Having grown up in a sales world where the emphasis on achieving targets created so much lose-win and win-lose thinking one of the most emotionally charged questions an Account Team ever discusses was: How much do you think they will pay? Often this is a discussion that happens way down the track towards submitting a proposal. Why? Simply, because nobody has worked out with the Client what the value is the project might create or what a reasonable return or value should be to the Vendor. So all we can do is guess at what it will cost. And then we can start having a completely fallacious discussion about how much discount the competition will offer, what the market or Client will bear, and how much discount we will need to give. If this experience doesn't resonate with you, then congratulations because your teams must be having the type of open discussion which lead to clarity around mutual value or at least has a Client discuss expectations of budget.
Why is it so difficult for many of us to discuss budget with our potential Clients? I have been offered numerous reasons including:
The Client won't tell us because they think we will price to whatever they suggest.
I don't think they have enough in their budget, but they will be wowed by our proposal.
Its not something I'm comfortable to ask - it makes me sound like a salesman.
It feels very self-interested, and I want to be a trusted advisor.
They won't share that information, so we don't ask them.
And sometimes its as simple as the fact that we really don't want to ask the question because we might not like the answer - and we would rather discount our way to success if that's what it takes.
My sense of this is that we fail to get involved early on or understand where the Client is in their decision process, and how they have arrived at the current stage. As I see it there are three simple questions Clients are asking all the time:
Are there projects we need to undertake which resolve business issues or deliver results which have tangible and significant return on investment? What value do they create for us? Which do I prioritise?
If there are projects that need investment of resources can we do this for ourselves or do we need help?
If we need help, what are the criteria we should think about in order to make the best decision?
Having undertaken the evaluation Clients then implement some kind of procurement process, and unless we understand how they stepped through points 1 - 3 we enter into a world of guess work and missed opportunity.
So the answer is always to be involved early, and to help the Client move through the decision process, and preferably to do so in a way that prioritises decision making in the Clients best interest, not ours. And then we get to understand in 1. what value case the Client is working to - what do they believe it should cost them to deliver specific business benefits, and how they arrived at that thinking. If we have built trust by demonstrating a mutual value mindset they may even be open to our input on the matter.
So that's the ideal world, but many still operate downstream of decision 3. Does this mean we should stay with all the old behaviour. Its your choice. Personally I always want to call the Client and test a range of potential fees which is feasible based on my knowledge of what they need, and by my experience in the Market. Here's the language that works for me:
"working in the market for some time, and having had my team look at your requirement in detail, we have done an initial assessment which suggest the fees for this project will be between £x and £y. Could you see yourself falling in that range?"
The point of asking this question is it starts a dialogue in every situation where the response is not "Yes". Any other response leads me to ask: "How did you arrive at your thinking?" I'm genuinely interested to understand what their decision process concluded, in terms of the value it creates and on what basis. I'm not trying to convince them about my fees, or demonstrate they are wrong. But when I understand, I can perhaps discuss the basis for our fees, or where we had wrong assumptions, or indeed that an expectation gap exists which means we shouldn't be pursuing the business.
Of course some of us will be working with Procurement departments, and it's a commonly held belief that they won't answer the budget range question. Which is 100% accurate when we don't ask. Please ask, but do so with a clear intent to help them make the best decisions. If they are trying to achieve an outcome which is impossible with the budget they have allocated this serves neither them or the Market well. You can build Trust if you are prepared to share your experience, even if this means ultimately no bidding. And if they put the shutters up and won't share, help them see why they damage the decision making process, and consider offering to no-bid.
This idea of discussing a budget range and how the Client reached that thinking, is fundamental to supporting a mutual value mindset and intent and if you don't truly connect with that concept, and you still have the old 'sell' mindset, then the approach will be manipulative and likely to fail.