Isn’t an e-shop enough?
When we start discussions with companies about product configurators and CPQ – what we call a Self-service Solution Configurator – a common early question is this: isn’t an e-shop enough? It’s a fair question, and the honest answer is that it depends. But the more useful question is what it depends on, because the answer tells you something important about where your business is headed.
Both are about self-service
For a start, both an e-shop and a solution configurator are very much about self-service, no difference there. It’s simply reasonable and expected for most customers to be able to do as much as they want on their own, and that definitely goes for designing and ordering their solutions. If they can’t, they might go somewhere else.
One is about hygiene, the other about differentiation
Both can be strategic initiatives, but one is more about hygiene and one is more about differentiation. To explain the difference, we'll look at a typical journey for a product-oriented company through the lens of strategic direction — using the Value Disciplines triangle above.
This triangle illustrates a company’s strategic direction at a given point in time.
- The top represents Product Leadership – focusing on innovating and offering the best product there is.
- The lower left represents Operational Excellence – focusing on cost efficiency and delivering smoothly and cheaply.
- The lower right represents Customer Centricity – focusing on tailoring your offering to specific customers, almost like a partnership. (A common misunderstanding: customer centricity isn’t about being nice to the customers, that should be part of every strategic direction.)
The evolution of a product company over a few years might look like this.
Phase 1: create and offer the best product
Most companies start here, it’s essentially the birth reason for the company. A really good product will sell itself to some degree, even if customers have to find it and figure out how to use and buy it. It doesn’t scale well, but it’s a start.
This phase is about Product Leadership.
Phase 2: sell your product in an e-shop
A possible next step is to scale sales by letting customers order through a digital portal. In many industries this is a hygiene factor, something customers expect. And, when your customers know exactly what to get, an e-shop is very cost efficient for sales.
This phase is about Operational Excellence.
Phase 3: offer a self-service solution configurator
The next step might be to provide a self-service solution configurator, built around your specific product logic. That way, the customer, who knows most about the situation and problem, can to a large extent design the solution themselves. Of course, with as much guidance from a sales person as they want or need.
We think of this as an extension of the product itself, making it better and more relevant for the users. So in this phase the focus shifts back toward Product Leadership.
Phase 4: offer customisations by category or by customer
In this phase, customers can order genuinely customised products, not just a configured assembly of standard components. The possibility for customisation is mainly driven from the specific needs of your larger customers, one at a time.
The focus is still Product Leadership, but with a tilt toward Customer Centricity.
Is it really that simple?
This is intentionally a simplified picture. There are numerous reasons your situation might look different.
For example, the order between phases may vary, or even overlap. For some companies neither will ever happen, for others all four will, but in a different sequence. It’s common, for instance, to swap phases 2 and 3: building a solution configurator first (that can, of course, also be used to order) and adding an e-shop later to make ordering spare parts or restocking easier for customers.
Another factor that totally changes the picture is if your products are used in isolation rather than as part of a customer-specific system. In those cases, the solution configurator path probably isn’t relevant at all.
So, to come back to the original question – isn’t an e-shop enough? The answer depends on whether your current strategic direction involves looking for differentiation or not.
If you would like to explore what a Self-service Solution Configurator could do for your business, we offer a three-hour workshop to help you discover the potential value – either remote or in-person. Don't hesitate to get in touch!
