CPQ and sustainability in mind, Plus Pack’s digital strategy centered around CPQ. To deliver 100% recyclable products with zero CO2. With CPQ’s needs-based configuration, Plus Pack finds it easier to offer its customers more sustainable packaging solutions supporting a circular economy. Plus Pack’s sales teams can easily compare different packaging options and to recommend customers the most sustainable materials that are fit-for-purpose as well as fit-for-future.
Change is coming for manufacturing across the globe. As new environmental requirements from local governments roll out, as well as demands for sustainability from communities and employees manufacturers must take notice. Creating sustainable products and reducing waste is possible using CPQ to ensure every requirement is met before even making a product. Schedule your personalized demo today to learn more about CPQ and sustainbility.