Not Enough Budget

Last week we talked about prospective clients not having a budget for what you sell and how that shouldn’t automatically disqualify them. The assertion was that if solving the problem you’ve uncovered becomes a priority, then that overrides them not having a budget.

This week let’s talk about what to do when the prospect has budgeted monies for your type of solution, but not enough.

First, are there some advantages to them having a budget? Sure. Someone thought it an important enough issue to fund solving it. And, once it’s budgeted, approval to spend is usually easier. Usually.

Issues With Having a Budget 

But, at the same time, them having established a budget has it’s own issues. Several, in fact.

1. It sets an expectation level within management of what solving the problem will cost.
2. If the recommended solution costs more than that, lower level managers absolutely hate asking for budget overrides.
3. The problem may have gotten bigger since the budget was put together but the budget amount hasn’t grown with it.
4. Budgets tend to commoditize solutions. They devalue those that cost more on the front end but save or make much more money on the back end.
5. When the vendor with the best solution doesn’t discount down to the budget, the client can end up with an inferior solution that doesn’t really solve the problem.
6. Managers who come in under budget get praised so there’s a big incentive to negotiate for price discounts.

So, how should you respond when they say they only have so much in the budget (and your solution pricing exceeds that)?

That’s the best part. There are so many directions you can go and questions you can ask just based on the issues listed above.

Key Goals

My recommendation is that before you get into that, you establish two key goals.

First, that you uncover enough pain and impact to make the purchase of your solution a must-have and not just a nice-to-have. As we discussed in the article last week, priorities get the money. And, they take monies from non-priorities, even those budgeted, if they have to.

Second, to secure their agreement that they would purchase from you if they could. That means if your solution fit within their budget, they would select you. Once they say they would, find out the reasons why. Those reasons can be used as the logic for a budget exception.

You want the desire for your solution to be so strong that the pain of not having it would be much greater than the temporary pain of asking for a budget exception.

Questions to Ask 

Once those goals are established, some of the questions you could ask, depending on the situation are:    

• How they fund new priorities that appear and are time sensitive.
• What they do when the problem they recognized at budget setting time has now gotten bigger.
• How they make the case for accomplishing priorities when there’s a freeze on spending. What does that process look like?
• If their company has ever moved monies from one project to another.
• How they decide on priorities that require funding and if they use expected ROI to stack them. Who gets involved in that?
• Since budgets only focus on cost, not on value or ROI, is it worth it to adjust the budget to get the results you want & need?
• When solutions pay for themselves within a year, is it necessary to work within a budget?
• How difficult accurate budgeting is and how it requires detailed upfront work. Was that done here?
• What first steps they would take to get a budget exception/override and if there was someone, a colleague, who’s done this before where they could get advice.

Bottom line: Don’t let the lack of a budget or underfunded budget deter you from an otherwise great opportunity.

Have a great weekend!

Bob

P.S. If you’d like access to multiple tactics for handling objections related to the client’s budget (and other objections), you’ll find them in my soon-to-be-released, “What To Do Next” program. Even better, hundreds of advanced strategies and counterstrategies for tough sales situations throughout the sales process are included. You won’t find this in any traditional sales training program anywhere. If that’s of interest to you, just send me an email: [email protected].

P.P.S. If a colleague forwarded this email to you, head over to https://www.labarberagroupuniversity.com to sign up. It’s a weekly email, it’s free and it’s designed for those who sell in a complex, tech-based market. We’d love to have you join us.