The Complexities of Quote-to-order and Possible Solutions

Sales channels struggle to understand their products well enough to sell them effectively. Getting sales representatives and channel partners up to speed (informed) on new and existing products is expensive and time-consuming. Furthermore, as product complexity increases, so does demand for customized products and services. For more background, please see The Basics of Quote-to-order Systems.

Even More Complexity beyond the Direct Sales Force

Although the traditional call center is not often used to sell and handle customer inquiries (or complaints) about very complex products, there will still be times when information needs to be given or received by phone. Some manufacturers of configured consumer products, such as personal computers (PCs), or Internet service providers may use telephone sales and support quite extensively, in addition to the web chat and self-service options of late. Internal sales and support staff share many of the same frustrations as their colleagues in the field, and need similar solutions. However, there are some specific issues that need to be addressed if complex or customized products are to be dealt with in a satisfactory manner via the telephone.

While communication may be bidirectional, one must realize the limitations of a solely verbal interaction with the customer, where the agent generally has the benefit of detailed systems information. Therefore, a support system for telephone or Web users must be simple to use and clear in its presentation, even for complex products. This will allow orders to be taken correctly every time, and up-selling and cross-selling opportunities to be promoted while the support system is closely integrated with order fulfillment and other downstream systems.

To help customers leverage the highly profitable, but often untapped, post-sale aftermarket and drive-increased revenue, Webcom Inc. (www.webcominc.com), an up-and-coming provider of quote-to-order (Q2O) solutions, has recently launched the WebSource CPQ Assets capability. Webcom's goal is to enable organizations to improve customer satisfaction and increase productivity of the sales force, channel partners, and back-office personnel by addressing the needs of aftermarket, field service, entitlements, and assets. The new module allows users to easily quote, propose, and sell additional products and services that are pertinent to a specific asset previously created (configured) via the WebSource CPQ (configure, price, and quote) product suite.

The need for this after-sales product came from customers frequently quoting renewals, upgrades, aftermarket service, add-ons, and so on. In industries that sell capital equipment, such as medical devices, telecommunications, instrumentation, IT hardware, and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies, this is a strategic move to increase the top line, while other companies are looking to replace revenue from slower, new product sales in the current economic conditions.

Thus, by selecting an asset, the user will now automatically be able to see the product and commercial characteristics associated with the asset, and based upon those attributes, will be guided to offer, select, or restrict relevant services and product offerings.

The WebSource CPQ Assets module includes a number of key features:

* Asset properties convey product, installation, and commercial characteristics, including customer information.

* Asset attributes affect the behavior of a product via product rules, dependencies, and triggers, thus guiding the user.

* Workflow and permission mechanisms govern who can make changes and the timing of such changes.

* Assets can be searched and sorted via a number of fields, including “key” attributes.

* Assets can be updated manually or through the quotation process via revision control.

* A side-by-side asset comparison is available.

* Automation of repetitive processes, including annual, quarterly, and monthly services (such as warranties, service contracts), and maintenance are available.

* Automated processes linked to output document templates, such as quotes or invoices to assets, are included.

* User-defined groupings for quotation and invoicing purposes are provided.

* User-defined selection parameters for automated processing, such as all assets with warranties expiring in 60 days, are provided.

* An optional linkage to customer relationship management (CRM) systems for opportunity creation is included.

* Users can forecast revenue from automated processes.

* Batch import of existing assets eases module implementation and creates greater value.

Last but not least, while the indirect channel or the network of dealers, agents, resellers, distributors, and remote sales offices enables more effective, low-cost, and rapid expansion into new and unfamiliar markets, the above issues faced by the direct sales force are magnified for this external force. Separated from the parent organization by distance and by time zones, indirect sales channels present terrible communication and management challenges for any organization. These challenges are much more demanding when remote partners handle products that require considerable sales knowledge.

Some concerns that are very specific to this arena include the following:

* Sales cycles are lengthier because of the need to consult the master vendor over many details.

* Security and geographic concerns can make it very difficult to distribute information and keep the information current.

* Because of product complexity, agents may choose (or may only be allowed) to sell a limited range of products. For instance, companies may simplify dealer products to make them easier to sell, which, on the downside, almost always hampers competitiveness and profitability.

* Reseller quotes may be even more error prone and lack the most current information.

* Indirect training is difficult and costly, while generating forecasts for indirect business is much more difficult.

One should also not forget about the challenges that organizations selling complex products face when having to assimilate product lines and sales teams from mergers and acquisitions (M&As). For all the above reasons, the notion of a “perfect order” (an order with absolutely no errors, from order entry, to shipping, to collection—please see The Perfect Order—Inside-out or Outside-in?) might remain an unattainable goal when selling complex products.

In many traditional complex manufacturing environments, a number of factors and situations can drain order profit margins: the costs per build-to-order fulfillment are often unknown or difficult to pinpoint; the engineering department needs to keep a dedicated headcount for checking proposals and completing schematics; the “swivel-chair” integration (multiple departments entering the same data) makes errors more likely between disparate enterprise systems; proposals for complex products take weeks, making 20 percent of total sales, on average, lost orders (according to Cincom Systems); the close rate on leads for customized products are unknown or very low; and the customer satisfaction is low because of escalating lead times and an invisible “cost of sale.” Although a bid preparation is a costly exercise (which, according to Cincom, amounts to an average of up to 15 percent of the total contract revenue), specialist knowledge is needed to create the bid. This requires high levels of “expert” hours, with teams often having a dozen or more key members that spend over a thousand hours on high-complexity bids.

However, attaining a perfect order in such environments is certainly not impossible (if seamless integration and visibility is achieved within the entire supply chain), and it can result in a much more satisfied customer than in the case of mass produced products' sales. The real key to successfully selling complex products and services lies in addressing the underlying issue—the need to capture knowledge (intellectual property) from wherever it is held in the organization, and to make that knowledge available to those who need it, whenever and wherever they might be.



SOURCE:
http://www.technologyevaluation.com/research/articles/the-complexities-of-quote-to-order-and-possible-solutions-19150/