Episode 43: Creating Value with CPQ w/Nils Olsson

In the world of coffee, a simple combination of coffee beans, water, and milk can give rise to a wide variety of products. From Espresso to Macchiato, Caffe Latte to Cappuccino, and regular coffee, each beverage offers a different configuration and process, delivering unique value and commanding different price levels. This remarkable ability to create diverse products from the same ingredients highlights the importance of looking beyond the problem itself and focusing on the solutions that connect problems with value. In this article, we explore the concept of Configure Price Quote (CPQ) and its role in enabling organizations to deliver value through tailored solutions. We had the privilege of speaking with Nils Olsson from Tacton, who shared valuable insights on how CPQ can revolutionize the process of mass customization and enhance customer experiences across various industries.

At first glance, CPQ may appear as a three-word acronym, which stands for Configure Price Quote, however, it is more than just a narrow definition; it is a crucial component within a larger framework. CPQ is about the process of effectively reaching customers with tailored product configurations, ensuring accurate pricing, and delivering quotes that resonate with customers' needs. Olsson emphasizes that it plays a vital role in creating customer value throughout the product lifecycle, starting from product ideation to market analysis and eventual delivery.

The Age of the Customer has placed significant demands on organizations, highlighting the shortcomings of traditional communication chains. Nils illustrates the long and convoluted process that often characterizes customer interactions within companies. From initial contact with a sales representative to the involvement of multiple internal stakeholders, this chain of communication can lead to delays, errors, and dissatisfied customers. Organizations must find ways to streamline and improve this communication to ensure a seamless customer experience.

Within this complex communication web, product management emerges as a critical discipline that can bridge the gap between customer needs and organizational capabilities. Nils Olsson identifies four key areas that product managers must address to drive success: generating demand, selling the value of products, building trust with customers, and sustaining long-term relationships. To achieve these goals, product managers require tools that facilitate customer engagement, enable rapid innovation, ensure efficient delivery, and capture valuable insights.

CPQ methodology acts as a highly effective sales representative, almost like the best salesman you have ever encountered. It enables organizations to connect user needs with the most suitable value delivery. Through CPQ, companies can effectively map out customer requirements and align them with the most valuable product configurations. This dynamic approach ensures that each customer receives personalized solutions that precisely meet their needs, thus enhancing the overall customer experience.

The benefits of CPQ go beyond sales and revenue growth. Nils Olsson highlights the following advantages that CPQ brings to organizations: