Gain Insightful Deal Metrics with CPQ

By Joe Parlett, VP of Sales, Veloce

In a prior blog, we discussed some critical KPIs that sales leadership tracks in order to know if their operational efficiency is meeting the standards they’ve set for the company. We also identified how a successful deployment of CPQ can help you to achieve your efficiency goals.

Understanding the comprehensive structure of a deal is crucial in decision making. Not only should a well-configured CPQ system make it easy for your sales team to efficiently get through your quoting process, it should also give your leadership easy access and clear visibility into the deal metrics that will drive their decisions on deal structure. How deals are structured (including the pricing offered) plays a major role in whether or not we will achieve sales goals. CPQ should be providing your leadership team with all the deal metrics needed to understand if a deal will help the company meet its objectives.

Make sure that you’re structuring deals in a way that’s consistent with your goals. As with your examination of a multitude of KPIs, there are numerous deal metrics that need to be evaluated so you know if you should approve, reject or re-structure a deal.

How can you gauge the health of a deal?

Which indicators are being looked at to determine if the structure is good for the customer and your company? In CPQ, while your rep or channel partner may not have visibility into all of the metrics, all of this data should be conveniently visible for leadership to review. You can give role-based access to more sensitive data (as some of the data may be confidential and only available to leadership), but it needs to be there. Otherwise, how do you know if the deal should be approved?

You can’t go off of a hunch or memory, you need data. 

It will vary by company and the products and services sold, but some key metrics will include the items listed below.

By deal, what’s the:

  • Annual Contract Value (ACV)
  • Total Contract Value (TCV)
  • Monthly Recurring Revenue (MRR)
  • Annual Recurring Revenue (ARR)
  • Non-Recurring Revenue/ Set up fees (NRR)
  • Renewal Uplift Amount or Attach Rates
  • Margin percentage
  • Margin by Product
  • Margin by Period
  • Gross Margin 
  • Cost
  • Discount by Product
  • and more

Once you have the metrics, you’ll decide:

How does this deal align with our goals?

How does this compare to a typical deal or similar deals we’ve done?

Is this a renewal or upsell?

Intangible: How strategic is this customer?

Should I approve this deal? If not, can I intelligently restructure this deal? (By ‘intelligently’, I’m talking about using data to guide your suggestions).

The data is in the CPQ system; make sure it’s accessible. Decision makers shouldn’t have to search for it.

Price Optimization

While the goals you set on items— such as margin, discount percentage, and comparisons to “average”— provide solid guidance on the decisions you make, price optimization solutions can work in tandem with your CPQ to help make sure you are truly maximizing revenue. 

Your business rules will tell you that you need to be above or below “X”, but price optimization technologies will use additional market data and intelligence to give guidance on what you can expect the customer will actually pay for your products or services.

Identify your Key Metrics and make sure they’re included

CPQ should provide you with all of the Deal Metrics needed to ensure you’re making business decisions that meet your corporate objectives. Make sure your technology vendor and/or implementation partner understands what visibility you require in order to drive the decisions which will help you stay ahead of your goals.

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