Distribution
Gaining a strong competitive
advantage in distribution with
configure-price-quote software
Technology has transformed the distribution industry so much that the industry is barely recognizable today. Back
in the 20th century, when much of the distribution industry was shaped, distributers needed to be in close proximity
to their customers in order to serve their needs. Today, customers can go online to explore choices that are not
held back by geographic locations and compare these choices with a wider range of sources. At the same time,
supply chain innovations are making it easier for distributors to fulfill orders from across state and continental lines.
These factors have enabled the rise of super-distributors such as Amazon Business and Alibaba that are
aggregating other distribution businesses—and making competition more intense.
With the new technology options available today, smaller distributors can have the agility, precision, and speed
they need to succeed against large competitors with deep pockets. These smaller companies are now better
positioned to identify special customer needs, transform their businesses quickly, and deliver new kinds of value
instead of just competing on price. “Forrester believes that 2015 will serve as an inflection point where
companies that successfully harness digital technology to advantageously serve customers will create clear
competitive separation from those that do not.”1
Configure-price-quote (CPQ) software is one of the main technologies helping distributors become more
competitive. An integrated, rules-based CPQ solution can provide an interactive visual catalog that speeds
complex orders, while capturing and codifying the insights and approaches of an organization’s top salespeople.
CPQ can also simplify the kitting and bundling of multi-product solutions and systems, while shortening lead times,
enhancing revenues, and reducing costs—all important factors in the current distribution industry.
2Distribution Industry Perspectives
3 Three ways CPQ software creates a
competitive advantage
5 Building better business outcomes
6 Knowing what to look for in
CPQ software
8 Automating the path to “yes”
Table of Contents
3Distribution Industry Perspectives
Three ways CPQ software
creates a competitive
advantage
CPQ software can transform the customer buying
experience with web-based, real-time visualizations of
products ordered. It allows a distributor’s sales
representatives to become instant product experts by
providing them with access to detailed product
information and an inherent guided selling approach
for error-free quotes. As a result, using CPQ software
can help distributors to achieve three important
competitive advantages.
With CPQ software, distributors can:
1. Simplify customer choices
In today’s distribution industry, brand commoditization
is a growing concern, and customer satisfaction is
more important than ever. Some distributors are
differentiating themselves from their competition by
using CPQ software to simplify complex choices for
customers and become easier to do business with.
Huttig is one of the largest wholesale distributors of
millwork and specialty building products, and it serves
as a good example of CPQ’s potential.2 Thanks to a
cloud-based CPQ solution, Huttig help dealers and
their customers design the exact door that they need
by providing thousands of possible combinations of
doors and related accessories. The software’s
rules-based configurator offers a step-by-step guide
that shows them all of the available dependencies as
they choose a door’s size, material, trim, and color,
and other features such as hinges and handles.
The same configurator is re-branded by Huttig’s
dealers to present doors from within their own
respective online sales portals. Dealers can easily
customize each mark-up, while the solution allows
them to create automated quotes that incorporate
pictures and email them to customers with a click.
When the CPQ system is linked with a CRM system,
special discounts and value-added services are
reflected automatically. In addition, CPQ software can
automatically generate all sales and manufacturing
documentation needed to accelerate an order,
helping to deliver a faster time to value.
After one year, Huttig reported a significant sales
boost and estimated that the CPQ solution helped it
avoid 80,000 to 90,000 phone calls to its inside sales
team. That constituted an immediate payback, said
Brian Robinson, vice president and chief information
officer at Huttig. “More important is increased
customer loyalty,” he added. “Our customers love the
ability to go in and create the order and have the
quote. It’s not just about price anymore. It’s about the
tools we’re giving our customers.”3
Ruby
CMYK: 10, 100, 100, 2
CMYK Color Palette
Graphite
CMYK: 25, 18, 12, 55
Coral
CMYK: 0, 65, 100, 0
Amber
CMYK: 0, 38, 100, 0
Citrine
CMYK: 2, 10, 100, 0
Jade
CMYK: 42, 0, 100, 0
Emerald
CMYK: 60, 0, 95, 0
Ruby
Light: 10, 100, 100, 2
Dark: 10, 100, 100, 22
Graphite
Light: 25, 18, 12, 55
Dark: 25, 18, 12, 75
Coral
Light: 0, 65, 100, 0
Dark: 0, 65, 100, 20
Amber
Light: 0, 38, 100, 0
Dark: 0, 65, 100, 0
Citrine
Light: 2, 10, 100, 0
Dark: 0, 38, 100, 0
Jade
Light: 42, 0, 100, 0
Dark: 60, 0, 95, 0
Emerald
Light: 60, 0, 95, 0
Dark: 65, 0, 100, 20
Turquoise
Light: 71, 0, 48, 0
Dark: 71, 0, 48, 20
Topaz
Light: 61, 0, 0, 0
Dark: 75, 20, 0, 0
Azure
Light: 75, 20, 0, 0
Dark: 95, 45, 0, 0
Cobalt
Light: 95, 45, 0, 0
Dark: 87, 70, 0, 0
Sapphire
Light: 87, 70, 0, 0
Dark: 87, 70, 0, 20
Amethyst
Light: 67, 90, 0, 0
Dark: 67, 90, 0, 20
Tourmaline
Light: 4, 94, 46, 0
Dark: 4, 94, 46, 20
Turquoise
CMYK: 71, 0, 48, 0
Topaz
CMYK: 61, 0, 0, 0
Azure
CMYK: 75, 20, 0, 0
Cobalt
CMYK: 95, 45, 0, 0
Sapphire
CMYK: 87, 70, 0, 0
Amethyst
CMYK: 67, 90, 0, 0
Tourmaline
CMYK: 4, 94, 46, 0
4Distribution Industry Perspectives
2. Create a standardized body
of knowledge
CPQ software can also help a distributor protect its
well-established reputation for great service, and
continue to build on it. Customers count on a
distributor’s expertise in answering questions and
solving problems: Which conduits are compatible with
a given electrical box? Will a change in pipe require a
different flow control valve? All too often, a
distributor’s knowledge about products,
dependencies, shipping, and discounts resides mainly
in the heads of senior sales staff and managers. CPQ
solutions allow organizations to codify much of the
knowledge of their top experts in business rules, so it
can be shared more easily for use by various business
units, from sales reps to dealers, and even end users.
A CPQ solution allows all reps in a distributor’s call
center, whether junior or senior, to work from a
consistent and standardized body of knowledge. The
quality of a distributor’s service becomes defined by
the strongest link in its sales staff, rather than the
weakest link. If employees leave, their knowledge
doesn’t leave with them. When a question comes up
about how a change in a condenser will affect the
delivery timeline of an air conditioning system, CPQ
software lets users explore the answer for every
configuration—in real time.
3. Diversify the business with
new services
To compete in today’s marketplace, distributors need
to be able to quickly diversify and offer new services.
“It’s time for distributors to rethink their place in the
supply chain,” says the Brown Smith Wallace
Consulting Group, noting that traditional roles are out
of date: some large manufacturers are using
technology to bypass distributors and sell directly to
large customers.4
At the same time, a growing number of distributors are
using technology such as CPQ software to provide
new, value-added activities such as light
manufacturing, assembly, and product configuration
management.
A steel distributor, for example, can integrate a CPQ
solution with its ERP application and turn steel into
partially finished goods by offering new coating,
cutting, and welding services. An electronics
distributor can assemble parts from different vendors
into kits that can reduce handling at an OEM’s factory.
A heating, ventilating, and air conditioning (HVAC)
distributor can work with a manufacturer to satisfy a
bid from a large hotel that requires hundreds of
different air conditioning units. In each of these
examples, the distributor can use CPQ software to
obtain all necessary components from different
sources and assemble the units to specification.
A self-service CPQ portal helped one
distributor to boost revenue, while avoiding
an estimated
80,000 phone
calls
to the inside sales team in a year.
5Distribution Industry Perspectives
A CPQ solution supports fast deployment of new
services such as these because it can quickly be
configured to present the service to sales reps and
customers, help ensure accurate orders, dynamically
generate necessary documentation and bills of
material (BOMs), and share data across CRM and ERP
solutions to handle all steps from order to cash.
Observes the Brown Smith Wallace report:
“The rewards can be extensive. In the years to come,
as old habits die, new roles and opportunities will
present themselves. Distributors who are open
minded and ready will reap the benefits.”5
Building better business
outcomes
Simply put, CPQ software delivers a broad impact.
Reps equipped with it close more deals with higher
value per deal—and they close them faster. In the
distribution industry, a rep using CPQ software can
concentrate on the customer’s needs while the CPQ’s
rules-based technology helps ensure accurate
quoting, kitting, bundling, and discounts. A report
from Aberdeen Group noted that when using CPQ
solutions, 26% more sales reps achieved their quota,
aided by a 17% higher lead conversion rate. Their
average deal size was twice as big as non-CPQ users,
and on average they generated 49% more RFP
responses per month, and reduced average sales
cycle time by 27%.6
How does CPQ technology make this possible? Some
experts point to the transformative effects of having
full product knowledge at one’s disposal. “These apps
can aid a change in sales person perception by the
customer,” says Chuck Schaeffer, CEO of Vantive
Media, “by advancing the sales person’s role from
go-between resource to a professional who can add
value in getting the complex product the customer
needs.”7
In a distribution call center, reps working with CPQ
technology can add value because they are reminded
about extended maintenance plans, special
promotions, and product upgrades at just the right
time, as they build the order with the customer. They
are alerted to upsell and cross-sell opportunities as
they occur. Because the CPQ solution presents reps
with a dynamic, real-time picture of the order, and lets
them drill down to details and dependencies as
needed, a rep can devote more attention to listening
to the customer and providing advice.
The analyst community is recognizing the positive
effects of CPQ technology. In its report How CPQ
Impacts Customer Engagement, Gartner states:
“CPQ helps sales organizations to achieve efficiency
by reducing response time to customers, reducing
quoting errors thereby avoiding rework, maintaining
consistency across the sales cycle and actively
engaging with customers.”8
Reps enabled by CPQ software
close more deals
with higher value per deal and they close
them faster.
6Distribution Industry Perspectives
Knowing what to look for in
CPQ software
To reap the full business benefits of increased sales,
lower costs, shorten lead-time, and improve customer
satisfaction, a distributor should implement a CPQ
system that can:
■ Promote step-by-step consultation and
collaboration—Sales reps can sit with customers
and explore configuration options in a clear and
simple way, problem-solving and consulting with
them, while branching to the next set of needed
information with just a click. Facets, or filters, allow
the user to control customizable characteristics
such as size, color, and price range, and help
quickly filter results, improving the customer
experience.
■ Provide a greater range of choices, more
quickly—In addition to centralizing all possible
permutations of products in the inventory, CPQ
software can capture core configurations for new
building materials projects, HVAC systems,
electrical substations, or audio/visual media centers
for later use. Sales reps don’t have to start from
scratch to craft a proposal involving a certain style
of millwork. New brands can be added quickly, and
customers can easily see suggested accessories
and additional purchases. A distributor can easily
develop and present bundles of different products
(such as connectors and mountings along with
transformers). Kits and bundles can easily bring
high-margin accessories forward into the
final order.
■ Take advantage of 2D and 3D images—A picture
can be worth a thousand hours. CPQ software can
dynamically generate 2D and 3D product
representations to reflect customers’ exact
specifications. When buyers can compare detailed
pictures rather than written descriptions, they can
more quickly evaluate options and confirm choices.
Windows can be matched with shutters and
hardware. Fan blades can be matched with motors.
A TV, cabinet, and mount can be kitted more
efficiently.
■ Integration with ERP to shorten cycles—CPQ
software should be easy to integrate with a wide
range of ERP applications. This connection speeds
fulfillment and gets orders right the first time, which
can improve your company's reputation and
encourage word-of-mouth referrals and additional
contracts. Everglades Direct, a B2B fulfillment
company that serves more than a million small
businesses, reported that CPQ software helped it
accelerate order turnaround time.9 The solution’s
rules-based configurator also allowed the company
to reduce customer service training requirements,
and to use flexible seasonal staffing to
minimize costs.
■ Generate automated documentation—To
streamline the ordering and fulfillment process,
CPQ software can generate compelling quotes,
comprehensive contracts, accurate orders, and
complete bills of materials and routings, all
personalized to customer and company needs.
That has made a big difference for The
Gorman-Rupp Company, a leading manufacturer
of pump systems in the Midwest.10 It uses CPQ
software to serve more than 1,000 distributors, and
the solution’s document automation has reduced
proposal development time from 3 weeks to 15
minutes. The result has been a strong increase in
sales and customer loyalty.
7Distribution Industry Perspectives
■ Simplify training, administration and
security—The CPQ user experience needs to be
intuitive to help minimize training. The software
should guide reps through best-practice
approaches step-by-step, training new reps and
allowing all reps to consult rather than sell. As an
example, Virginia Air, an independent HVAC
distributor, used CPQ software to reduce a 6 to 12
month training period for reps to a matter of
days.11 To simplify administration, CPQ business
users should be able to make changes to the
configurator without help from IT. And, for deeper
security, there should be role-based access.
Transforming an entire
business’s workflow
CPQ software does more than streamline the
configuration of complex batch orders and manage
contracts. It gives top distribution executives the
opportunity to transform the workflow of their entire
business. When used with an ERP system, CPQ can
simplify order entry and billing, while accelerating
support and service.
In addition, CPQ replaces manual administrative work
with a complete, convenient user experience that
provides high visibility into all product and kitting
options, up-to-the-minute cost and availability data,
and detailed customer information to strengthen
relationships and upsell opportunities. CPQ solutions
benefit many different people in different ways:
■ Distribution customers can request accurate
orders because it’s easier to see how
dependencies, rules, constraints, and variables
affect components and lead times. With CPQ,
customers gain greater knowledge of options and
components for current and future orders and can
take greater ownership of their purchases due to a
more collaborative quoting process. Customers
also like having a self-service portal that they can
access at any time, from any device.
■ Salespeople can respond to bids faster and focus
on relationships and problem solving, rather than
on selling. Margin information is easily accessible
and continually updated as different choices for
materials, fittings, and accessories are made. This
helps the sales force achieve profitability targets
and meet quotas faster.
■ Sales executives can capture their best sales reps’
strategies and approach to simplify training for new
reps. For instance, CPQ software shows the best
way to guide a buyer through the hundreds of
sockets, circuit breakers, and connectors that can
be involved in an electrical components order for a
construction project.
With CPQ software, sales executives can
capture their
best sales reps’
strategies and approach, to simplify training for
new reps.
8Distribution Industry Perspectives
■ Marketers can showcase promotions faster, and
aggregate line items into bundles that qualify for
special terms. If an order of electrical parts clears a
minimum weight, for instance, it might fill its own
truck and therefore get a discount. In addition, CPQ
software highlights new promotions and features
for customers in context, as they proceed through
the order. Marketers also get real-time data on
customer needs and trends, which can help
improve product development and planning. More
importantly, they can drive customer behavior by
suggesting a more profitable product option over a
less profitable one, while still meeting the
customer's needs. All these capabilities help create
a critical competitive edge in meeting customer
demands and enhancing product differentiation.
■ Dealers and other selling channels can integrate
CPQ software with their own customer-facing
systems, and enjoy multi-tier capabilities for
complex sales channels. Their customers can use
the visual catalog to facilitate faster, easier
searching and be exposed to options and
contingencies automatically. An automotive parts
distributor, for instance, can use CPQ software as
an intuitive, dynamic ordering interface that
presents only available options of brakes, clutches,
and mounting kits. It will be much easier to
collaborate because CPQ software dynamically
generates a BOM without manual order entry and
duplication of information.
■ The IT team gets more time for innovation and new
projects because CPQ software allows sales,
marketing, and operations teams to make CPQ
changes quickly and easily, without IT assistance.
Automating the path to “yes”
Click by click, advanced CPQ software guides
distribution customers through an empowering array
of options. Customers can watch their dynamically
configured kit or set taking shape. They can see the
effect on costs and dependencies of different choices,
and be interactively guided to meet their desired
delivery date, performance target, or compliance
objective. The overall effect is that customers gain
greater control, find ordering easier, and experience a
deeper sense of partnership with the distributor.
In an age of increasing competition, CPQ software can
help distributors provide a better customer
experience—which is the key to brand differentiation
and long-term growth.
1. CIOs Will Lead the Digital Change – Or Be Usurped – In 2015, Pascal Matzke, Forrester Research, Inc. Blog, November 10, 2014.
2. Infor,
3. “Huttig Building Products—Customer Video,” Infor.com.
4. Brown Smith Wallace Consulting Group, “Blurring the Lines Between Manufacturing and Distribution: Exploring the Hybrid Business Model”,
November 2014.
5. Brown Smith Wallace Consulting Group..
6. Aberdeen, “Configure-Price-Quote: Best-in-Class Deployments that Speed the Sale,” Peter Ostrow, July, 2013
7. Chuck Schaeffer, “How Manufacturing CPQ Software Simplifies Complex Selling”, CRMsearch.com, 2015.
8. Gartner How CPQ Impacts Customer Engagement, Praveen Sengar, October 22, 2013. Last refreshed May 21, 2014.
9. Infor, “Everglades Direct increases personalization with Infor Product Configurator,” Infor.com.
10. Infor, “The Gorman-Rupp Company increases sales and distributor loyalty with Infor Configure Price Quote,” Infor.com.
11. Infor, “Virginia Air improves product configuration with Infor PCM”, The Wholesaler, July 2014.
Learn more about
configure-price-quote software
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Gaining a strong competitive advantage in distribution with configure-price-quote software
Today, customers can go online to explore choices that are not held back by geographic locations and compare these choices with a wider range of sources. At the same time, supply chain innovations are making it easier for distributors to fulfill orders from across state and continental lines. These factors have enabled the rise of super-distributors such as Amazon Business and Alibaba that are aggregating other distribution businesses—and making competition more intense.
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