Why customer budgets don’t matter in complex B2B sales
There is lots of conflicting information about customer budgets in complex B2B sales. Many salespeople qualify customers based on the available budget. They spend lots of time trying to find out if customers have a budget for the products they sell. If they do have a budget they try and find out how much budget they have.
This might make sense for transactional sales. Where products are undifferentiated, the cost is low and it is a quick sale. But it makes no sense for complex B2B sales. You need to understand why customer budgets don’t matter in complex B2B sales. Now, more than ever. As we enter a recession, budget cuts will be the norm. Many business challenges and associated product purchases have no budget.
Why customers don’t budget for some problems and products
These are some of the main reasons that a particular problem or products have no budget;
1. Some products are never budgeted for
Complex B2B sales include products and services that fall outside existing customer budgets. Such as products or services that are innovative, intangible or in new categories. Companies can not budget for something they don’t know exists. They may have a known problem but they don’t know how to resolve the problem. So, they have not set aside budget yet.
2. Problems that are misunderstood don’t get budgeted for
Sometimes a problem or an opportunity is not a current priority. So, no budget is made available. But this could be the result of miscalculating the potential ROI of solving the problem. Or a misunderstanding of the ability to seize on an opportunity. A skilled salesperson can help teach a customer about this misunderstanding which can lead to a re-prioritization of budget.
3. Budget process and timing
Often a company has a brand-new problem. So, there is no budget defined yet.
Often, the budgeting process companies is cyclical. For example, a company may have assigned $10M to the Marketing budget. But they haven’t allocated the budget at a detail level. So, a salesperson discovers that today there is no budget for marketing automation software. But that doesn’t mean that no budget exists at all. It’s a matter of timing. If they asked in 6 weeks, they may discover something different. They may learn that $2M of the budget is now available for marketing automation software.
There are many reasons that a company may not have budget set aside to solve a specific problem. Or to buy your specific product or service. So, focusing only on customers with budget in complex B2B sales is a mistake. If you do this you will miss lots of opportunities. In fact, sometimes unbudgeted projects are the best sales opportunity.
How unbudgeted problems are better sales opportunities
1. Greenfield projects are ideal
As I noted above, unbudgeted can mean that it is a new problem. A skilled salesperson can shape a customer's thinking in these types of greenfield opportunities. They can help the customer develop the business case. This would justify why the budget should be set aside to solve the new problem. The salesperson who helps create the business case has a leg up on the competition.
Contrast this with a project that has a budget. This may become an RFP (request for proposal). The customer can be far along their buying process and have completed lots of their own research. In this scenario, it will be hard to change the customer's thinking. They may already have made a firm decision to go in a certain direction. The salesperson may also face several competitors. Usually, there will also be strict guidelines such as whom you can talk to at the customer. In short, in an RFP it is often the vendor who has the lowest price or makes the nicest proposal that wins. Not necessarily the best solution.
2. Sales effectiveness is mandatory
When a customer is far along their buying journey most salespeople default to sell on features and functionality. Or even worse they focus on pricing and discounting. When a problem is not budgeted it means that the status quo is the biggest competitor. This requires the salesperson to up their game. To overcome a status quo bias, salespeople need to get the customer to first buy-into the need to change.
This forces a focus on the outcomes the customer wants and away from a product-focused sale. Value-based selling needs to highlight the business case for solving the problem. This is a far more effective sales technique than resorting to discounting.
Now, you see now why customer budgets don’t matter in complex B2B sales. You shouldn't disqualify a prospect just because they have no budget available. If anything, it can be a good signal. What you need to do in the case of no budget is follow a different process. Such as the Status Quo Disruptor method™. This was designed to persuade executives to invest in solutions that do not fit into existing budgets.
Please connect with me here. If you would like to explore other ideas on how to sell your B2B products even when customers have no budget set aside.
About the Author: Bryan Socransky is the Principal Consultant of Disruptive Consulting Group. Bryan's experience spans over 25 years in enterprise software and B2B SaaS. He helps enterprise software, SaaS and IT companies grow by disrupting the status quo in favor of their innovative products and services.