How Do I Handle A Customer Who Wants To Cut Back on Budget?

This is from a Q&A call our team recently did in our program called The Accidental Salesperson. As we were transcribing this, we thought we’d give you a peak inside our thinking when we answer client questions.  (This is a transcription of spoken audio so forgive some of the clunkiness).

Q: My biggest problem is getting more budget from clients who are constantly looking for ways to cut back.

A: Here’s my general answer to this: When you are in a business where there is a confined space called budget, in other words, the company actually creates a budget and they literally cannot go beyond it, then the contractor has an amount that they need to work with and they’re unlikely to borrow from one bucket to put into another bucket although they can. Whenever you have a hard and fast budget, then you really don’t have a lot of movement there.

Usually Budgets are Arbitrary and Random

But I find that more often than not, budgets are arrived at by an arbitrary and random means. In other words, one arbitrary means is we have $25,000 in our training budget this year. If I were to say, “Well, why do you have $25,000?” They would say, “Well we had $22,500 last year and we did a cost of living adjustment. We’d like to spend a little more.”

Well, OK. So why did you have $22,500? What’s the foundation for the $25,000? The fact that there was a cost of living adjustment from last year’s $22,500 makes no sense.

There has got to be more to it than that.

So I think whenever you are faced with a customer talking about what I would consider their capital B budget which is the number on the spreadsheet and they say, “I can’t go beyond that,” you’ve got to find out a little bit more about how they arrived at that. Because chances are – and here’s hopefully the somewhat profound insight — the budget should always be based on the problem?

Whether I spend $25,000 on training or $250,000 on training equates more to the size of the problem I’m trying to fix than some arbitrary budget.

Change the Game

So I think the thing that you, the accidental salesperson, can really help people with is say:

“Look, I understand you have a budget $25,000. Let’s talk a little bit though about the problems you have that you want to solve with this budget.”

Now, you’ve changed the game.

The game they want to play is, “I’ve got this amount of budget. New pricing has to come in under that.” Well, that’s not necessarily relevant.

So the answer to your question, “How do you get more budget from clients who are constantly cutting back?” is you must forget about the ‘cutting back.’ Instead, focus on their pain and why they have ANY money in the budget at all.

Three Great Questions

  1. What’s the problem you want to fix by spending this money?
  2. If you decide not to spend this money, how much money and time will it cost you?
  3. What does the perfect world look like once you spend the money?

If you start attacking it from all three of those angles – and I would take those exact three questions with you – you’re going to see the game changes away from a I-only-have-this-in-the-budget game to, “Boy, I really want to solve this problem and I’m willing to spend a lot more to fix it because it is causing us a lot of money to fix” game.

But again, when you show up, it’s unlikely that the customer has thought through it in that way. So it’s really an expansion of thinking that you can bring to your customer.

  • http://www.inktechnologies.com/ Jonnalyn Pascual

    Great point Bill. Budget is one of the main problem that clients and business owners/companies truly faced. And focusing on their problem can be a good strategy for this.

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