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What’s the Difference between Product Configurators and CPQ Software?

Aug 2, 2017 custom software Dennis Junk

Types of Product Configurators

If you’re researching ways to customize your products or deliver an online quote, you’ll likely come across two different terms—configurators and CPQs. 

So, is there any difference between them, and if so which one is best-suited to your needs?

Understanding CPQs

A CPQ application is usually a back-office tool that helps employees generate cost estimates, manage inventory, and set prices in rapidly changing markets. It stands for Configure, Price, Quote.

You’re probably interacting with one anytime you fill in information for an online quote, as you might when you sign up for insurance.

Functions of CPQ software:

  • Streamlining processes for getting cost estimates to customers
  • Syncing data and facilitating coordination between sales, inventory, and finance departments
  • Setting prices based on shifting demand and inventory

 

CPQ Examples

Along with online quotes for insurance, another example would be mobile quote generators like the ones our dev team has built. 

For one project, the client wanted to be able to get information about potential projects from conference attendees and then send them a cost estimate in the coming days. But our dev team found a way for the mobile app to pull data from the company’s ERP and generate quotes on the spot. 

Note that this company’s customers aren’t designing their own orders. The customers aren’t using the app at all. But it still allows sales representatives to differentiate the company’s services at the conferences they attend. 

This app gave the salespeople a great deal of freedom in helping prospects envision what a project with the company could entail—and made it easy to see how adjustments to the scope would affect the total cost. 

So, even though it’s an effective sales tool, the main goal is to expedite the quote-generating process, not to enable customers to tailor their own products.

Understanding Configurators

Configurators are web apps used by your customers to design or personalize the product they’re purchasing. Instead of seeing static product listings, like they would on Amazon, site visitors are given tools to customize the product, changing any aspect that has a range of options.

Functions of Product Configurators:

  • Increasing visitor engagement with your online product pages
  • Giving customers the tools to personalize or customize their purchases
  • Differentiating your site from competitors with static product listings
  • Improving customer experiences and product satisfaction
  • Building brand loyalty

 

Configurator Examples

To get examples of online product configurators, all you need to do is type the term into a search engine. The top results will be for high-end automobiles. But you can find them for things like shoes, furniture, and wherever else:

  • The products are customizable
  • Engagement with the website is a central stage in the customer’s journey
  • The tools improve customer experience by making the purchasing process simpler or more fun.

 

The second point here suggests ecommerce may be the arena best-suited to these online design apps. But they can be effective in any context where the other two conditions apply. 

For instance, our developers have built a configurator for a stationery company whose clients are funeral home directors. The design app allows the directors to personalize products like prayer cards, remembrance albums, and candle wrappers for their own customers. 

Cars and shoes show the importance of engaging site visitors with tools encouraging active personalization. But the stationery example is a good illustration of how simplifying the purchasing process can have a huge impact. 

Asked what role the design tool plays in their relationship with any given funeral home director, one of the company’s salespeople said, “Whosever software he’s using, he’s probably going to use their paper.” That’s a pretty good way to explain what configurators are for in general. 

Now, the caveats: the terms CPQ and configurator are often used interchangeably. This makes some sense, considering the C in the acronym stands for Configure. And you can have a configurator that performs CPQ-type functions internally even while it’s letting visitors design their own purchases on the public-facing web app.

Bottom line: you’ll find a lot of overlap in the way each term is used. 

How to Determine Which One You Need

Rather than being a stickler about which term to apply, your best approach is to focus on your needs. You can start by comparing the general features with your business goals.

  • If you need to streamline quote generation, manage pricing and inventory, or coordinate efforts by sales, inventory, and finance, you’re looking for a CPQ.
  • If you need to boost online engagement, differentiate personalized products from your competitors’ offerings, or provide a better purchasing experience, you’re looking for a configurator.
  • Whatever term you use, the important thing is that the tool does what you need.

 

From Browsers to Buyers: 3 Top-Performing Ecommerce Sites That Are Using Product Configurators Effectively

 

 

 

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Topics: custom software product configurators

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