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How can Manufacturers Realize Value and ROI with a CPQ Implementation?

Is your company in the process of investing in a Configure, Price, Quote (CPQ) solution but is uncertain about the business value? This can be a crucial part of your selection criteria. Luckily for you we sat down with Tacton’s Chief Product Officer, Nils Olson and VP of Sales Engineering, Johan Jacobsson to discuss the value and ROI CPQ can provide.

What is customer value management? 

Nils: If we go all the way back, value documentation or customer value management as they call it in academia is the approach of looking at how you affect customers that you’re working with and based on that draw conclusions about what effect new customers could have using your products.  

Kellogg School of management in Chicago formulated this method. The interesting thing about this approach for documenting value, rather than using imaginary data, what we do here is base it on what is happening with existing customers using Tacton CPQ. It’s not a what if element, but data coming in from facts from using CPQ.  

What are some common value elements you are measuring?  

Johan: When we begin to document the potential value, we work on three axes. The first is quality, the second is revenue, and the third is efficiency. Within those axes we are collecting a wealth of data points. For example, if we start looking at revenue, we’re looking at win rates and quoting time, getting quotes out the door with CPQ will help increase the number of accurate quotes you deliver.  

If we look at efficiency, we’re looking at quoting time, but also things like ramping up new sales staff. Finally, there is the quality of your orders, how many handovers and order errors are impacting your data quality.  

What effects do you see from using Tacton CPQ?  

Johan: Based on the research we’ve done with our current installation base, we’re talking about a 30% increase in efficiency, an 8% increase in the number of quotes being delivered and we also see a dramatic reduction in the number of order errors and a 11% increase in the number of quotes.  

How do you use the collected data for companies interested in CPQ?  

Nils: The typical customer journey when it comes to value assessment, we start with a value workshop. We introduce how we go about quantifying the value at hand, and together with the company we’re working with we gather the data from their situation. Here are a few frequent questions we ask: 

  • How many quotes are they producing per year? 
  • What is the average profitability of won orders?  
  • How long does it take to produce quotes?  

Johan: We take the data provided by manufacturers, and we merge it with the research results, which then gives us the projected benefits.  

Which roles are typically involved in a value workshop?  

Johan: It varies a little bit depending on the organization, but normally we talk with a project manager who owns the project. We also involved the head of sales, marketing, and the chief digital officer. These kinds of roles give us a good perspective on the business processes.  

How do these companies react when they see the benefits of CPQ? 

Johan: When the companies realize how we can help quantify the value of CPQ we get some great discussions. We recently had a case where the organization we were working with thought the main value was within efficiency, and we started to dig deeper into their project and found out the real value was on the revenue side based on the number of quotes and win rates. 

The real WOW moment comes when we take their data points and merge them into our research findings.  

How can the value estimations be used in a CPQ project?  

Nils: Once you get these insights into place it then feeds them into the implementation of the CPQ project. It becomes the KPIs we can use to navigate the project. It helps both Tacton, and the customer target the outcomes that we originally set out to accomplish.  

And of course, once the CPQ solution has been set in place we now have a fantastic way to go back and measure the actual effect it had comparing it with the actual business case we constructed in the beginning.  

Why is customer value management important for a manufacturer?  

Johan: There are many investment options for organizations now. So, we want to make sure manufacturers are investing in the right options for their day-to-day operations.  

Why is customer value management important for Tacton?  

Nils: For Tacton, we live and die on the success of our customers. If we engage with a company to implement a CPQ solution, to do the digital transformation that entails, it must be a success. When we look at how we will guide our customers through the digital transformation, if we don’t know what value it will provide, we will not be benefiting our customers. For us, customer value is not just something which is good to know, it’s essential for our company.  

Interested in learning more?  

Manufacturing is quickly adapting to challenges across the board. From disruption in the supply chain to sustainability, complexity is growing larger by the day. Value and ROI with a CPQ is the best way to measure success. Seeing just how much CPQ can help transform your business is worth a call. Learn more by scheduling your demo today.

Author: Michael Brassea