Dove Direct Print & Marketing Blog - “Never Pre-Spend the Prospect's Budget”

Welcome to the Dove Direct Print and Marketing Blog. Today's post, "Never Pre-Spend the Prospect's Budget" uncovers mistakes B2B sales people tend to make when sizing up a prospect's budgetary status. Before we get started, we'd like to wish all a safe and Happy Thanksgiving Holiday Season!

In the high stakes sales game that focuses on pre-qualifying a potential client's spending budget, sales people need to avoid making any pre-judgements. In many cases, there are instances of sales people doing just that; prejudging spending potential. It is quite easy for sales people to inadvertently misalign their prospects potential spending ability against their targeted sales goals, and quite frankly miss converting prospects into paid clients. Sales managers typically insist that their sales staff focus on client prospects that are "low hanging fruit," which could include a number of pre-qualifying traits that should be easy to target.

For example, an experienced local affiliate television account executive understands what type of minimal budget is required for a successful spot ad buy, which is based on buying frequency and reach. For argument's sake, let's say that the average spend for a two week run using news programming for the ad buy ranges from 8k to 10k, minimum. Therefore, that account executive is marching to sign new prospects to a minimum 8k to 10k contract, and will focus on the prospect's ability to meet that spending requirement in their budget. What could and does happen all too often in instances such as this, is that the prospect could be turned off by an account executive looking for that minimal contract spend requirement, which is for the most part based on the sales person's needs and not that of the prospect. Prospects today are looking for real value.

In addition, what transpires in more instances than you may realize, is that the mindset of prejudging a prospect by a contract spend goal versus uncovering the real budget could prove to be a costly mistake. It is quite apparent that while all the advanced tools now available for data analysis are helpful in the preparation stages of building a sales presentation, it is not originating from the horses mouth, so to speak. For instance, Google makes a huge point in why we all need to use Google Analytics to decipher web traffic statistics. However; while those Google stats do provide some insights, they do not match the exact stats of the website's internal data where the website is hosted, and further, that data is coming in a specific manner to the website's host provider, directly to and not from a third party data collection source.

In short, third party data sources simply put you in the ballpark, but not at the exact areas within the ballpark that you may require. That said, when it comes to converting a prospect to a paid client, being in the ballpark often proves to be lacking when compared to gaining insight directly from the decision maker. Therefore, it is not recommended to assume the data collection for sales targets are the single most appropriate methodology.

Mistaken Visual Cues

The B2B sales proposition requires a face-to-face meeting in most circumstances, and in the instance of online communications, also requires a direct line to the decision makers. Depending on the monetary size of the contract, more than likely new prospects will require an in person meeting. Cold calling, which in a sense is not actually "cold" due to the fact that data collection provides a number of benchmarks that sales people can utilize in preparation, therefore the cold part of the call is based on meeting the client, in person for the first time.

For starters, if you are a sales person, how many times have you prejudged a potential account based on the visual depiction of the premises? Ranging from the manner in which the offices are appointed or how the staff is dressed, or the manner of professionalism exhibited by the staff, or…have you even decided to make the call short to exit the premises because you prejudged the capability of the account's ability to invest at the level that you are seeking to close?

Here's a true story of a sales person selling newspaper ads back in the day, when newspaper advertising was in vogue. This sales person had a territory to manage, which consisted of mostly small businesses, ranging from small street vendors, including a few commercial enterprises. During the daily grind of visiting current clients and making a few inroads to the 'non-buys," the sales person often made a habit to stop and visit a shoe store that carried Timberlands. However, this store was small and carried a few iconic brand names, and over time the sales person got to know the store owner. In fact, the sales person eventually purchased a pair of Timberlands, and at that moment the owner of the store asked the sales person why he never made a presentation to him to advertise in the newspaper.

The sales person was taken aback with the question, and while trying to generate a response the owner cut him off with, "I'll bet you thought that my little store lacks the budget to invest in advertising in your newspaper, right?" Reluctantly, the astonished sales person admitted that the owner's assessment was correct. However, in this case, it worked out in the end, since the owner had come to know the sales person, a presentation was made, and an annual contract was signed for $30k. That may not seem like a large contract amount, but in the scheme of things, that was a lesson that could have resulted in leaving $30k on the table. Moreover, the takeaway is that one should never prejudge a prospect's capability to purchase a product or service based on visual interpretations.

Mistaking Budget Potential Based On Size of Company

It's quite easy to call on a chain store, or a large enterprise, and make the assumption that a company of such a large size can definitely afford a large contract purchase. Again, making assumptions and prejudging the budgetary outlay of any organization is a recipe for disaster. Large enterprise organizations tend to have a large if not burdensome fixed cost parameter, including variable costs, and more than likely a 10 to 15% contingency set aside for emergency uses.

Depending on the market share and product/service array being offered also serves as a budget indicator. Products and services that are in a growth mode generally bode well for sales prospects. That said, it would serve sales people well not to make any budget assumptions in the instances of brands being in a growth mode, as one may not have information as to what expenses the brand has made or is in the process of executing to have reached growth mode status.

In hindsight, preparing a sales presentation that is attached to a predetermined budget in the absence of first discussing such variables with decision makers is paramount to jumping out of a spacecraft orbiting the moon without a spacesuit. Sales people should avoid having the need for a decision maker to hand out life rafts to save the process!

Instead, sales people who are prepared to discuss problem solving issues prior to even alluding to budgetary considerations, will fare far better in the long term. Therefore, the focus of any top-of-the-line sales presentation should be based on problem solving, and then asking the value question; "Mr/Mrs. Prospect, what is solving this problem worth to you?" Or, "What would you be willing to spend to fix this problem." Further, large enterprise organizations may have less expendable cash on hand depending on their internal circumstances.

In the event that is the case, one of two formulations will emerge. In the first instance, the prospect may want to sign a contract but for much less than the sales person has in mind; and second, the value of the sales proposition may be such that the prospect may decide to move dollars away from one area to make a large contract come to fruition. Ether way, it is not a recommendation that will materialize for sales people who prejudge the capability of an organization to meet the sales investment presentations based on the size of the company. The bottom line, never pre-spend the prospect's budget.

The Net-Net

B2B sales require a longer sales funnel, and even with all the online data and resources B2B buyers have at their fingertips, at some point, a face to face or a direct call outlining the presentation will be required. Therefore, first present the problem solving solutions, then ask the client how much they would be willing to spend on obtaining the solution, and then discuss contract dollar commitments to close the sale. Thanks for reading "Never Pre-Spend the Prospect's Budget."

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