This blog was authored by Colin Masson, Director, Manufacturing Industry Solutions, Microsoft Cloud & Enterprise Group
If there's one thing nearly everyone agrees on, it's this: faster is better. From one-click online ordering to instant sharing on social media, speed is a new imperative. In manufacturing sales, the paradigm has overwhelmingly shifted to speed. Traditionally, sellers developed deals over the course of multiple interactions, but today, batting a price back and forth for weeks doesn't work. Customers demand a fast-paced sales process, and in this environment, delivering a quote quickly often means the difference between winning and losing. Today, 50% of buyers choose the vendor that responds first, which means time to quote is an important predictor of success.[i]
While speed to quote is essential, it can't be at the expense of accuracy. Typing your thoughts into a 140-character post is fast, but it's not always the best representation of a thought. Similarly, sellers may be able to create a quote quickly based on gut instinct, but they can't guarantee the price they provide will be in an optimal range. If the seller quotes too high or provides the wrong price, a customer isn't going to take their proposal into consideration. But if quotes are over-discounted, the seller is likely leaving money on the table.
To achieve the speed and accuracy that manufacturing buyers require, the right technology is essential. Modern configure-price-quote (CPQ) technologies help accelerate time to quote, but many of these solutions only automate existing processes. What's needed is a solution that not only drives fast quotes, but also supports the need for accuracy. PROS Smart CPQ does just that, giving sellers the tools they need to help close deals at optimal prices, pairing necessary speed with precision in pricing.
The right price, for the right products, at the right time
The PROS Smart CPQ solution uses dynamic pricing science technology to create a personalized pricing window for each customer, known as the "price envelope." This is the window between the lowest and highest prices that a customer is willing to pay—above the window, customers won't bite, and below the window, the seller has left money on the table. The price envelope enables sellers to see the range of prices within which the customer is most likely to accept the quote, while giving them the flexibility to determine an exact price based on their experience with that customer.
Big data and advanced analytics are what drive this price envelope. PROS' dynamic pricing science technology analyzes historical and 3rd party data, such as customer geography, product hierarchy, channel, annual spend, and product usage to create the initial window. Next, a model is run to test how this information influences the price for each segment of customers, further refining the pricing window.
Unlike other CPQ solutions who claim price optimization capabilities, PROS Smart CPQ doesn't just give the same price for an entire segment. It goes a step further and uses attribute analysis to provide prescriptive insights on each individual customer's willingness to pay. These insights are especially powerful when delivered across an entire organization, enabling every seller to know how much customers will pay and specifically tailor their quotes.
Leverage a fast, data-driven pricing envelope to get the most value from quotes
PROS Smart CPQ's pricing envelope enables sellers to deliver tailored quotes quickly, increasing the chances of success. Hewlett-Packard experienced firsthand how dynamic pricing science shortened their sales cycle. Because of accurate and dependable guidance from dynamic pricing science, sales managers stopped needing to touch every quote during the approval process. Since sellers did not need to wait for approval, they were able to reach more customers. The auto-approval rate jumped from 10% to 80%[ii] and customer response times increased by 25%.[iii] By proactively calculating a customer's willingness to pay, PROS algorithms helped HP sellers efficiently target customers with deal-winning prices.
Win more deals with easy-to-use dashboards and analytics
The dynamic pricing science solution includes dashboards, KPIs, and attributes that enable teams to grow their sales. Key business stakeholders get a dashboard with critical information in one place, from average margin to market data. The dashboard includes access to manufacturing-specific KPIs, as well as trend indicators like margin drivers that help managers identify areas of improvement. In addition, dynamic pricing science also comes equipped with a set of quick-start definitions so teams can immediately implement the dynamic pricing science model and create quotes based on a customer's ideal price envelope.
Cloud technology helps scale these dashboards and price envelopes to optimize their sale approach. Enabling teams with dynamic pricing science can produce dramatic results. Users typically see margins go up in just 90 days, one global auto parts manufacturer drove $5 million in incremental revenue after just 30 days of using the solution, and sales teams see quoting productivity gains of up to 49%. [iv]
Implement dynamic pricing science today
PROS Smart CPQ dynamic pricing science works with the Microsoft Cloud to deliver the powerful analytics sellers need to provide fast, accurate and winning quotes. Leverage your existing data and a solution strengthened by decades of experience, training, and data to increase your leads margin by up to 15%.[v]
Learn more and try the PROS Smart CPQ solution for yourself on Microsoft AppSource today.