In this chapter, we will learn what Salesforce CPQ is, as well as begin to identify situations and business needs that can be aided by Salesforce CPQ. Typically, sales personnel spend a lot of time creating quotes, calculating prices, seeking approvals, and working through multiple legacy systems. These legacy tools may not be up to date and so are inaccurate, leading to delays in closing deals as well as impacting customer satisfaction. Salesforce CPQ helps to automate and streamline sales processes and create quotes quickly and efficiently, resulting in increased business revenue, the ability to forecast efficiently, and increased customer satisfaction.
In this chapter, we will cover the following topics:
By the end of this chapter, you will be able to install Salesforce CPQ either in a Salesforce test environment or in a production environment. You will also understand when your business needs Salesforce CPQ. With the examples provided in the upcoming chapters in this book, you will learn how to configure, test, and automate Salesforce CPQ.
In the past, the sales process was done manually. Sales representatives used printed catalogs and assembled quotes by hand. These quotes would then be physically delivered to customers. Changes to a quote or fixing errors in either the product or pricing meant the quote process had to be started again.
Before cloud computing, closing deals included business cards and manual processing. Over the decades, though, the sales process changed along with the advent of technology, and businesses started using automation as a result.
A business that hosts everything in-house is called an on-premises model. The on-premises model of using software also has its own challenges in the form of a lack of flexibility and agility for the sales rep. When data is disconnected, sales reps struggle to keep up with demand. Without the sales process being automated, businesses would face longer sales cycles, resulting in revenue loss.
The limitations that businesses face with an on-premises model were tackled by the introduction of cloud computing. Cloud computing has taken the world of software by storm and the sales process has not been left out, consequently getting a boost in the form of automation with speed, enhanced security, ease of use, centralized reporting, and an efficient sales process.
Salesforce is one of the leading Customer Relationship Management (CRM) vendors, having realized the limitations of the traditional on-premises model, leading the transformation of the sales process through their cloud computing software.
With the evolution of cloud computing, the Salesforce sales process has also benefitted. We'll explore the quote-to-cash process in detail in the next section.
The sales process is key for any business to be successful. Although this seems pretty simple, right from leads entering the system, generating opportunities, quotes, shipping the products or services, and invoicing the customer, this process can become complex as your business grows. The quote-to-cash process refers to the sales process right from opportunity creation to the invoice being paid by the customer.
In any business, once the marketing team completes the lead generation process, the potential leads will be handed over to the sales team. This marks the entry point of the quote-to-cash process for the sales team. The first step in the quote-to-cash process is creating an opportunity to deliver a quote to a customer. Here is a look at the high-level quote to cash process (this is a generic sales process and this can be tweaked as per the customers' business needs):
The following are the major steps from Figure 1.1 for the quote-to-cash process:
Shipping and invoicing is not a pure CPQ process. Salesforce Billing can be used as an add-on to CPQ and helps customers to have an end-to-end solution on a single platform.
In the upcoming chapters, you will learn in detail how to configure and implement Salesforce CPQ to automate this process. You will also see how renewals can be combined with cross-selling and upselling to increase revenue and continue selling to new and existing customers.
From the preceding brief description, you will realize the important role that the quote-to-cash process plays, from quote creation to payments for your products and services.
When the quote-to-cash process is part of an integrated system, it will result in the following:
Important Note
All technical references in this book will be with respect to Salesforce only. You will be advised otherwise if a non-Salesforce-related topic is being discussed.
Now that you understand the elements of Salesforce CPQ and the quote-to-cash process, we will dive deeper into each of the components of CPQ.
CPQ is cloud-based Salesforce software standing for Configure, Price, Quote. This tool can be used to create a structured and scalable sales process for your company and can provide your customers with accurate pricing for your business's products and services.
Salesforce CPQ was originally called SteelBrick, which was a managed package. CPQ uses most of the standard Salesforce objects, including opportunities, products, and price books. Here are some of the key concepts of the Salesforce business process that will help us have a better understanding of CPQ:
When a CPQ package is installed, custom objects, including subscriptions and quote lines, are added, which extends the native functionality of Salesforce Sales Cloud.
In this section, we are going to dive into CPQ as a concept. This will help us to understand how accurately you can configure products and combine the right products into a single bundle or separately. You can also apply discounts and complex pricing to your products to generate a quote for your customer.
Let's start by exploring C for Configure.
You need to first Configure the product your company is going to sell to its customers. Typically, CPQ is used when the product configuration is more complex than what standard Salesforce can support. When there is a need for product bundling, validations, automatic pricing, and discount calculations, standard Salesforce requires heavy customizations that are hard to maintain. In addition, a simple error in adding a product can delay the sales process. If an error occurs, the rep will need to start the quote all over again and add the right products.
Using Salesforce CPQ, product configuration becomes simple and easy. This configuration can be achieved by answering a few questions related to what the customer wants to buy, including the type of product, quantity, and configuration. When these questions are answered, the related products will be displayed. Using out-of-the-box CPQ configurations products can be bundled together with related products or services, and reps can add the configuration with a few clicks. Bundles can also be configured based on a customer's specific needs.
For example, if your company is selling laptops, the rep does not need to remember the configuration of the laptop and the prerequisites.
Product managers can bundle the following:
The rep can then add the configured bundles in one click. When the company has customers across different regions, based on the locations you are selling in, bundles can be adjusted accordingly.
For example, a laptop bundle sold in the US will include a US power cord and a US keyboard. The same bundle, when sold in EMEA, will contain a UK power cord and a UK keyboard.
Product configuration can also provide soft alerts or hard errors. When the rep is configuring and they forget to add an optional component, the system generates a soft alert: Do you need to add a mouse pad? The CPQ can force hard errors on the product configuration when the rep forgets to add a mandatory product such as the power cord.
Automations such as bundling accessories according to the geography and providing alerts if a mandatory component is missed while configuring the products can be configured in a timely manner with Salesforce CPQ. Using CPQ, sales reps will always generate error-free quotes and make the sales process a better customer experience.
In Figure 1.2, a sales rep can use previously created bundles with all the relevant products to create a quote. With one click, the bundle can be added to the quote, and all the products in the bundle will be added automatically.
In the Product Selection page, both standalone products and bundles can be selected as required.
Reps do not have to burden themselves with memorizing the Price of products or referring to a third-party tool or a pricing catalog. They also do not need to waste time on spreadsheets and calculators for complex discount calculations. In addition, they do not need to refer to any additional details to provide extra discounts.
All the pricing logic and discounts can be configured in CPQ, which does all the complex math for you. As a result, reps can stop worrying about the calculations and concentrate on each customer's needs.
If the rep wants to apply discounts or make changes to any of the quantities, the quote can be updated in a matter of a few seconds with the click of a button. With prices changing dynamically for any business, CPQ can automatically pull the active price from the Salesforce price book.
A price book is similar to a catalog with the list of products and services that your company is selling, and the corresponding price associated with them. Salesforce provides two types of price books:
CPQ allows different pricing methods based upon the type of product. Using the number of units purchased and the discounts applied by the rep, the quote's total price is automatically calculated by the CPQ engine.
When a sales rep is negotiating an opportunity, there can be multiple quotes. However, there can be only one quote that is marked as primary. A primary quote is a quote that will most likely be accepted by the customer, and this gets converted to an order. At any time, all the quote lines from the primary quote are synced to the opportunity.
It is now time to generate a Quote for the previously created product(s). Out of the box, Salesforce CPQ supports generating doc and PDF versions of a quote using a pre-built template. This quote template can also have the company logo embedded to create a professional quote. Dynamic quote templates can be used to change the quote's terms and conditions. We can also dynamically add sections to a quote. This can be integrated with e-signature software (for example, DocuSign) to send the quote to the customer in a matter of minutes and close deals faster.
Shorter sales cycles and more accurate data result in greater customer satisfaction day by day.
A quote template is a PDF document that contains the products and services that you are selling. It contains the prices associated with these products, including the discounts and the totals. It also includes the terms and conditions specific to your business.
To generate a PDF quote, navigate to a Salesforce org, App Launcher Opportunity Quote Generate Document.
The quote template can be emailed directly to the customer. A sample CPQ PDF quote has been generated next using out-of-the-box Salesforce CPQ functionality:
You can preview the quote template before emailing it to the customer and change the terms and conditions as needed. You can also customize quote templates.
While there are many aspects of Salesforce CPQ, the main objects are products, pricebooks, accounts, opportunities, opportunity products, quotes, quote lines, orders, and contracts. The following diagram shows a high-level CPQ object model:
Opportunity is created from an account. Once the products are added to the quote and the quote is made primary, quote line products sync to opportunity products. An order can be created from an opportunity or quote. Based on the products added to the quote, contracts and subscriptions can be created either from an opportunity or an order. We will learn about object relationships and the data flow in Chapter 9, The CPQ Data Model and Migration Concepts.
Salesforce CPQ Return on Investment Calculator
The decision to implement Salesforce CPQ for your business can be methodically calculated by using the Return on Investment (ROI) calculator, provided by Salesforce. This tool asks you to answer a set of questions that will help you make an informed decision. The questionnaire includes basic questions about your business, such as the number of invoices raised, the number of quotes generated, the number of sales reps, the hourly rates of sales reps, the gross profit margin of your products, and the annual revenue of your business.
The results of the ROI calculator will provide insights into your business regarding increased sales productivity, a reduction in invoicing costs, an increased win rate, and improvements in cash flow, to name a few. These indicators will help you make informed decisions for your business to be successful.
Here is the link for the Salesforce CPQ ROI: https://www.cpqbillingcalculator.com.
Now that you have an understanding of Salesforce CPQ, let's explore the advantages of implementing CPQ.
Out-of-the-box Salesforce may not always support all your business needs. Sales reps sometimes struggle to sell complex products with their associated pricing. They resort to the manual generation of quotes to be sent to the customer. Generating quotes that are accurate is one of the biggest challenges that companies face. When the sales process is dependent on accurate data that the rep does not have access to or the quote does not reflect the products and services being sold to the customer, the following may occur:
To address the aforementioned shortcomings and to give more flexibility to the sales organization, Salesforce CPQ is the way forward.
Some of the obvious advantages of using Salesforce CPQ include, but are not limited to, the following:
In the next section, we will look at Industries CPQ and when it can be used.
Apart from Salesforce CPQ, the other CPQ used for specific business needs is Industries CPQ. Industries CPQ, formerly known as Vlocity, was acquired by Salesforce in 2020, and it is built on the force.com platform. The solutions that Industries CPQ provides are for specific industries that include telecoms, health, insurance, media, and entertainment. Industries CPQ requires a typically extensive programming effort and is not a direct competitor to CPQ. They serve different needs entirely, even though the end result is generating a quote. Industries CPQ helps companies with complex business models overcome the challenges that are unique to their industries.
Industries CPQ with Salesforce Service Cloud helps companies deliver a personalized solution. For example, in the insurance industry, combining Salesforce Service Cloud's omnichannel capabilities with Industries CPQ helps deliver a personalized and seamless retail experience. For the media and entertainment industry, Industries CPQ can provide a complete industry solution across subscriber and advertising sales life cycles for both B2B and B2C customers. Pre-built modules can be downloaded, deployed, and integrated, with Salesforce removing the burden on the business to come up with new solutions.
In Chapter 11, Understanding Industries CPQ, we'll cover more use cases and Industries CPQ tools and features.
Having covered the need to implement Salesforce CPQ, as well as the advantages it offers, it is now time to install it.
Before the full implementation is deployed in the production environment, all the required configurations can be done in a test environment. The advantage of using a test environment is that deploying these configurations into production following thorough testing and approval by the business will leave little room for error. All use cases in this book will be demonstrated in a developer org using Salesforce Lightning. Let's get started.
Tip
You can skip the installation if you just need to practice CPQ configurations. Salesforce provides a pre-installed CPQ developer org for 90 days. You can get a free training org here: https://developer.salesforce.com/promotions/orgs/cpqtrails.
Before installing Salesforce CPQ, you will need to create a developer org. The developer org comes with sample data for all the Salesforce standard objects. To create a developer org, sign up here: https://developer.salesforce.com/signup. You can then verify your account via email and set up a password.
Important Note
Salesforce CPQ is a managed package and it needs to be separately installed on any Salesforce org.
Once you have created a developer org, you are ready to install Salesforce CPQ. The following steps can be followed to install CPQ in any Salesforce org:
Now that the package installation is complete, you are ready to configure CPQ as per your business requirements.
Great work! In this chapter, you gained an understanding of the stages through which a quote that is generated by the sales rep gets converted to cash. You also learned about situations where Salesforce CPQ has not been implemented and the difficulties that sales reps undergo with a sales system that does not support closing deals on time and with accuracy.
We have covered in detail what Salesforce CPQ offers to the sales organization in particular, and to your business in general. We also covered the individual components of Configure, Price, and Quote, its meaning, and how it fits into the sales process. We covered the advantages and the ROI for your business organization when CPQ is implemented. We also outlined the steps that are necessary for installing the Salesforce CPQ package. You will be able to utilize the full potential of quote-to-cash automation in the following chapters.
In the next chapter, we will cover how to configure opportunities and quotes, and how to automate approvals.
18.191.233.205