There are many reasons customers are reluctant to share their budget with us:
- They genuinely have no idea of the investment level required. (Perhaps first time buyers or those simply floating an idea).
- They fear by sharing a budget of £10k our proposal will be £9999. (It's a fair point)
- They haven't cleared it with the Finance Director
- There is some flexibility depending on the solution
- They have already ruled us out as a supplier
- They suspect our proposal will be a bigger number than their preferred supplier or incumbent and they want to use it as leverage. (Smart thinking when you have a board to convince).
Using thumbscrews or holding your prospects hostage in the stationary cupboard (yes, it happened to me) isn't very 2023. So how do we unearth whether or not we are in the ballpark?
The most effective method I have found is this one:
'Our solutions range from X at the low end, Y for mid spec and Z for the all singing and dancing version'.
Now sit back and look carefully at their expression.
If it's one of relief you know you are aligned on budget. If they fall off their chair, or more likely say 'That's a bit out of our price range', you can both agree to part company - at least on this occasion. Neither party has wasted their time.
The verbal/non-verbal cues over the phone may be slightly different but should still give you a good idea of where you stand. (This won't work over email. Pick up the phone, get in the car or set up a Teams call and ensure the video is on).
If your prospect does give you an indication of their budget, follow up with these two words:
'Up to?'
A complete gem of a question.
They might just say 'That's it.' But in some cases you could find there is more cash in the pot: 'At a push, we could go up to X'
It's win-win. You have either confirmed the budget you already knew existed or uncovered a bigger one.
If your prospect still won't share their budget there are other tools in your toolkit. These include submitting a 'No Bid'. We will cover this later in the series alongside more specific price objections and how to manage them. (Finance, split payments, removing whistles and bells, value adds etc all play a part in closing the deal)
Remember the 32 hours x 9 people on average to prepare a proposal (RFP Stats in 2023).
When you do the maths, add in visits to the prospect and other overheads, you could be looking at a cost somewhere in the region of £10k per proposal.
Over multiple proposals this is a huge investment.
Establishing an indicative top level budget is critical in the early stages of qualifying an opportunity. (Preferably without the thumb screws).
Author: Shelley Thomas | Accelerate Leadership Ltd | December 2023