Stop obsessing over finding out your prospect’s budget

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Chip Griffin: Hello and welcome to the Agency Leadership Podcast. I’m Chip Griffin.

And I’m Gini Dietrich.

And today we’re going to ask you how much you have to spend to listen to us. Nothing? Come on. You got to come up with something.

I’m trying to be nice!

I come up with these on the fly.

I’m trying to be nice!

See, if we start this way, nobody’s going to pay anything to listen to us.

And nobody does pay anything to listen to us. Budget for listening to us. Oh boy. And that’s the real topic on today’s Agency Leadership Podcast episode, finding out what the client’s budget is, and some of our thoughts on that right after this.

So if you didn’t like hearing the question, what’s your budget, you’re probably like most of your prospects. It’s a question prospects don’t like to hear. Right. Because what prospects hear is, how much, how much are you going to be able to take from me? And the reality is, it’s the reason why a lot of you are asking that question.

And it’s the wrong reason to ask that question.

Gini Dietrich: Well, I will tell you, I have had a client now for, I think we’re going on four years, but when I first started working with him, he said to me, I hate it when agencies ask what my budget is, because if I tell them, that’s how much the proposal is going to be.

And I thought that was an interesting perspective, because from from my perspective, especially at the time, it was like, well, I just need to know at least a range. So I don’t come back with a million dollar. Program, you know, based on everything you said you need when you have 60, 000, right? Like, give me some idea.

So I thought that was a really interesting perspective. And since he said that, I’ve really tried to be cognizant of the fact that if a client says we have 250, 000. that your proposal doesn’t use all of that money.

Chip Griffin: Right. Well, and it, it seems to me, and maybe this is just my perception, but it seems to me like there has been a rash of articles, blog posts, videos, podcast episodes lately encouraging agencies to find out what their prospects budget are, budgets are, and ask them that question in one form or another.

And to me, This just, it doesn’t make any sense because what you’re doing then is you’re taking a dollar value and trying to figure out how you’re going to squeeze your services into that. Yep. Yep. That is not the right reason. Now you do need to understand, you know, if you’re, if you and your prospect are even in the same ballpark, as far as general affordability, right?

So I think it is helpful. for you to be clear about what your minimums are and what the ranges that you typically have are, things like that, so that, so that you can perform a qualification. But that’s different from digging in and figuring out what the actual budget that your prospect has.

Gini Dietrich: Yeah. And you know, I, we’ve talked about this before, but one of the things that we do is we do a strategy session.

And the reason we do that is because, well, there’s a few reasons, but one of the reasons that we do that is because it allows us to find out what the true budget is In the process and as we do it collaboratively with the client. So, I mean, we, I’ve, I’m sure I’ve told this story before, but we had a client who was like, yep, let’s do the strategy session.

Absolutely. Come on down. They were in Oklahoma City. We flew down to Oklahoma City. We spent 2 days with them. And as we were doing it, part of what we ask is for the financials, just so that we can understand like what their goals are, what their, their margins are, all of that kind of stuff. And during that process, we discovered that they had spent their entire marketing budget on having us there for the strategy session.

We didn’t know that. Right. And had we, at the beginning said, what’s your budget, we wouldn’t have gotten. A direct straight answer. And so what we were able to do in that particular instance is say, okay, it looks like you’ve spent all this money on on this session. And that’s great. So what we’re going to do is give you a plan that your team can execute.

And we spent a day. Helping the team understand what their role was in the plan and executing that those pieces of it. And who was going to be responsible for what versus us taking the plan and then executing it on our end. And so that that that kind of session allows you to figure those things out.

I’ve also found that when you do that, they’re always, they are always willing to spend more money with you. After the session, so they, you know, they’ll either find money or they’ll take money from other places or what, you know, whatever happens to be, but because you’ve built trust and you’ve built a relationship and you’ve done it really, really quickly and they say, Oh my gosh, yes, you’re right.

We have to do these things. We hadn’t planned on those things. Let’s find money to do it. And so we all, we’ve always found that there, that they end up spending more than we anticipated in the long run.

Chip Griffin: Yeah, that makes sense for a number of reasons. The first being that the dirty little secret is that the vast majority of businesses don’t have a proper budget at all, right?

They may, they may have a document that they call a budget or something like that, but it’s not really, it’s more like loose projections. Even fewer have specific budget allocated for. This is what I have to spend with an agency, right? Most of the time it’s, they may have a general bucket of marketing money and they need to figure out how they’re gonna allocate it, but they kind of do it on the fly and they, you know, so, so it’s, it’s sort of a nonsensical question for most businesses from that perspective.

Now, if you’re dealing with fortune 500s, that’s different. They do typically proper budgets and all that kind of stuff, but, but the vast majority of businesses in this country and around the world are small businesses and small businesses are notoriously bad at that kind of funding. Financial planning.

So if you’re trying to dig into that number, that’s a mistake. The reason why we’ve talked so much on this show about paid discovery and those strategic sessions is for exactly the reason that you say, Gini. It’s an opportunity for you to dig in and figure out what’s really going on. But it’s also that opportunity.

The reason why. Okay. You’re finding clients will spend more with you through that is because what you’re able to do is to show the value more directly of the work that you’re going to be providing. And the reality is I may have no budget for something, but if you can show me that, if I give you 10, you can return a hundred dollars to me, I will beg, borrow, and steal to get that 10.

Absolutely. So. So this whole fixation on figuring out from the client, give me your number first, this whole, this whole school of negotiating thought, whoever names a number first is a loser, rubbish, rubbish, rubbish, start by figuring out what, what the challenge is or the opportunity is that your prospect has.

How you can help them get there and then figure out if there’s a way to make the numbers work for both sides. Don’t start from a number and work backwards from there. You’re going to end up perhaps fitting within their quote unquote budget and perhaps getting the business, but the expectations are going to be out of whack.

Correct. You’re not going to be providing the actual service in all likelihood that they really need.

Gini Dietrich: Yeah, absolutely. And you said this at the beginning, but and I really like this having minimums. Because there are plenty of times. It just happened earlier this week where somebody will email me and say, Hey, we’re really interested in working with you.

What will it take? And I’m like, well, our minimum is, and then they either say, holy crap, or, or, oh, yes, let’s, let’s go ahead and proceed to the next. So at least at that point, I know that they can afford can or cannot afford our minimum. And then we can proceed to the next. Section Right. Section. Right. But because we do the discovery, I can say this is our process and this is how much it costs and it doesn’t, I can just copy and paste that.

Right. I don’t have to write a new email every time

Chip Griffin: I do it. Right. And, and you as the agency should be setting that tone. Mm-Hmm. from the get go. For sure. It’s on, it’s on you. I mean, yes. When you go to, when you go to a car dealer. They have prices on the cars. They don’t say to you, what’s your budget for a car?

Because they want to get you into the biggest, baddest, most expensive car they possibly can. And you’re able to look and see the prices. Yes. Set the expectation. Don’t wait for them to tell you what their number is, because it’s either going to be wrong. And so you’re going to lose out on an opportunity to sell them on something.

Bigger, better and more expensive, or you’re going to try to pigeonhole based on that number. And it’s just, it’s a silly way of doing business. And I don’t understand why so many people are advocating this.

Gini Dietrich: Well, I will say in my experience of being, of running an agency in the beginning, you would say, you know, can you give me an idea of, and I would say this for sure.

Can you give me an idea of your budget? And, and the prospect would. always without fail say, well, why don’t you tell me what it’s going to cost? Right. And I’m like, but that doesn’t help either because you don’t like everything that you just told me you need is probably a seven figure budget. I’m going to guess you don’t have seven figures.

So how I couldn’t for the longest time, I couldn’t figure out how to make the leap from this is how much it would cost. Everything you just said you need would be A million bucks, let’s just say, but I kind of guess based on the conversation and where your businesses and all that, that you’re not going to spend 25 percent of your annual revenue on marketing.

So, I know it’s too much, but is it 30, 000? Is it 10, 000? Are you expecting all this for 500 a month? Like, give me and I couldn’t figure out how to make that jump. And when we started doing the strategy session, and I had a very specific. Process and I said, this is what we do. This is what’s included. This is still deliverable.

And this is how much it costs. People can either say yes or no. And that’s it. That’s it. And then you get paid to craft the plan with the client.

Chip Griffin: And so, you know, so there are these things that you can do. You can say, you know, you have a minimum, you can give a range. I’ve got no problem with that. You generally know what the range is for the work that you do.

And so, and, and for those folks who say, well, you know, you’re limiting yourself by giving a top end of that range. No, you’re not because look, if you, I mean, if you usually build websites and generally, you know, you charge between 10 for those websites. If someone wants a hundred thousand dollar website, you’re probably not the best one to do it.

That’s just, that’s reality, right? Making those kinds of leaps generally leads to disaster. Not always. Sometimes you’re able to do it, but generally, if you’re doing something that’s four or five times the size of any engagement that you’ve ever had, you’re going to run into problems. And so, you want to be very cautious about doing those things, so you’re not necessarily leaving money on the table, you’re avoiding a bad experience.

So, you know, share those with others. ranges, help them understand what it is that you do, how you might fit within what they do, but have some sort of a way to really diagnose what the problem is. Because the other problem with this is when you start talking budget, you start turning into the order taker.

And we’ve talked previously about the importance of not being an order taker for so many reasons. But if you say, okay, what’s your budget? What’s the list of things you want? Then you start going through and saying, okay, well, I can give you these three ingredients and you can have that right. But are those the right three ingredients?

Right. Or are you just doing that? Because that’s how you can get to their budget figure.

Gini Dietrich: as a client for an agency right now, I will tell you that. There are a couple of things that really bother me and, and it’s the discovery piece of it when you’re, when you’re interviewing firms and as a client, when they’re interviewing you, the, the agency will ask the, you know, whoever it is, whoever’s doing the best dev will ask a certain, certain questions to get information, right?

To be able to, to say, this is what it costs. If you then get the business and you’ve costed it based on the questions you asked and the information you got, you have to stick to that number because there is nothing worse than the agency coming back to you and saying, well, we didn’t realize this. So it’s going to cost 5, 000 more.

You’ve spent my budget. You have my budget. I don’t have 5, 000 more. You told me this is how much it’s going to cost. You asked that question in, in the meeting, in the first meeting. So I’m sorry. Like, it’s just, there’s, there’s nothing I do. I can’t find money at this point to, to pay, to pay the extra. So I see, I I’m such a big fan of the paid discovery for that very reason.

Because. You will uncover things in the paid discovery that you can’t uncover in prospect meetings. You just, you just can’t. You haven’t signed an NDA at that point. You’re just getting tertiary information. Sometimes people aren’t totally honest with you. Maybe they’re embarrassed about something like those.

There are things that happen in those first few meetings. That you’re just not going to get the full truth and it may very well be that they’re, they’re not holding out on you. It’s just that they don’t know, or they’re not going to give you any information. Any in depth information without an NDA and all that kind of stuff, right?

So when you do the paid discovery, you get all of you have all that paperwork in place. You have a legal arrangement, and then you can start to dig in and get really deep. Well, why is this happening here? And what’s going on here? And. Oh my gosh, what’s happening with operations over there? Why does it cost twice as much as it should to ship a product when the product is 20 and shipping is 50?

Like, you can dig into that stuff because you’re actually in their data and in their business. You don’t get that in prospective meetings. So the idea that you’re going to create a budget based on what you think they need, I mean, and I, I’ve done it too. I, that’s how I ran my business for years, but it, you just, you can’t, you can’t do it the way that you should and be able to make money and make a profit and all those kinds of things and service the client the right way.

If you don’t do some sort of paid discovery,

Chip Griffin: Right. And it, it starts even before the paid discovery, it starts in those initial meetings that you’re having with the prospect doing less talking and more listening. Absolutely. Yep. Yes. Most of us have the instinct that we want to sell our agency, that we want to, you know, to go out there and say, these are all the great things we’ve done.

These are all our capabilities. This is my great team. And, and I’ve been part of numerous pitches that agencies have done on, on both the, the delivering and receiving end. Where there’s just so much talking and so many people involved and, and it’s not enough listening to what the prospects actual challenge or opportunity is right.

And the way that you demonstrate your expertise is through your questions. I like nothing better when I’m in a pitch and someone says, wow, that’s a great question. That really, you know, that’s making me think. That’s that’s how you show your expertise. It’s not by telling all the great things you’re doing or showing screenshots of this or that or showing all these logos from the publications you’ve gotten, you know, media placements in.

It’s by asking the questions. It’s by listening to the answers and then it’s matching up. What you do with what they actually need.

Gini Dietrich: I love that because you’re absolutely right. You’ll leave a meeting and the client, the prospect will say, wow, you guys are so smart and you kind of laughed to yourself.

Cause you’re like, all I did was ask questions. I didn’t say anything.

Chip Griffin: I didn’t talk to me. To me, that is the best feeling. Yeah,

Gini Dietrich: that’s a win. Yeah. I will tell you, I read a book called a beautiful question or I’m looking at myself. A more beautiful question or something like that. two years ago. And even though I’m, because I’m so introverted, I prefer to ask questions and listen.

So it’s very natural for me to do that, but it really, it helped me kind of reshape strategically how I ask the questions, and really how you use your emotional intelligence to really listen. And it’s really good. It really, and you don’t have to read it front to back. You can like flip through and to different chapters based on where you are, but I highly recommend it.

Especially if you’re not accustomed to asking questions and showing your expertise that way, but even if you are, like I said, it’s, it’s a phenomenal read, just to kind of help you think through how do you, how do you ask the question? And then how do you use your emotional intelligence to be able to continue to ask questions that, Makes that kind of follow what they’ve said versus you having a list of questions and you’re trying to get through them.

Chip Griffin: Yeah I mean, absolutely do not I I hate lists of questions really for anything. I don’t like them for job interviews I don’t like them for prospect interviews Oh my god, they are so horrible in podcast interviews You can just tell that that they’ve got the list of questions there and they’re just going to monotonously go through them It it all starts with curiosity Curiosity Absolutely.

Yeah. You know, you need to actually be curious about your prospects and your clients and the business that they’re in. And it’s one of the values of specializing in certain industries or certain kinds of businesses because you can actually start to learn about them and you start to get smarter about which questions to ask.

And, and so you can, you can explore that curiosity more. And so just have a natural conversation the next time you’re in a prospect meeting, sort of forget that you’re in a prospect meeting and just have a conversation. Yeah, just, just as if you were sitting down and having a cup of coffee and, and, you know, you’re curious about what their business is, what they do, just start from that and get rid of the script, get rid of the questions, get rid of the agenda, have a conversation.

Particularly in those first few conversations you’re having with a prospect. You will learn so much more if you’re just open to it and asking questions and listening, instead of selling, selling, selling, and asking what’s your budget, what’s your budget, I want to know what your budget is. Hate it, hate it.

And I’m tired. I’m tired of all this, all these people telling agencies, find out what’s your prospects budget is.

Gini Dietrich: Yeah. I agree with you know it. Yep. Yep. And even if they do know it, they want to know, like I said, my, my client who’s been with me for a while now. He’s like, if I tell them it’s a hundred thousand dollars, guess what?

The proposal is going to be a hundred thousand dollars

Chip Griffin: every single time. Yeah. Yeah.

Gini Dietrich: Single time as a prospect that really bothered him really bothered. Yeah. So I think, I think the idea that you have minimums, you’re not, you’re willing to say what they are to your point. If you want to have a range, that’s great to have some sort of process where if it’s paid discovery, if it’s strategy session, if it’s an audit, whatever happens to be something that allows you to get in the door so that you’re working with them and working with them day to day so that you can dig into the business deeper than you would in just, you know, yeah.

A zoom meeting or a coffee meeting or whatever happens to be and do that and then build into something bigger.

Chip Griffin: Right because it’s it’s the solution and then what’s the solution cost and what’s the value of it? And and if you if you think solution first instead of budget first you’re going to end up with better clients Absolutely.

Will it mean that, that, you know, some of your engagements may look different? Yes, but, but those clients are likely to be more satisfied. You’re likely to deliver better results because you’re putting that solution in the driver’s seat. You’re not putting the checkbook in the driver’s seat and this, you know, and, and so, you know, find that way so that people, when they’re talking to you, they know, are they in a Lamborghini dealership or are they in a Kia dealership, right?

Because they do need to know that. Okay. Absolutely. But beyond that, there’s no need to start from a number that the number should come from the work that you’re doing, and then they can decide if the risk and reward is there for them to take that plunge.

Gini Dietrich: I love that. Yes. So change your thinking, change your mindset, ask more beautiful questions, use your EQ to enhance that and find some sort of process where you’re getting paid for, for lack of a better term, a project upfront that allows you to dig deep into the business.

Chip Griffin: Yes. Indeed. And with that, we’re going to take the plunge right out of this episode. I’m Chip Griffin.

And I’m Gini Dietrich.

And it depends. Thank you for listening to the Agency Leadership Podcast. You can watch or listen to every episode by visiting agencyleadershippodcast. com or subscribing on your favorite podcast player.

We would also love it if you would leave a rating or review at iTunes or wherever you go to find podcasts. Be sure to check out Gini Dietrich at Spinsucks. com and join the Spin Sucks community at Spinsucks. com slash spin sucks community. You can learn more about me, Chip Griffin, at smallagencygrowth.com. Where you can also sign up for a free community membership to engage with other agency leaders. The Agency Leadership Podcast is distributed on the FIR podcast network, where you can find lots of other communications oriented podcasts. Just visit www. firpodcastnetwork. com. We welcome your feedback and suggestions and look forward to being back with you again next week.