Some of you reading this may ask it regularly and feel it’s a great way to know what the customer has available to spend.
Some of you most likely believe it’s a great way to determine if the prospect is even worth your time.
And, of course, some of you may feel this is an absolutely stupid question that only undermines a customer relationship.
If you’re looking for my opinion, here it is:
The question stinks and should only be used in a very small number of situations.
The reason it stinks is simple — any customer with even half a brain is going to throw out a number less than they’re willing to pay. In fact, I know buyers who when asked this question will provide a number that is less than ½ of what they have in their budget.
What is even worse is how easily salespeople accept the number the customer puts on the table.
You should never provide the customer with an opportunity to low-ball you. This isn’t to say they won’t do this on their own, but you simply should not be the one setting up the opportunity.
What you do want is for the customer to share with you the full range of benefits they desire and the needs they have. Your goal is to keep the conversation focused on these desires and needs — not on price!
Some salespeople believe asking”how much do you have in your budget” early in a sales presentation is a way to determine If the customer is really serious about buying. Excuse me for saying this, but there are far better ways to find out.
If the customer is not giving you some solid needs, as well as a sense of urgency in meeting those needs, then you may very well be dealing with a sales suspect. The best way to find this out is by asking them a question pertaining to their needs (and the need can’t be focused on “low price.”)
If you start a prospecting call by honing in on their budget, you will set the stage for low expectations for you and the customer. If what you’re selling is a consumable of any type, then by lowering the expectation, you’ve also lowered the long-term profit potential of the customer.
There are a couple of times when asking a customer a question of this type might be appropriate.
One is where you already have business with the customer and you’re working with them on year-end or quarter-end orders — and they have already shared with you they have a very defined budgeting process.
In this type of situation the question may have merit. An example might be a salesperson who sells consumable items quarterly to a customer who always carries the items.
One other area it might be appropriate is if you’re dealing with a capital expenditure that is driven again by a defined budget established by another party. This might be a government agency or a design firm of some type. Key is you and the buyer must know the budget is visible enough that both parties know the numbers can be verified. An example of this might be a construction components company looking to sell items to a general contractor on a building site.
The examples I listed above are just that — examples. You will have to be discerning and look at the big picture to know if the question is warranted.
In the vast majority of situations, though, the question “how much do you have in your budget” is going to be detrimental to the relationship and to your bottom line.
If there is any doubt as to whether or not you should ask a question of this type, don’t ask.
Copyright 2011, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.