If you’re in sales, client management, or work with clients in some other capacity, you’ve no doubt heard those seven fateful words: “We don’t have the budget for this.” This phrase is discouraging to hear. If you take it at face value it can effectively shut down the discussion. But you shouldn’t take it at face value because quite often it’s code for some other issue that can be overcome.
When prospects or clients make the ‘no budget’ claim, it’s usually a clue to dig deeper. You may find out something that helps reframe the issue in a mutually beneficial way or makes the return on investment for the client more compelling. Either way, money that supposedly isn’t there can sometimes appear, as if by magic.
There are four fundamental objections in sales:
- No need (“We just don’t need what you have to offer.”)
- No urgency (“It’s interesting, but the timing is not quite right.”)
- No trust (“You seem like nice people but we’re not sure you have the right/most effective solution.”)
- And finally…no money (“We don’t have the budget for this.”)
Learning how to overcome such objections is a big part of what it takes to become a trusted advisor to your clients. In regards to the “We have no budget” objection: before you craft your response, you need to understand WHY the client is saying it.
Here are six main possibilities:
1. You’re working with a junior buyer (i.e., not a real decision maker).
The executive you’re talking to is not senior enough to control the kind of budget needed to buy your service/product and they can’t unilaterally raise their insufficient budget. The company MIGHT have the budget somewhere, but not where you are working in the organization!
2. What you’re proposing is not a priority for the organization.
All the budget has been allocated to other, higher-priority investments. “Priorities” will typically be initiatives that are strongly aligned with strategic goals, have senior executive sponsorship, are embedded in that year’s approved plans and programs, and/or form part of the client’s performance goals for the year.
3. You’re outside the budget cycle.
You’ve been caught in a rigid corporate planning and budgeting cycle, and the client has already structured their investments and time around a small set of strategic priorities for the year. In other words, you didn’t go deep enough and soon enough into the client’s planning cycle and get your engagement budgeted for.
4. There’s a lack of perceived ROI/value for your solution.
The client may have a need, and they may like you and your firm, but you haven’t demonstrated the “R” in Return on Investment in terms of the value and impact of your proposed solution. They just don’t see the value.
5. There’s no budget for YOU.
The real objection may be the third one on the first list, above: “No trust.” For the right solution/firm, the client can come up with the budget. But they don’t trust that you and your firm represent the best and highest value alternative.
6. There’s a spending freeze.
The funny thing about this reason—the CEO declares a spending freeze on all non-essential and unbudgeted expenditures—is that, of course, the client is still spending money on lots of things. I’ve had many clients declare an absolute freeze on outside consultants. But then, a few months later, I see that they’ve hired one or more of the large global consulting firms for a seven- or eight-figure fee because a particular C-Suite executive has decided that using them is utterly essential. This goes back to reason number one—there’s always budget if your client is senior enough and sees a high ROI on your proposal!
As you can see, there are potential solutions to the “No budget” objection, and they need to be tailored to the particular situation. Here are 16 ideas for you:
Strategies to Create or Free Up Budget
1. Gain sponsorship from a higher-level, more powerful economic buyer. You’ll have to work closely with your existing client to make this happen, as no executive likes it when you go over his or her head.
2. Redefine the issue so that it is more strategic and can attract the necessary funds. This may also be necessary to gain the higher-level sponsorship mentioned in Strategy 1.
3. Identify opportunities for the client to create efficiencies in their existing budget. This requires investment, but if you gain a deep enough understanding of your client’s overall set of expenditures (e.g., for consulting, legal services, IT, etc.) you may be able to recommend efficiencies through service provider consolidation, productivity improvements, or other means.
4. Restructure the work to achieve cost savings. Whereas Strategy 3 looks at their broad budget, in this case you recommend changes in the way the client is approaching your particular program or project so that it can be executed for less money.
5. Create flexible contractual terms. If it is a client you trust, and you can get the agreement in writing, you could offer to invoice and receive payments on a flexible schedule. A client, for example, may have the funds available in three or four months, and if you’re willing to accommodate that, you may be in business.
6. Increase the perceived value of the overall package. “It’s too expensive” usually means “We don’t perceive sufficient value.” More value could include advice and counseling around your core solution or service, personal coaching, knowledge transfer, training, follow-up assessments, or many other things.
7. Appeal to an important personal “win” of the buyer. Most clients have a business agenda and a personal agenda. Showing how your offering can help accomplish both of these will raise the perception of overall value.
8. Combine budgets to fund your program. To the extent your project impacts multiple functions or business units, you might be able to get budget allocations from multiple sources.
9. Combine discounts to create a BIG discount. “One of my clients was asked to discount their fees by 15 percent, and their ability to do this was going to make or break the deal,” says Sobel. “They responded by creatively finding a total of 15 percent from 8 different sources that all reduced their cost of delivery or otherwise saved them money—allowing them to pass on the savings to the client. These included early payment discounts, productivity discounts, a volume discount, and so on.”
10. Restructure the project to meet the budget they DO have (if they have any left!). This is common sense and it can lead to a very fruitful dialogue about what is most important to the client.
11. Rename what you’re doing and find a different budget category. This could work in particular circumstances. For example, some of a consulting project budget could come from funds for employee training.
12. Tie your work more closely to quantifiable revenue increases or cost reductions. You should always be doing this, but it’s especially important today because of the intense scrutiny on even small amounts of spending at many corporations. You’re going to have to spend more time on the benefits case for each piece of work you sell. One tip: Have your client approve/endorse the benefits case. Otherwise it will carry little weight!
13. Provide ongoing advice to keep the discussion going. If a client has no budget to get a project started, you may—depending on the circumstances—be willing to meet on a regular basis to talk about the issue and give some free consultation to your client, all the while keeping the interest up so that when there is money available, you’re the preferred advisor. Invest to stay on the radar screen.
14. Sell what you do as a product, not a service. If you can productize your know-how and approach, then you may have access to a different budget or budget approval process. If your service can be capitalized and then amortized over time, this could make a big difference.
15. Deliver your services virtually. By eliminating in-person meetings you could dramatically lower the cost of your proposal. Many clients are in fact relying on webinars, teleconferences, video teleconferencing, and other means to cut down travel and meeting expenses.
16. If you’re outside the client’s budget cycle, then work with the client to get your proposal into their NEXT planning and budgeting cycle. You could suggest some modest upfront work to learn more about their needs, build some key relationships ahead of your next proposal iteration, and so on.
When you’re told there is no budget, first try to understand why. You may actually be able to do something about it—and, help your client with something important in the process.