Ever play that game when you were a kid? Well, one of the most frustrating things about ad agency new business development is having to play that game with prospects. “I don’t know what my budget is. I don’t know what it should cost. I don’t know how much they will approve so just tell me what you think it will cost to do a multichannel demand gen product launch with a new website, all in three months.” I’m thinking of a number between one million and ten million. How’s that?
When a prospect asks for a proposal and doesn’t know or won’t disclose their budget, my first reaction is to run away. But what if the opportunity is too good to pass up? How can you get a prospect to reveal their hand? Or, how can you help a prospect better frame a budget ballpark so you can develop a proposal relevant to the need and resources for their organization? Sorry. It might just come down to I’m thinking of a number. Let's play and by all means, improvise.
The opening question to ask is what budget or budget range has been allocated for this project. We all know that agency services can be scoped from zero to infinity, and the types of services vary dramatically depending on the budget. If they can’t or don’t want to provide a budget, you have to try to get them to explain their objectives for this effort. If they can’t clearly articulate their goals or have unrealistic expectations, then head for the nearest exit.
If on the other hand, you want to play along, the next step is to talk about the fact that objectives are dependent on the budget and what the expected ROI is, because of course, the result is budget dependent. Do they want to drive sales, awareness or traffic? There are plenty of industry statistics about the general cost of these actions if they can’t provide their own averages. Let's say it costs $125 to acquire a customer in their category. If they want to gain 1,000 new customers they can expect this effort to cost in the range of $125,000. Does that kind of budget seem reasonable to them, oh confused new prospect?
You can try stating what the budget should be to gauge their reaction. Typically this would be a range that includes the minimum budget you would consider. A statement like, we’ve had great success with our clients doing this kind of project and think we can do the same for you. Our clients have spent between $100,000 and $150,000, some as much as $200,000. I’m certain you can find others who will charge much less but beware. This is a range that has proven to be successful and risk-free. Body language and voice intonation are good clues whether to stay in or fold.
I’m certain you’ve heard it before. “Sure. Send me a proposal.” Not so fast. I wouldn’t invest the time and effort unless you can validate this budget. Questions like, have you ever budgeted for this kind of effort before? If so what was the spend? Does your department have an annual budget and what portion of it would this be? If the prospect deflects, “I just joined this department and don’t yet know, or this is a brand new initiative, and there is no precedent or we are working on our budgets and can’t say”, it may be time to bail.
Still interested? There are two paths you can follow; push on or lay down the guilt. To push on, try appealing to their ego, instincts or intuition. Ask if they feel in their gut whether a budget in this ballpark would be within the realm of possibilities. Not sure? What about half this amount? Or, one-quarter? I won’t hold you to it, but I can tell that you are a very intuitive person and a good judge of character. Does your gut tell you your boss is thinking about a smaller number? Has he or she had any experience spending this kind of budget on marketing initiatives in the past? I really really want to work with you and don’t want to blow my chances right at the start. If you had any advice for me about this proposal budget, or if you were writing this proposal, where would you start?
When evoking the guilt card, discuss the time and effort that goes into proposal making. Let the prospect know that your company judges you on the ability to scope properly and prepare a credible proposal. If you don’t have a realistic sense of the budget, you are going to be judged harshly by your boss. You are also responsible for the time and effort of the people in your agency who have to put aside client work to make sure this proposal accurately estimates staff hours, team salaries and agency schedules, and accurately reflects their needs, so it doesn’t come in under or over expectations and budget. Your job is to figure out how much the agency can do within your budget, and how to prioritize what can be done to deliver the greatest possible impact for your budget. I don’t want to overestimate or underestimate. A ballpark budget will help make sure I’m doing my job as best as I can. Help me out on this, please.
Your time on the phone or over coffee is the best-spent time of the day if it saves you and your agency from responding to nothing. It is the hardest thing in the world to say no to the possibility of a new client, and our optimistic nature compels us to believe the circumstances could be legitimate. Yet, time and time again, agencies fall victim to marketers who use and abuse them to get a competitive bid only to make whatever their ulterior motives look legitimate to their management. We always praise new revenue, but we should also recognize the revenue we’ve protected from wasted time on spurious proposals, time that should be spent on winning the good ones.
The interrogation goes something like this:
Do you have a budget set aside for this effort?
Do you have a ballpark for what you want to accomplish?
What have you spent in the past for this kind or any similar effort?
Have you or your boss or your company ever managed a project of this scope?
Based on our clients, this project will cost X. How does that sound? What about half of X? Or 2X?
What does your gut tell you? If you were me, what would you budget for this?
My job is to accurately scope this project and I can’t without a sense of the budget.
You should go back to your boss and discuss what a realistic budget is, so we can both do our best to deliver the greatest value.
But always be prepared to walk away. I’m sorry. I can’t scope or price this without a budget.
In the end, you may get a better sense of the budget or not. Some buyers just won’t budge. If not, the motivations of the prospect should be very suspect, however, depending on the quality of your relationship and your continued interest in the prospect, you can play the mentor card. Try something like; in my experience, management always values good judgment and initiative. I suggest you go back to your boss and explain why having an idea about the budget is so important for you to gather accurate information from potential agencies so you won’t waste your boss’s time and you can responsibly find the best solution for the project. Let them know that by asking the right questions they will be viewed as a smart, conscientious manager and a good steward of their boss reputation and their company’s resources and time.
I would enjoy hearing how you manage this process and what tips you have to get to the budget. In the end, you may have to make the hard call and just say no…thank you…bye bye.
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