Bottom line: Relying on the wrong or an outdated CPQ system for collaborative selling is like a leaky pipe that drains manufacturers of valuable revenue, margins, time and the chance to grow their channel selling strategies.
What’s Slowing CPQ Channel Selling Down?
Manufacturers with $100M or more in annual revenues are relying on indirect channels for the majority of their revenues. Gartner predicts that up to 80% of high-tech manufacturing revenue will be gained through indirect channels. 68% of North American tech companies’ revenue is earned through the channel, according to ServiceSource. Dell Technologies is predicting their channel revenues will reach $70B by 2020 up from $49B in 2018 with channel-driven CPQ sales making a solid contribution.
As indirect channel sales increasingly dominate every manufacturers’ revenue mix, many realize they could be getting better results from their CPQ channel sales strategies. Common challenges all manufacturers face when attempting to create more collaboration with their channels and sell more CPQ-based products include the following: having to rely on paper and Microsoft Excel-based price lists and pivot tables; no price exception discounting controls or automation; no automated sales tools that are integrated to CRM systems for customer data; no integration to supply chain systems to provide Available of Promise (ATP) and Capable To Promise (CTP) on quotes; no rules- and constraint-based configurators to verify a given product configuration is buildable and many more. Taken together, all of these factors are the roadblocks that are blocking channel revenue today. The graphic below captures just a few of the many high costs of inefficient CPQ channel selling:
What’s Needed Now To Make Collaborative Channel Selling Pay
From a steel gear manufacturer creating engineer-to-order transmissions to a plastics manufacturing company building customized silicon housing for NASA and SpaceX, manufacturers of complex products rely on channel partners to drive more revenue. The following are the key lessons or takeaways from conversations with them regarding their collaborative channel selling strategies:
- Get started with a Partner Relationship Management (PRM) platform first to improve sales enablement and collaboration. Every manufacturer who has improved their collaborative selling strategies started with a solid PRM foundation they either created to support CPQ channel selling or already had in place. Having a PRM foundation to build from stabilized the partner community and provided them with the communication tools they need to improve collaborative selling.
- Providing channel partners with the freedom to personalize every screen and application of the CPQ platform you provide them to resell on. Traditional CPQ systems based on ERP break down and fail to scale when it comes to personalization. It’s because their initial design goals didn’t provide the level of flexibility and agility channel partners need to succeed at selling.
- Find ways to gamify reseller performance to create competition using a point-based system that rewards loyalty. Resellers respond to the opportunity to lead their peers in selling, so consider how you can gamify the use of collaborative selling applications, including CPQ. Differentiate reseller achievements by level to give recognition to those resellers who are achieving selling and margin goals.
- Pricing is now the most complex, powerful area of a collaborative CPQ system, so devote the majority of implementation and change management time to it. Taking the time to create intuitive, simplified screen workflows for bundling, discounting, price exception approvals, and escalations and pricing updates pays. Building in scale within pricing will pay off in thousands of saved hours a year and potentially millions of dollars in saved sales and margin.
The four steps above are a good starting place to reduce revenue, margin, and time leaks in a collaborative CPQ selling strategy. Manufacturers taking the initial steps of creating a PRM platform to automate and scale sales enablement report higher levels of collaboration and change management across their reseller networks. Providing resellers with a collaborative selling platform that is customizable by selling role and reseller delivers results including the following:
Conclusion
Manufacturers need to fix the revenue, margin, and time leaks in their collaborative selling strategies now. Complex products configurable in the channel, the need for improving quoting and pricing accuracy, simplification of the order process and greater customization are needed. It’s time to replace the leaking pipes that are traditional CPQ systems that can’t scale to today’s channel selling complexities and start saving the revenue, margin and time being lost due to systems not being designed for today’s reseller challenges.
