Salesforce CPQ (Configure-Price-Quote) enables companies to automate and refine their pricing strategies. Here’s why this can benefit your organization, as well as a couple of challenges to consider. Written by Eric Borthwick.
As companies’ processes become more complex, quoting and billing activities are no exception. Historically, companies have used manual methods to build their pricing; however, as product and service lines grow, setting their prices can become a challenge. CPQ software allows companies to quickly and accurately emulate quotes based on factors such as competition and local criteria that affect pricing.
Last year, Salesforce took that efficiency a step further by incorporating CPQ directly into its platform. By making the quote-to-cash process native, it purges the quote process by gathering all the sales information directly into the application that the sales force uses. As a result, there are no clicks or searches for pricing information. Quote-to-cash software coupled with Salesforce’s CPQ tool has become a successful price management tool.
Salesforce CPQ, makes it possible to automate processes from the creation of an invoice to the collection process. With new functionality, such as Salesforce’s artificial intelligence application called Einstein, built into the platform, companies can also build logic to predict whether certain payment processes may require certain milestones or more assertive collection practices. The CPQ tool also allows companies to employ additional intelligence to align their pricing guidelines with external factors, such as the practices of their competitors. Salesforce aims to make ERPs a relationship management tool that requires integration only for moving data between systems. While CPQ software can be adjusted according to individual customer milestones, companies must carefully incorporate their quotation activities into their processes. Although application costs have not yet been published, the demand created by the Salesforce customer base has not diminished.
Managing sensitive collection processes within Salesforce also makes good sense. Someone on the sales team who is knowledgeable about the collection tactics being applied-and can sometimes be aggressive-can pause the marketing and sales efforts being made; a customer who, for example, receives a collection call from your company and is about to receive another call or email offering new products or services. CPQ can alert the marketing and sales team to the best time to make a product or service offer. Companies that have implemented Pardot and the Salesforce Marketing Cloud have a competitive advantage from the start.
The billing functionality also enables milestone billing; a professional services company with such a feature can use a number of free project management applications available on the Salesforce AppExchange to review each project in progress with full transparency so that the finance department can manage its cash flow. Many firms that have contracts with clauses that stipulate penalties for late payments can also automate the calculation of such penalties.
Salesforce’s billing functionality uses native data and reports, which can help manage aspects of customer commitments. This includes the ability to configure future contracts according to a customer’s propensity to make timely payments, or even the need to plan for greater financial capacity according to projected costs. Some companies have chosen to establish financial limits to their client’s opportunities and initiate collection processes only when the limits exceed pre-established parameters.
International contract management with currency exchange safeguards, which are based on the delivery of a commodity, can also be achieved through Salesforce Billing. Split billing also allows for bifurcated collection processes to run concurrently for a given customer or opportunity. Event management is a scenario where a customer can, for example, make a deposit for exhibition space while purchasing printed collateral at the same time. A print ad will probably have to be cancelled in its entirety before it is published, while the exhibition space may require only a deposit. In that case, the portion of the invoice related to the balance of the exhibit space will be executed through a collection process established for that specific purpose.
Billing functionality also includes tax management, which can be configured by product, by product category or by a customer’s billing or receipt address. Tax exemptions can also be configured in the tool – payment processing platforms are also connected to credits and all electronic transfer and clearing house (ACH) functions are supported.
There are challenges to achieving effective implementation of a billing system. How a company manages connectivity to its accounting systems and the time it takes to update Salesforce with incoming payment information is important and must be addressed carefully. Companies must be careful not to complicate business development by relying solely on workflows or approvals derived from billing. In many cases, placing the sales force in a position that makes it difficult to acquire new customers is a counterproductive strategy. Clear separation of responsibilities will go a long way towards success.
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For more than ten years SQDM -Software Quality Driven Management- has advised a number of companies with professional consulting services on CRM solutions. SQDM is an official business partner of world-class manufacturers in these technologies, including Salesforce, Oracle and Microsoft.
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