February 14, 2012
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Kim Frahm
If you’ve ever interviewed for a job, you’ve likely been stumped when the hiring manager asked you, “What salary are you looking for?” Remember that feeling of dread—not wanting to answer too high and lose the opportunity, too low and undersell yourself or not at all and risk alienating your interviewer. Now, think about the sales prospects you’ve talked with lately. When you’re early in the process of qualifying sales leads, one surefire way to put them off is to sound like a hiring manager by asking them, “What is your budget for this project?”
Don’t fall into the trap of asking “the budget question.” From our 23 years of experience working clients, we’ve seen the three biggest blunders that sales people make when trying to close a sale all revolve around “the budget question.” These are:
1. Asking about budget too soon
Believe it or not, many sales people ask about budgets upfront, during lead generation, so they can tailor their offering around how much money the client tells you they’d like to spend. Makes sense, right? Wrong. If you ask about the budget too soon into the process of qualifying sales leads, you risk getting incomplete or no information from the prospect, and thus any rapport you may have established is about to disintegrate. It’s the equivalent of meeting someone at a party and then immediately saying, "Hi, Jeff, nice to meet you. I'm Bob. So, what's your net worth?" It can be perceived as rude and invasive in a personal context, and this may actually carry over to the business environment as well. So when is the right time to ask about budget? Read on. The answer might surprise you.
2. Asking about budget too directly
Generally speaking, it’s never wise to ask outright, "Do you have a budget for this project?” or “What is your budget?” Sure, these are the questions you want answered. But if you’re too blunt or too eager to get budget information from your sales leads, you run the risk of shutting down the sales process before you’ve had time to talk and get to know the client’s needs. Although we all want to win the client’s business, there are smarter ways to get there. For example, you could ask, “What are some recent initiatives you’ve done in this area?” This shows that you’re interested in the broader problems facing the client’s business, and you can get a sense for how much they might have spent on other similar solutions. You could also say, “Where does this situation stand on your priority list?” This gives you insights into the client’s level of urgency and eagerness to make a buying decision.
3. Asking about budget. Period.
Getting at the budget in a sale is an art form. Most sales leads don’t come right out and tell you their preferred budget; instead, it requires finesse to hone in on the client’s needs and clarify expectations of what solutions to deliver, and at what price. The real trick is getting the prospect to give you the budget information you're looking for without having to explicitly ask for it. How? Start by leading off with questions that show you're concerned with the client’s best interests. Then show them that you’ve been listening, and demonstrate how you can help solve their problems. Finally, provide a basic cost-benefit scenario and leave it to them to tell you if they can afford it. If you’re doing your job right, you won't even have to ask if they "have enough money."
So now that we’ve discussed the blunders, what is the “right” way to talk about budgets when qualifying business leads?
Remember that you are selling a solution—an “investment” that will benefit the client’s business. Don’t talk about what the client has to pay, talk about what they’re going to get in the context of ROI. Show them that they can’t afford not to pursue your solution since it will likely deliver a positive return for their business. That is, assuming you believe your product or service will genuinely provide this. Here are some examples of how to do it:
Cost-driven conversation
“We have a solution that’s going to cost you $X,000, but if you can afford to go higher on the budget, we also give you additional features for $X,000 more.”
With this conversation, the prospect is prompted to think, first and foremost, about what they will pay instead of what they will gain. A cost-driven conversation reminds the client of what they’ll be giving up, before they think of how they will benefit.
ROI-driven conversation
"Our solution can help you reduce your payroll by X percent and also give you more capacity and faster processing. This means that you can save (X amount) during the next 12 months. The cost of our solution is Y. So would a return on your investment of Z be a good fit for you? If so, then we might have just the solution you're looking for.”
You’ll always be on the right path to profits when the conversation is about the impact your product or service will have on day-to-day business operations or long-term growth.
What other lead-gen tips do you have? Share them with me below.
OPEN Cardmember Al Davidson is the founder of Strategic Sales & Marketing, a “leading light” among lead generation companies, helping to deliver B2B lead generation and appointment setting services for global clients ranging from local small businesses to the Fortune 100. The company’s sales agents have generated over 7 million new sales leads, and created millions of dollars in new revenue for clients.
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Kim Frahm 3 months ago
Good article and comments on the art of closing a sale. Chandler, your comments are right on target with regard to budget as a bottom-line qualification. Wanting to do business and financially being able to do business are two very different things. And indeed, we should remember that we all communicate in different ways. The language style that resonates with one customer may not be acceptable to another. Communication style and the art of adaptable selling plays a big part in the budget discussion and close.Ernest, Al actually used the term "hone in" quite correctly.