I was talking to an audience of BSEEN students last Thursday about networking. After the workshop, a number of them approached me, independently, asking the same question:
“How do you deal with prospects who don’t have a decent budget?”
The question came about as a number of them had spent time marketing to and meeting prospects. They had outlined the benefits of their product or service and after a sales meeting the prospect had finally said “Yes, I’d like to buy.”
This is a great feeling but it is completely scuppered if your prospect says “And I want this, this and this for £200” when you would be expecting to charge about 10 times that.
This might seem exaggerated but it is based on a real-life encounter where a prospect wanted a tailor-made web site with an all singing and dancing back-end CRM system for £180 when in reality it would have cost, minimally, in the region of £2 000.
Coincidentally, the evening before the workshop one of my good contacts, who has successfully run his own marketing company for over 20 years, told me that one of his prospects had said that he was now ready to go ahead with a new web site and his budget was £150. He asked me what could he do with such a low figure and I replied that all he could do was point the prospect in the direction of a very low cost provider such as Wix.
As this story demonstrates, the situation is not restricted to new companies and everyone I know in business has come across this issue more than once or twice.
So how do you avoid wasting time with prospects who can’t or aren’t prepared to pay you properly?
First off, let’s look at why this happens. There are only 3 reasons you get into such a meeting:
1. The prospect is insufficiently informed.
This is the most common reason. The prospect does not really understand exactly what you are offering, how much skill it requires,what the usual rates are, how much time this will take you etc. etc.
There are many low cost providers out there in the marketplace and often prospects will assume that their price and offering is the same as everyone else’s. Hence, their expectations are skewed towards low-cost.
Further skewing occurs when the prospect is unfamiliar with your service and presumes that what they are asking for is a simple “5-minute job” when it’s actually quite a bit of work.
The solution is to educate the prospect before your meeting. This can be done in various ways including very simply giving a range of prices or starting prices or number of days to complete to the more preferable alternative of a book, e-book or article you can send them which outlines what you do. Your marketing, as a whole, should educate your prospects.
This type of education has 2 advantages:
a. There are no surprises for the prospect. He makes a decision to find the money or look elsewhere before he even asks for a meeting.
b. If you educate your prospects upfront, then this creates confidence in you making them more likely to buy at your price.
2. They are cheap.
The prospect has the money but they just don’t want to pay the proper rate for your services or product. These people expect the most, pay the least (often late) and will make your life hell while you’re working for them.
If you do what I’ve outlined above then you should minimise the chance of meeting with them. Usually, you can spot this type of prospect easily and you can be “just too busy to meet”.
3. They need help but genuinely don’t have the full amount of money of needed.
This happens. The prospect wants to go ahead with you but hasn’t got all the money at the moment and wants some help. I usually do one or more of the below in this case:
I am always happy to help a networking contact for free for an hour so I offer this first. I think it is important to give support.
Sometimes the prospect requires more than an hour of work and I’ll look to see if we can do a straight exchange, i.e. I help them with their marketing in return for services or products of equal value from them.
If this isn’t viable and I really want to help the person and their business then I’ll come to some financial and business arrangement which is mutually beneficial. My rule here is only to have one such client at anyone time. It is not sustainable or good business practice to do it with more than one at a time.
The final option is to direct the prospect elsewhere; as I did with the contact who wanted a web site for £150. This way you are still being helpful and when the prospect has the money they may come back to you. Remember low-cost solutions are almost always temporary as they will not give the client the benefits they are looking for (e.g. cheap web sites look cheap).
I hope these guidelines help you to minimise these types of meetings. Remember it is frustrating for both you and the prospect, if they have low price expectations. You might BOTH walk away from the meeting feeling you have been tricked and have wasted your time. The prospect was probably there to buy in the first place and now they have to look elsewhere in the knowledge that it is likely to cost them more or they are going to get a lot less than they thought for their money.