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How Will The Customer Pay For It?

by David Brock on July 19th, 2013

I’ve written before about how many opportunities we inappropriately disqualify because the customer doesn’t have the budget.  If you’d like a refresher, look at “We Don’t Have The Budget.”

I’ve gotten a lot of emails on this topic and realized I needed to continue to expand on this.  It’s important that we understand how the customer is going to pay for whatever they are  or that we want them to buy.  If we don’t understand their budgeting and funding process, so much of the time, we’re just crossing our fingers and hoping.  Hope isn’t a sales strategy!

We know we have to produce a compelling business case—a business justified proposal that meets all the ROI or other hurdles a customer might have.  As we’re developing this business case, we have to understand the customer budgeting and funding process.  Additionally, sometimes despite everything we do, however compelling our business case, the customer says, “We want to buy, we can’t buy now, we have to put it into next year’s budget.”

Or we’re early in the sales process.  The customer is enthusiastic, but we’ve got months ahead of us–in the best case– we want to make sure the customer has the money available when they do make a decision.

Or we’re thinking ahead on our accounts–we’re starting to lay the groundwork for next year. we want them to be ready to buy.

So we have to understand a bunch of things about “How Will They Pay For it?”

Can you answer these questions?

  1. What is the customer’s fiscal year?
  2. When do they start budgeting and planning for next fiscal year?  What does that planning and budgeting process look like?
  3. How do they review and assess “budgetary” requests as part of their annual planning and budgeting process?
  4. How do they handle unbudgeted or unanticipated projects?
  5. When they bought something like what you sell in the past, what was the budgeting, funding, approval process they went through for that?  How did they handle it on a planned/budgeted basis?  How did they handle it if it was unbudgeted?
  6. What is their capital plan (if what we sell comes from their capital budget—and if you don’t know what a capital budget is, you need to know!)?
  7. What is the process they go through to allocate capital?  Do they have a capital approval cycle or capital approval committee?
  8. Do they have a calendar or plan for reviewing capital requests?
  9. What’s their process for handling unanticipated capital requirements?
  10. Can they choose to pay from either a capital or operating budget?  How do they decide which one?
  11. What business case, format, forms are needed to get discretionary or capital budget approval?  Then, even more detailed, how do they issue a purchase order, what forms, approvals are needed?  How do they do contracting?  Who’s involved, what’s the process?
  12. Does your customer—the person who is doing the buying–understand this process themselves?  Do they know how to get funding allocated?  Do they know how to work the system?  Are they willing to work the system?  Are they willing to fight for what they want and for you?

Too many sales people don’t understand this.  They get the customer interested, but they don’t know how the customer will pay for whatever they are selling, consequently they run into a brick wall.  Or the customer says, “Definitely, but next year,”  and we fail to make sure they do the work to get budget/funds allocated, and we run into the same brick wall next year.

If we are going to be successful in helping our customers buy, we can’t just focus on getting them to select us, we have to know, How Will They Pay For It?

Our customers may be inexperienced at “buying,” so if we are going to be successful with them, we have to make sure they understand, How Will They Pay For It?

Can you answer all the questions outlined above?  If you can’t, start understanding it right away!  Don’t waste your time selling until you understand How Will They Pay For It?  It does us no good to have a customer who says “I want to buy, I don’t know how to pay for it.”

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2 Comments
  1. Doug Schmidt permalink

    Dave as usual excellent insights and knowledge of a complicated subject. Thank you for giving us clear direction!

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