VARs often operate in environments prone to inefficiencies and time waste. With multiple quotes, iterative processes, and a high risk of manual errors, quoting can become a significant bottleneck.
Efficient quoting directly impacts a VAR’s success by improving win rates, customer satisfaction, and overall profitability. Therefore, understanding and optimizing the return on investment (ROI) of quote automation is crucial for VARs as it helps quantify the benefits of automation relative to their costs.
Implementing automated quoting drives two main economic benefits for value-added resellers:
VARs traditionally work with partially—or fully—manual quoting processes. When considering the return on investment on a quote application for resellers, compare the following three parameters: Revenue/Profitability
As the next step toward estimating potential ROI for any quote automation tool, each reseller should take the time necessary to internally assess its quoting process. While efficiency (#2) is the easiest to calculate as it is linked to headcount, correctly assessing profitability (#1) and quality (#3) will significantly affect efficiency as well.
Below, we have compiled a list of questions to help VARs assses the economic impact of a VAR quoting software. Included as well are benchmarks that StrataVAR has calculated from years of experience in this space.
First, consider the number of quote iterations that occur each month and how frequently quotes need to be refreshed. This will offer insight into both the operational burden and the potential for improvement. Additionally, assess whether the value of each quote is factored into ROI assessments. A failure to account for quote value can skew ROI projections and lead to an underestimation of potential gains.
For resellers, another critical factor that affects the CPQ’s ROI is the contribution of Value Incentive Program (VIP). For example, a VAR with an annual Cisco turnover of $50M could see an increase in profitability from $2M (4%) to $3.5M (7%) annually through automation. This can represent a significant profitability boost, as VIP could account for up to 7% of annual revenue.
Personnel time reduction, particularly in sales and operations, should also be examined. By reducing the time required for quotes, VARs can potentially win more deals and increase revenue. An analysis of current win rates and the impact of automation – which can lead to a 20% improvement in these rates – can provide further insights.
In addition, evaluate the cost of errors, as error rates in manual quoting processes range from 5% to 10%. Quantifying the cost savings that come from reducing these errors can significantly contribute to the reseller’s ROI from the CPQ solution.
Finally, consider the value of trust in customer relationships. Improved accuracy in quotes and the addition of features like delivery tracking and serial number management can enhance the customer experience, and thereby foster trust. This trust can lead to future sales, with an estimated 5% increase in revenue due to the stronger customer relationships formed through automation.
To understand the importance of VARs focusing on ROI, we’ve highlighted some examples from our vast experience working closely with VARs:
One VAR’s manual quoting process often delayed quotes, resulting in lost opportunities, especially when competitors were faster. They considered the ROI of implementing an automated quoting solution.
Before: The VAR had a 20% win rate. Out of 100 quotes, they close 20 deals with an average deal size of $50,000 (20 deals × $50,000 = $1M).
After: After implementing an automated quoting solution, their win rate increased to 25%. This resulted in 25 closed deals, generating $1.25 million in revenue. The improvement represents a 25% boost in the number of deals closed, which translates to an additional $250,000 in annual revenue.
Based on the VAR CPQ ROI calculation, automation speeds up their quoting process, allowing the VAR to respond to more RFPs. The quick time-to-quote gives the VAR more opportunity to revise their quote based on feedback, so by the time their competitors submit their quotes, the VAR could be on their third iteration. This speed directly increases win rates and helps them close more deals, contributing directly to higher revenue.
Our analysis indicates that error rates in manual quoting processes range from 5% to 10%, with errors potentially accounting for up to 5% of deal value. One VAR’s quoting process had an error rate of 8%. These quoting errors led to costly delays, client dissatisfaction, and lost deals. They considered the ROI of implementing an automated quoting solution.
The VAR closed 30 deals per year with a total value of $5 million. However, 8% of their quotes had errors, which in their case, resulted in a 3% decrease in revenue, adding up to $150,000 annually (3% of $5 million). With automated quoting, error rates dropped to 1%. This reduction saved the VAR around $100,000 annually.
At the end of the day, it’s all in the numbers. Automated quoting solutions definitely save time and reduce errors—but they also offer measurable financial gains. By quantifying the impact on revenue growth, cost savings, and operational efficiency, VARs can make a compelling case for automation. As we’ve shown in the examples, even modest improvements in win rates or error reduction can add up to significant sums and lead to considerable ROI improvements.
VARs should take the time to internally assess and calculate these metrics, examining everything from win rates to error costs. This will provide a clear picture of how much revenue an automated quoting system could generate annually for their business. The numbers speak for themselves, and by presenting these figures, VARs can justify the investment in automation and set the stage for long-term growth.
For more information on how automated quoting solutions can drive ROI for your business, contact StrataVAR.
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