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Selling technology services is stuck in the dark ages. First, the services pricing and proposal process takes place in a silo, distant from the technology product or subscription sale. Second, services are almost always priced and sold using spreadsheets, proposal and SOW templates, and endless emails—just like it was 20 years ago. In this post, I will show ( with video!) how leading companies have solved both problems by adopting services CPQ (Configure Price Quote). Services CPQ is designed to make selling services fast, simple, spreadsheet free, and seamlessly integrated with technology product sales.
Services are often an important part of a technology product or subscription sale. This is a good thing. However, product pricing and services pricing are often done by different teams using different tools and processes. In most companies, integrating this process gets accomplished with brute force. This slows down the overall sale and requires a lot of very expensive, manual work. It also causes unnecessary errors and no shortage of frustration for everybody.
This arms-length distance between technology product and technology services is easy to understand. Product quotes are done in a CRM quoting application, but services quotes are not. Services are almost universally priced in spreadsheets, so this creates a fundamental challenge: How is the Services team informed about what’s required for a product sale? When the product quote changes during the sale, how is the Services team informed so they can update the services quote? The answer, unfortunately, is phone calls and emails with spreadsheet attachments.
When the product quote changes, how is the services team informed?
The dilemma is that unless the services pricing requirements are very simple, most quoting software will not work for services. Why? Because quoting applications evolved as a solution for pricing products, not services. These tools are missing the elements that define services pricing and proposals: timeline, roles and skills, tasks, phases, pricing models (fixed price, T&E, managed services, etc.), analytics, and dynamic proposal content generation, just to name a few!
Even if the distance between services and were ignored, the fact is that completing services proposals is a really inefficient process. The reason can be summed up on one word: labor. The vast majority of the process is manual, and therefore slow and expensive.
In Services, there are two or three crucial elements in a sales proposal: estimating costs/level of effort, pricing, and proposal content.
Level Of Effort (LOE) is an estimation of the resources, skills, hours, cost, and duration required to deliver the service.
Pricing takes the LOE and prices it. It’s the quantity, price, pricing model, timeline, terms, discounts, etc.
Proposal Content describes the services that will be delivered. It includes requirements, scope, assumptions, expected outcomes, exclusions, etc. Proposal content is almost alway created in Word documents (or equivalent).
The problem is that level of effort estimation and pricing happens in spreadsheets, while the corresponding proposal content is added in Word. When you take even a modest volume of proposals, throw in continuous changes from the customer, you get a process that is slow, expensive, and error prone.
The companies that we talk to estimate that their sales teams are spending over 40% of their time on proposal admin, while the cost of sales/solution support is going up, not down. With margins in services already under pressure, this is not a sustainable combination.
Services CPQ is built for selling services. It replaces spreadsheets.
Services CPQ is purpose built for selling services. It replaces the spreadsheets. It autocreates proposal and SOW content based on the services and technology/subscriptions being sold, it streamlines approvals, and integrates with the product/technology quoting tools in CRM. The result is a vastly more efficient process. Let’s take a look:
With Services CPQ, pricing can be simplified with predefined templates or guided selling, which drives pricing, role allocations, service offering mix (professional services, managed services, etc). Guided selling also generates proposal and SOW content. Rules make the approvals simple, and real-time analytics (for a single quote or all quotes) becomes a reality.
When companies reduce the proposal process from weeks to days or hours, it’s a 10x improvement, literally. These gains unlock sales capacity resulting in new services, faster deals, and reduced sales support costs. It’s helps Service teams improve margins with real-time visibility. But customers say it best: CPQ modernizes a sales infrastructure in Services that hasn’t changed in decades.
Attending Technology & Services World in Las Vegas? If so, stop by the Zimit booth and we’ll show you how much simpler selling technology can be.
Not going to TSW? No problem! You can still see Zimit live. Just click here to schedule a 30 minute overview.
Post Date: October 11, 2018
James Cramer works for Zimit, the leading provider of Services CPQ. Other popular blog posts of his include: “CPQ for Services: The Spreadsheet Killer” and “How to (Actually) Automate Services Proposals.”
The Technology Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.