When a prospect tells you that “there’s no budget”, how do you respond?

Are you thrown into a tailspin?

Do you start to wonder why you bothered to make the sales call?

Do you wonder if anyone has any money?

 

If this is what you think, then it’s proof that you haven’t prepared properly for the call. You’ve gone in with the expectation that you’d either get a deal or would make the shortlist. And in the absence of evidence beyond this meeting, that’s an erroneous conclusion to draw.

 

Everyone spends money

All organisations spend money. Some, every day, others once per week, and many at the end of the month.

You already know that.

You also know that for the most part, they only buy what they need. Need is a peculiar word. As individuals, we confuse it with desire. At an organisational level, however, desire takes something of a back seat. That’s because much more is at stake than the personal wants of the MD.

Before those desires can be met, sufficient money has to be earned just to keep the doors open. The purchase of raw materials, semi-finished and finished goods, and the payment of salaries and wages for the people who make it happen. Benefits, bonuses, celebrations, and yes - even training - are added extras.

The best companies make the most of these things, though comparatively, the numbers are relatively few.

So you must recognise straightaway, that when you’re told there’s no budget, it doesn’t mean that the organisation doesn’t have money to spend.

It does.

And so your task is to persuade them that they should.

This may seem blatantly obvious, but when you read many of the replies on the Internet to that infamous phrase, “There’s no budget”, you get the distinct impression that this hasn’t crossed the mind of anyone.

 

Why would prospects say that?

The first thing you have to think about is why would prospects make this statement.

Why would they tell you that there was no budget? And there may be perfectly legitimate reasons why they would.

So the first thing is that you have to disarm them. You have to anticipate that they may say this. You must not seem surprised.

The next thing is that you have to be sure that you’re not doing or saying anything that would cause them to make that statement.

As we’ll see in a moment, the advice that salespeople receive often does exactly that.

 

Examples

Let’s take a look at a few examples of the advice given on how to respond.

 

I’m not calling to sell you anything

A refrain that is commonly recommended is to say, “I’m not calling to sell you anything today”.  Really?!

“Earth calling all salespeople! No one believes you”.

Of course you’re calling to sell something. Your company isn’t paying you to play golf, go to the horse trials, or drink coffee at Harrods. They’re paying you (and everyone knows it) to do whatever it takes to sell your product eventually, whether it’s now or later.

Even you refer to these “appointments” as sales’ calls.

And so when you say that the call isn’t about selling anything, you’re lying. And if you can’t be truthful at the beginning, then why should anyone trust you when money enters the picture?

You avoid the problem by stating your intentions clearly at the beginning.

If you make a veiled approach, the prospect will run ahead mentally, cut you off mid-sentence and then tell you that there’s no budget. And then you’ll either have to defend yourself or end the conversation. Not the best way to start a relationship.

If you make it clear why you contacted them at the beginning, then prospects won’t draw incorrect conclusions.

 

I want to see if our company would be a good fit for you

That approach may have been believable 20 years ago, but everyone knows that game now. A statement like that is intended to create scarcity. Essentially what you’re saying is that, “We don’t sell our products to everyone we meet, and so I’m here to find out if you’re good enough for us”.

Anyone who has read Robert Cialdini’s book Influence or Russell Granger’s book The 7 Triggers to Yes knows what you’re up to. Even though we all have emotional vulnerabilities in purchase decisions, forewarned is still forearmed.

A scarcity statement like that can backfire.

Here’s where it can work.

If you’re the leader in your industry and an expert in solving the problems of your customers, then you probably do have companies queueing up for your help.  But if that’s the case, then you also wouldn’t be making cold sales calls.  You’d be too busy dealing with the people who were trying to throw money at you.

 

What is your budget?

This question gets asked in a lot of different ways.

Only a novice would say it like this. Others might say, “Where do you normally get a budget when something unexpected comes up?” Or, “What were you hoping to spend?’

Some people will even try to make it sound unofficial. “Off the record . . .” It’s always on the record.

When you ask what the budget is, or what budget your prospects would be comfortable with, or what they expected to spend, you are admitting that you really don’t understand them or the market.

This question, and others like it, shouldn’t even come up in the conversation.

What should happen instead is that you understand their problems and know with more precision than any of your competition why your solution is better than any of the others. You also know how it should be implemented. And you present it like that.

So when you make a call, you’re not there to find out how much they have to spend. Instead, you’re there to persuade them that their problem is almost an emergency, and that it won’t go away until you help them.

When they’re convinced of that, then they’ll find the money.

They may ask you for a payment plan or for some flexibility, but just like you, if the need is pressing and a solution is staring them in the face, then they’ll buy. If you ask them where they normally get money for an emergency, you’re misreading your importance.

In an emergency, people are trying to fix the problem. They aren’t talking about where they might get the money to cope with it.

 

Variations on a theme

Sometimes you won’t be told that there’s no budget.

Instead, you’ll be told that you’re too expensive, or that you cost twice as much as your competition, or that they can’t afford it right now - leaving open what sounds like the possibility that they might be able to in the future.

 

I’ll think about it

You might hear this one, which also sounds like a death knell: “I’ll think about it”. The received wisdom is that you should “call them out on it” by saying something like, “When people say this to me, it’s because they haven’t told me everything, or because I haven’t answered all their questions or identified the real problems. Or it could be that what we’ve just talked about isn’t important to you.  Is that a fair statement”?

 

Listen carefully.

You have to be extremely skilled to pull this off. Handling badly, each of them sounds like your accusing the prospect of lying. How would you feel if a salesperson said to you, “I don’t think you’ve told me everything” or “you’re really not interested, are you”?

Such statements insult people.

And your prospects may give you a warm smile, and shake your hand, and tell you how much they enjoyed the meeting; and then you’ll never hear from them again and wonder why.

 

Threats

Some encourage you to threaten prospects. When people say they can’t afford you right now, then you’ll hear suggestions to the effect you should stir up their pain. One recommendation is to ask how much worse it will be in six months.

Stirring up pain is important, but you have to do it in a way that makes you the obvious solution. You can’t be seen as one of many options.

Threats sound like this: “How strong is your commitment to this?”

Helpful suggestions sound like this: “Let’s see if we can find a better way”.

The emphasis always has to be on helping them; not on filling your order book. Remember, people are more afraid of what they might lose, than what they might gain.

 

Comparisons

When prospects compare you to your competitors, they are viewing the difference between your price and theirs as a loss. And when they make a statement like that, it’s because in their mind, you both offer the same amount of value.

In others words, they see you as equals.

You have to build so much value into what you offer, that the price differential seems inconsequential by comparison. If you do that, then you’ll always be able to negotiate from a position of strength. Part of building in the value is to tell people what your guarantee is.

You do have one; right?

The prospect should never ask you if you have one. You should always tell them what it is upfront. And you certainly don’t want to ask them what guarantees they need. That sounds like you’re wheelin’ and dealin’ - only giving what you have to.

 

Stay in control

In any negotiation, you want to remain in control.

That doesn’t mean that you bulldoze over people. Instead it means that because you’ve anticipated all the objections, that you’ve structured the discussion in such a way that all of them are met just as the prospect starts to think of them.

 

Can you send a proposal?

Here’s a final one: “Can you send me a proposal”?

If at all possible, your answer should be “No”. That’s because if you’ve handled the discussions correctly, then there’s nothing to propose.

A better answer is, “Let’s do it together now”.

(Of course, you’ll have memorised the format.)

Take out a blank sheet of paper (not a printed pro forma) and start writing it out in outline form. If the prospect balks, says he doesn’t have the time or makes some other objection such as, “I want you to write something up and send it to me,” then challenge him. “Why? Both of us know what will go in it. It will take five minutes to write it up. You can sign it now, and I’ll get a typed copy sent to you”.

Then go back to writing it and talking out loud about what you’re doing.  DON’T waste time preparing a long drawn-out proposal later.  One very successful consultant does so much research on the companies to which he pitches, that he can persuade them to pay him to write the proposal.

That’s the way to do it.

But prospects who want you to do it on your own time aren’t serious. They’re either fishing or uninterested. Chances are that they’ll use your proposal as a means to leverage more value out of someone else.

Your proposal should state simply the problem(s) to be solved, the methods you’ll use to solve them, the specific people who will deliver the solution, and the date when the work will begin.

The shorter and simpler, the less wiggle room.

You have to recognise the phrase, “There’s no budget” for what it is.

 

It’s not stalling.

When you hear those words, it means that you’ve either misunderstood the purpose of the meeting or failed to convince prospects that their need is neither important enough nor urgent enough, or both, to use you.

It’s unprofessional to imply that they’re lying or to threaten them if they fail to sign on the dotted line.

Negotiations do mean that compromises are made, but they’re from both sides. You must handle them in a way that demonstrates your professionalism and which leaves you in a position of strength. That means that you can’t say or do anything that makes you sound desperate.

If your solution exactly fits their problem, then that makes you the obvious choice.

The price won’t matter.

 

If you want to be more effective at handling these sales situations, – email me via this link