Budget Defines Need Article

Budget Defines Need (Not Just Scope)

Cal Harrison CMC, MBA

If you've ever had a proposal go off the rails late in the selling process try using budget as the starting point for your sales discussions.

Recently I assisted two clients to procure the services of other consultants. So here I was - a consultant, helping other consultants, to hire consultants. (That’s either scary or perfect.)

I participated in two separate searches for professional services firms with two different clients, on two different projects. It was very interesting to watch the process from the buyers point of view and I’d like to share a lesson from it with you.

In both cases we initially chose to approach and meet with only one firm for each project. Incredibly, both projects stumbled at the closing stage because of similar proposal inaccuracies.

The approaches proposed by the potential vendors in both instances were financially out of whack by 100-300% and reflected an obvious misunderstanding of the fundamental requirements of the project even though a lengthy meeting had been conducted in each case to explore the needs of the client.

Let me reiterate - this was not just a matter of getting the pricing or scope wrong, it was a matter of fundamentally not understanding what was being asked for.

So how could this happen?

Vendors in both projects failed to ask about the budget during the initial meeting, choosing instead to go away and put together an estimate and proposal based on what they felt they understood the project to be based on their "scoping process".

Interesting to note is that in each situation the buyer had a well defined budget which they were willing to disclose - but never offered the figure because they were never asked.

Had the vendors simply asked about budget it would have been obvious to them that either (i) they misunderstood what the client needed, or (ii) the client had expectations that were not based on reality. Either way, they would have returned with radically different proposals or possibly just politely walked away from the opportunity at that time.

Regardless, they would not have wasted everybody’s time.

Be Direct

It’s not a client’s role to know what it costs to hire you to solve their problem. It is their responsibility however to recognize what level of expenditure would make sense to engage you and to communicate that to you when you ask. But here’s the secret - you actually have to ask. Not hint, not suggest, not dance around the issue - you must be direct and specific.

Asking “what is your budget for this project” is much more valuable to you and your client than telling them “our typical project ranges from $25,000 to $85,000” and then moving on to write a proposal listing all the cool assessments and studies that you could use on their project somewhere within that range. If you use the above "budget range approach" I guarantee your client is expecting a $25k solution as you reveal your $85k proposal. And so the selling process stalls because to the client it looks like you have just given them a preview of your poor consulting skills. Instead of closing, you are now back-pedalling.

Handling “I Don’t Know” or “I Can’t Tell You”

If the buyer can’t tell you what makes sense to spend then turn the question around and ask them “What amount doesn’t make sense to spend?” I guarantee you they always know the answer to that question and it’s often the prod they need to help them make a decision about what the budget should be.

Ask And Ye Shall Receive

Asking about budget and getting a very specific answer ensures that your proposal will be on target, relevant, and a good investment of your time.

At worst, it will be a disaster check on your assumptions about the client needs and prevent you from looking uninformed, or incompetent because you were off the mark on your understanding and estimate of the project.

Asking about budget up front will make your selling process, and also your client’s buying process, less expensive, and far more efficient. The best consultants make it a mandatory part of how they sell.