What Is Quote-to-Order (Q2O)?

Learn about an often overlooked Sales Operations function that has an unexpectedly large influence on customer satisfaction.

Mike Kephart

Quote-to-Order (Q2O) is the sale. It is where your organization makes its offer to do business, where your prospective buyers have room to negotiate, and where they (hopefully) make the decision to do business with you. For your company, Q2O is the revenue generator.

For the buyer, Q2O marks the beginning of a business relationship. It is the first glimpse into how responsive you are, and how easy it will be to do business with you in the future. The numbers agree. Q2O survey data suggests that perceptions formed during this critical touch point are not only influential on deal success rate, but also influential on repurchase decisions and upsell opportunities, months or years later (Deloitte, “Increasing customer responsiveness and sales velocity”). Clearly, the deal is not done until it is done. And if you throw a gutter ball for that first impression, they might still buy once but have decided not to do business in the future.

Each stage of Q2O houses tremendous potential to turn the odds of success in your favor, success extending beyond Sales and Service into Operations and even Accounting. Q2O’s cross-functional reach packs it with tremendous value, producing efficiency and effectiveness gains for the entire organization.

A brief walkthrough should establish how Q2O can be a differentiator, or a disappointment.

What Is Q2O? | Overview

Q2O means different things to different people, so let’s start by unpacking the confusion. Five years ago and before that, Q2O was used in a broad sense to mean all dealmaking processes from configuration to order.

  1. Quoting
  2. Proposal/Contract
  3. Negotiation
  4. Order (sent to Operations)

Quoting was a single term, signifying the quoting process instead of the quote as an object, encompassing the development of a quote, as well as proposal, negotiation, and creation of the order. Today, Customer Relationship Management (CRM) and Configure-Price-Quote (CPQ) vendors can market Q2O as a feature, seeming to shave off most of the Q even though the end-to-end process is the same.

  1. Configure
  2. Price
  3. Quote
  4. Proposal/Contract
  5. Negotiation
  6. Order (sent to Operations)

Configure-Price-Quote (CPQ) CPQ vendors now use Q2O either in reference to this end-to-end process, or more specifically to mean steps 4, 5, and 6. These latter steps will be the focus of this article.

What Is Q2O? | 4. Proposal/Contract

Sales delivers a quote at the end of the Configure-Price-Quote (CPQ) process, having exploited upselling and cross-selling opportunities, requirements / specifications being added to the quote, the total package being priced accordingly and approved. This is the quote, not the proposal.

CPQs naturally flow into proposal creation, since many of the pricing rules that went into the quote should form the basis of the proposal, only communicated more clearly and conveniently to the prospective buyer. To become a proposal, Q2O will often rely on quantitative information gleaned from the quoting process, also relying on qualitative information about the products/services in the proposal.

This stage is important because of the way in which the underlying quote is explained. B2Bs should implement master sales skills by providing detailed explanations for pricing, components, service packages, and other value-adds. These explanations can be automated with the right Q2O to add professionalism and precision to your proposals while saving valuable time for the Sales Rep. The most experienced reps will be more than happy to tell you exactly how the Q2O will become a differentiator, not a disappointment.

What Is Q2O? | 5. A Conference Table

The second challenge of Q2O is to create a digital negotiation table. The value creator for the organization, the “table” starts with communicating the proposal to the prospect with the ability to negotiate, ask questions, or revise. In turn, the seller should be able to respond promptly to these actions, and possibly requote, if necessary.

Consulting firms can focus on the templates, files, data, security, questions like, “Should you use Microsoft Word or VisualForce? These questions are incredibly important, and indeed, some of the most obvious gains from Q2O come from simple technologies like eSignature, but these are like the proverbial trees from the forest. Any tool, particularly one that enables negotiation, should focus on capabilities added, or be transparent about constraints on digital negotiation.

Considering the incredible amount of value generated by this one step, it is disappointing to see Q2O mentioned as a mere feature, devoid of meaningful explanation and completely obscure regarding the constraints or enhancements it might bring to the Sales Rep. These changes in capability should be discussed openly and analyzed as differentiators or disappointments, using the business strategy as a guide to progress.

What Is Q2O? | 6. The Finalized Order(s)

The success of the final step of Q2O is measured by how well Sales communicates with core business functions. Work orders must be created and distributed to Service / Operations; the bill must be sent to Accounting for collection, data needs to be structured for easy analysis. Each of these interfaces has a different structure, metrics, goals, and rewards, leading to potentially high integration costs. These costs can be managed to deliver high Return On Investment (ROI) at each stage of implementation.

One way to manage these costs is through Q2O vendor selection. Vendors differentiate on out-of-the-box integrations, some unlocking easy integrations across revenue management, others focusing on contract management, or still others on Operations.

Next week, we will show how this differentiator can be used to determine the right Q2O system for your organization. Subscribe to our blog to receive next week’s article, direct to your inbox.

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