The dreaded “No Budget” objection
4 tips for addressing budget concerns in today's macro environment
DEAR STAGE 2: How do you deal with the "no budget" objection in this crazy macro environment? ~Sellers everywhere
DEAR SELLERS EVERYWHERE: “No budget” isn’t a new objection, but it’s definitely one we are all hearing more frequently right now.
When I called on Stage 2 LP and Freshworks sales leader, John Gambaro, to help tackle this question, we first agreed on the obvious — we are selling in a macro environment that is currently full of obstacles. On top of a potential (looming?) recession, continued tech layoffs, and the highest inflation we have seen since the 80s, the last few weeks have made it even crazier with SVB and its subsequent cascade effect.
As John put it, “Most tech companies have either thoroughly prepared for the worst but are hoping for the best, or they are continuing to iterate on their plans for 2023.”
So yes, the tremendous amount of uncertainty in the markets has resulted in tighter budgets in 2023.
But, life goes on. Quotas are still being set, and new customer sales are absolutely still happening across industries! To ensure you’re prepared to keep closing deals, we’re have four tactics you can use to address the dreaded budget objection:
Preempt and neutralize the objection: This two-part approach is actually fairly simple. First, mention budget before they do, and second, ask a question to help them move past the topic and start thinking through a solution. Here’s what this looks like in practice:
“Like many of our customers, you’re probably feeling a budget crunch right now. Where do you normally get the budget from when an unexpected expense comes up?”
“A few of my customers are struggling to justify new budget right now. How do you all decide which new initiatives get prioritized for funding?”
Quantify cost of problem or opportunity: John knows that ultimately, “the no budget conversation should stem back to a solid business case tied to a significant business result.”
In turn, the the work is on you, as the AE, to do deep discovery and actually quantify the cost of the problem or the upside for the opportunity. Think about the cost of not solving this problem or the upside this opportunity presents.
This type of discovery should help you narrow in on an actual dollar figure. If someone says the problem is costing them $500K/year, and you are bringing them a solution that costs $50K/year, it’s hard to ignore the difference and not find the budget. You might also bring this to life through customer stories, an ROI calculator or by quantifying that next big opportunity!
A solid business case, tied to a business result that’s top-of-mind for executives, is critical to moving a deal forward in this macro environment.
Executive sponsorship and alignment: John advises sellers to “gain and maintain executive alignment as early as possibly in the sales process, as the human capital involved in the pre-sales process is now more precious than ever.”
Executive alignment comes in many forms. Start by understanding who the executive sponsor is for your deal, and who in the organization cares or is impacted most directly by the project. Once you know this, you can share regular updates on the progress of the deal, help craft the right internal communications for your champion, and pull him/her into the right meetings.
John recommends positioning the executive alignment meeting as a value step to the customer to ensure that the evaluation team is not wasting their time on solutions that do not align with customers' executive vision.
Play the long game: Know that sales cycles are elongating and you will likely have to put in more time and effort. When these strategies don’t work to open up budget in the short term (budget freezes are real for some), build a nurture strategy. Establishing a relationship early will allow you to develop a stronger case and remain top of mind when the time is right.
John sums it up well: “It’s not that companies have no budget… they have all conducted their AOP and have a spend plan for 2023. Granted that a 2023 budget may be more conservative than 2022, it’s simply a matter of getting the executive to prioritize the budget around your business results versus other areas of the business.”
Good luck closing out the quarter and teeing up new opps for Q2!
Until next week…