The global Configure Price Quote (CPQ) Software market, once valued at US$2.2 billion in 2022, is predicted to reach a remarkable US$7.3 billion by 2030. In addition to its rapid growth, the industry is on the verge of seismic change.
Join us as we delve into the key trends set to reshape the CPQ industry and unveil the future of this tech-led revolution:
First, let’s define CPQ and explain how cutting-edge CPQ solutions operate today.
Configure, Price, Quote (CPQ) is an indispensable step-by-step process used by businesses dealing with complex and configurable products. CPQ software streamlines the process, boosting efficiency and productivity and enhancing the customer experience.
A robust CPQ solution can shrink sales cycles that once took weeks down to a few minutes. This speed can significantly increase your win rate and deal size¹, while offering significant advantages in these areas:
An effective CPQ also streamlines the sales process and automates many transactional engineering tasks required to sell engineer-to-order and configure-to-order products. These include auto-generating CAD files, BOMs, and sales drawings, along with routing them to the appropriate person or system.
In changing markets where efficiency is critical, CPQ enables end-to-end file-to-factory automation, which can make dramatic net positive impact on costs--manufacturers can produce more products, in less time, with a reduced headcount across sales, engineering, and the shop floor.
There are two main types of CPQ products: cloud-based and on-premises. Cloud-based CPQ products are hosted on the internet and accessed through a web browser, while on-premises CPQ products are installed and maintained on your business's own servers.
The CPQ industry is on the rise generally, but cloud-based CPQ is experiencing the most rapid growth. Growth in the cloud segment is forecast at 17.8% CAGR for the next 8-year period, while on-prem is projected to record a still fairly strong 15.1% CAGR .
So why do we see more and more businesses opting for cloud-based CPQ products over on-premises ones? Here are some of the main reasons:
Here’s a powerful statistic: According to a report by McKinsey, 75% of B2B decision-makers prefer remote interactions with sellers over in-person interactions with sales reps. This is why CPQ vendors are experiencing increased demand for CPQ products that support sales teams to optimize sales remotely or on the go.
Today’s leading CPQ solutions use technology to take products out of the showroom and into customers’ homes and offices (see Augmented Reality below). They’re also focusing on mobile accessibility for hybrid teams that work in and out of the office.
Companies leveraging remote sales through CPQ are seeing real benefits. These include reduced travel and operational expenses, enhanced scalability and flexibility, improved customer satisfaction and loyalty, and greater access to new markets. They can also cast a wider net when hiring and attracting talent worldwide.
Augmented reality (AR) is a technology that overlays digital information onto the physical world, creating an immersive and interactive experience for the user. The global AR market is skyrocketing, projected to grow from $62.75 billion in 2023 to $1,109.71 billion by 2030, at a CAGR of 50.7%, with leading technology companies like Apple, Meta, and Google all in on the action.
AR is set to have a massive impact on various industries, including gaming, education, healthcare, and retail. But one of the most promising applications of AR is in the CPQ industry, where it provides a more engaging and realistic way of presenting products to customers.
AR can allow the customer to see how the product would look in their chosen environment—for example, how a new sliding glass door would look on their property. It can also enable the customer to interact with the product or service, such as changing its features, colors, or dimensions, to see how these changes affect the price and value.
By using AR in the CPQ process, sales teams can achieve several benefits:
People underestimate not only the size of the current B2B eCommerce market but its immense growth potential. Valued at US$17.9 trillion in 2021, it’s more than five times that of the B2C eCommerce market and currently ballooning. Asia Pacific leads the way with a market share of 78%, leaving North America and Europe far behind.
One of the main reasons for the rise of B2B ecommerce is the changing expectations of buyers. Today's B2B buyers are used to the convenience, speed, and personalization of online shopping in their personal lives, and they expect the same service when buying for business.
The rise of 3D visual product configurators is another potent driver. Embedded into an eCommerce website, buyers can see how their products will look and function in real time as they make changes to their configuration. They also provide feedback on the components' compatibility, availability, and pricing and make suggestions for upselling and cross-selling.
Using visual product configurators, buyers can make informed decisions faster and easier, while sellers can showcase their products more effectively and increase conversions. They’re a win-win for both parties in the B2B ecommerce space.
Artificial Intelligence (AI) and Machine Learning (ML) are transforming how businesses use CPQ software. These smart technologies learn and get better with each cycle of feedback, which means they'll improve exponentially over the next year, making business operations more efficient and effective than ever before.
The impact of AI and ML can be felt across the entire Configure, Price, and Quote process, from the shopping cart to the shop floor. Here are some of the ways these technologies are having an impact:
Product rules engines are a vital component of CPQ (configure, price, quote) solutions. They allow users to define the logic and constraints for configuring complex products and services.
However, traditional product rules engines often require coding skills and technical knowledge, limiting the flexibility and efficiency of the CPQ process.
That's why more and more CPQ solutions are adopting a no-code approach for their product rules engines. No code means users can create and manage product rules using a graphical interface, drag-and-drop elements, and natural language expressions. It makes the rules engine accessible to business users with no coding experience.
The no-code movement is growing fast and provides several benefits to CPQ rules engines offer several advantages:
It's also worth noting that no-code doesn't mean no-complexity. Advanced no-code tools can handle complex logic and business rules, making them suitable for even the most complex product configuration scenarios.
As we look towards the future of the Configure Price Quote (CPQ), we see a landscape shaped by transformative technological advancements and shifting market dynamics. The challenge lies in keeping pace and harnessing these advancements to create value and deliver customer excellence.
Choosing the right partner for your CPQ solution is essential for growth and innovation. At Epicor CPQ, we can position your organization at the forefront of this rapidly evolving landscape so you can set the pace for your industry. We're committed to your success, and are ready to show you how we can help your business thrive.
¹ Epicor CPQ customers increased their win rate by 40% and their deal size by 105%, on average.
