How to Get Customers to Reveal their Budgets

A salesperson I was coaching came to me with this question:
“I seem to be running into the same problem over and over, and I need your help. Too often, I put a proposal together for a customer, only to be told that my quote does not fit in to the budget. The problem is, in these cases I have specifically asked the customer about the budget before I crafted the proposal. Usually what happens is I have my initial meeting with the customer and before I leave, I ask them, “Do you have a budget in mind for this project?” The customer invariably answers with, “We are not sure what the budget is going to look like.” So I go back to my office and spend hours writing up a proposal for the customer. When I return, they take one look at my price and act like they are in shock! They will say things like, “We certainly weren’t thinking of spending that much.” Why can’t they share that kind of information with me before I have wasted my time on the proposal?”
I completely understand this salesperson’s frustration. I too, am amazed when prospects claim they have no idea what their budget will be for a project. When I first started my company, I ran into this problem more than once. I would spend a significant amount of time and effort putting together a proposal, only to be told, “Your proposal is great, but we only have $X to work with at this time. Sorry.” If they had only shared that with me at the beginning of the process, it could have saved us both a lot of frustration. I could have crafted a proposal that would have fit in their budget. Instead, I lost out on those opportunities because the prospects thought I was too expensive.
I learned that when someone tells me that they do not have a budget or they do not know what their budget is, I need to press them further. I will say something like,
“I suggest that you determine your budget before you start soliciting bids. Too often I have seen customers put themselves at risk by spending more money and resources than is necessary. A little planning on your part will put you in control of the situation and give you a better sense of direction as to how much you want to invest. When do you think you could get back to me with some hard numbers?”
This approach puts the focus on the prospect, not you. It tells them that you care about them and their financial security and you do not want them to make a mistake. You can even be lighthearted about it and ask them, “You wouldn’t go car shopping without a budget would you? If you did, you would probably end up with a Ferrari you couldn’t afford.”
Due to the fact that this problem occurs frequently, I like to have other strategies available in case my first attempt is not successful. If a prospect still does not give me a number after I have given him/her the speech about planning, I have another approach to use:
“We want to recommend a program that will best suit your needs and expectations. To do this, I ask that you please give me some budget parameters. It is no good for anyone if I come back with a recommendation only to find out that I’m way off base when it comes to budget. I think we can both agree that we need to go into this with mutually agreed upon expectations. What is a ballpark budget number you have in mind?”
If they give you a number, see how much wiggle room there might be. If they say they cannot give you a number because they’re not the ones putting the budget together, ask to be introduced to those who are involved in crafting the budget. This will minimize price objections later on in the process, especially when you are put in front of people who are not as concerned with budget, as they are with their ROI.
Without getting some #s on what they’re willing to spend, you are just rolling the dice. good luck winning the opportunity.
Paul, I’m glad you brought this classic sales struggle up. I’ve experienced it like most sales professionals have and we’re always getting beat up on price and in the one-down position in the sales process!
I have since found there several key factors that can minimize… and in most cases… eliminate the “Price Objection” all together while position you as a trusted partner NOT a peddler in the sales process!
* Make sure you provide enough Pre-Value before meeting your prospect face-to-face.
* Realize there is never a price objection…there is only a VALUE objection.
* Make sure you are working with a prospect that is ACTIVELY SEEKING your solution to their urgent, pervasive, expensive need.
* And you have done your pre-work developing yourself as a known expert and go to person in their industry for what they are seeking.
There are a few more that overcomes this problem, but for the sake of brevity I will end my comment here. Great topic!
Brian,
You are right! We have to focus on the right opportunity and it comes down to really understanding what the customer values in order to position our solution accordingly. At times they will use price as a smokescreen or perhaps out of ignorance because they don’t know what else to fall back on and that’s where we can make a difference. We need to ask the following questions: Does the value we provide align with their values? Are we planning our approach as a business strategist or as you say product peddler? Are we confident and proud of the fact that we are a higher priced solution and in fact we should be charging more in the marketplace because of all the great value we deliver? Are we willing to walk away because the reality is the prospect and us are not a good fit? Thanks for reaching out and it’s good to hear from you again.
I think most buyers don’t trust salespeople so the last thing they want to do is give up information first. To help put them at ease, I always do a “flinch test” early on by volunteering pricing information – usually in the form of a very broad range. Sometimes I even do it before they ask. I might say something like, “We license based on users/volume/etc. Most of our transactions are in the low to mid six figures – is that in line with what you were expecting?” or “Is that a level that you have the ability to sign off on,” or, “is that a level that requires you to put together a business case?” Then I pause and wait for the reaction. If no reaction or a positive reaction, then I learned something useful. If I sense discomfort, then I continue, “but there are ways to keep it on the low end (or potentially even under that low end). I really would like to work with you to find a way to structure this so that it fits with your budget. The more you can share with me about your budget, requirements and timeline, the better equipped I’ll be to make a case internally to do something special for you. But I think we need to first validate that the [product] really is a good fit for you. Do you want to talk about how we might support you in evaluating the product?”
Nevra,
You provide great insight. You mentioned one of the reasons why customers don’t reveal their budgets is because there could be a lack of trust. That is so true. So just by asking the question about the budget and not getting a quality response, this tells me I have to work on building more trust “the relationship” before I attempt to present a solution, or chances are I will lose.
Now when the customer doesn’t want to share their numbers with you based on asking the budget question, you are smack on the issue and that is to throw out some numbers or ranges that other clients tend to go with. Interesting enough when you do that, all of a sudden the customer is more knowledgeable. They will react and that’s what we want. As you mentioned, you are looking for the flinch test. And now we have some parameters to at least start working with or exploring. What I really like about your approach is how you press for #s and tailor your words in their best interest versus our own interest. There is a spirit of collaboration in your approach and I believe the readers will definitely agree with you. Thanks for passing along this great idea.