Terminology Every CPQ Consultant Should Know

As we already know, CPQ software usually stands between a CRM/Sales Cloud system and a middleware or ERP system. Because of this, CPQ consultants need to understand terminology from multiple domains including sales, manufacturing, and software integration.

Products and Offerings

Good: A tangible or intangible item that can be transferred from a seller to a buyer.
Service: A valuable action or effort performed to satisfy a need or to fulfill a demand which does not involve the transfer of ownership.
Solution: Bundles goods and services (and maybe other solutions) to solve a problem and delivers a positive business outcome that can be measured against a baseline.
Product: A business offering from a seller. It can be a good, a service, or a solution sold or procured.

Sales Process Terms

Lead: In sales and marketing, a lead is a prospective customer’s information collected when the individual or company showed interest in a product you or your company sells. Most of the time the lead is the basis for an account (company/organization record), opportunity and/or contact.
Opportunity: An opportunity is a lead that could generate a potential sale. The conversion will happen as soon as the lead is qualified. An opportunity is usually associated with a contact and an account.
Account: A company or an institution that has multiple employees involved in the buying process.
Contact: The contact information for a given customer or prospective customer that is recorded in the CRM.

Quote and Contract Terms

Proposal: A document that is presented to a contact in response to a request to suggest the best solution and price for a specific problem.
Quote: A paper or digital document provided to a contact in response to a price request for a specific product.
Contract: A commercial document that legally binds the parties involved to sell the products on agreed quantities, prices, and terms.
Approval: In sales, an approval is the action of official agreement by a superior of a salesperson on a discussed proposal, quote, contract, or other info that will be presented to a contact.

Order Terms

Purchase Order: A purchase order (PO) is a legally bound order-placement commercial document for procuring products that is sent from a buyer to a seller.
Sales Order: A sales order (SO) is a confirmation of sales. This document is generated after the customer sends a purchase order based on the seller’s quote.
Change Order: A change order is a request to alter the original sales order after it has been processed. The newly generated order will be considered the default order.
Invoice: A document issued by the seller and sent to the buyer along with the products with the goal of receiving payment.

Pricing and Product Terms

Price Book: A list of prices that were agreed to be presented to a customer. Many systems allow price books to be defined dependent on partner, region, time of the year, or even buyer.
Bill of Material: A bill of material (BOM) is a list of components and their quantity required to build a product.
Asset: A product that was bought and shipped to the buyer. It is useful to track what assets each account has as to better serve the customer.

Digital and Signature Terms

e-Signature: An electronic signature is a technology that allows a signer to electronically affix a signature to an electronic document with the same legal standing as a handwritten signature to a paper document.
e-Commerce: The process by which products are bought and sold via the internet utilizing websites.

Manufacturing Process Terms

Engineer-To-Order (ETO): A manufacturing process where goods are designed, engineered, and built to specifications after the order has already been received.
Configure-To-Order (CTO): A manufacturing process where goods are configured or assembled based on customer requirements.
Build-To-Stock (BTS): Also known as Made-To-Stock (MTS), a manufacturing process where goods are built and stocked in anticipation of demand.
Build-To-Order (BTO): Also known as Made-To-Order (MTO), a manufacturing process where products are built based on orders received but the designs and implied costs are known beforehand.

Integration Terms

Integrated Software: Two or more software applications that share data and combine functionality in such a way that it is perceived by the user as a single software product.

Why This Matters

Understanding these terms helps CPQ consultants:

Communicate effectively with stakeholders from different departments
Translate business requirements into technical specifications
Design integrations between systems
Train end users on the complete quote-to-cash process
Identify process improvement opportunities

Keep this glossary handy as you work with clients across different industries and business processes.