The "B" in BANT-focused Demand Generation - Budget 101

The best thing in life is free,

but you can give it to the birds an' bees.

I need some money, need some money.

-John Lee Hooker

My favorite Blues singer sang it well - and for demand generation, money (or in this case budget) is a necessary part of any qualified lead. However, most prospects don't like disclosing their budget numbers to vendors early - and often, vendors don't know how to ask the right questions around budget in general.

From the client's perspective, it's a bit like dating - you don't tend to disclose how much you make to someone on date #1, but by the time that you are serious enough, you'll share your W2 information. Same thing is true in the engagement cycle between a client and a vendor. On day 1 of engagement, the client will rarely disclose their actual budget numbers on a project (unless tactically it is done to reveal either a top or bottom line of price sensitivity).

From the vendor's perspective, if the client won't be sharing budget on day 1, then how in the world do you determine budget?

• Ask circular questions about budget.
• Do your research in public documents like the company's annual reports for budget trends and planned expenditures in the future fiscal year.
• Sell the heck out of the value of your solution - not the cost of it.

Circular questions about budget can range from understanding:

• Which departments are funding the project?
• Does a board of directors have to sign off on the expenditure?
• Are the funds only available for a certain timeframe and do they go away/need re-approval past that timeframe?
• Is the project considered part of a capital project initiative or "everyday" spend of IT dollars?
• If they are price sensitive (and have let you know it), have they considered using financing* to complete the project?

Researching the company's public records (and heck, twitters/blogs) can generate a wealth of information on the what the company has done in the past and what it plans to tackle in the future. Understanding the scope of what initiatives the company has on its radar can be invaluable - and lead the vendors to structure their value propositions more centrally to the company's plans.

Selling the value of your solution and not the cost of it is a topic I plan to discuss in a future post - but let's leave it as simple as, if the client understands and believes the value you bring to the table, cost can become irrelevant.

The KISS Question is "how many ways do you ask about budget on date 1?"

*Financing can be a terrific way to secure that a lead turns into a sale - a vendor can reap a ton of benefits including:

• Increase deal size.
• Close deals faster.
• Strengthen customer relationships by being a partner - not just a vendor in the process.
• Get paid up front.
• Offer more flexibility to the clients.

7 Ways to Predict a Company's Financial Health

Sometimes when you are looking at a prospect - or heck, even your own company - you think to check the stock price for its health score. Good start.

However, there are other ways to figure out if the company is doing OK or if it is the Titanic.

Here are other ways to find out information on the health of a company - here are the top 7:

1. Revolving Accountants
Look for the anomalies - if cash flow is in the basement, but earnings are holding up....there is probably an issue. Taking dollars from the bottom line often equates to a serious issue. Also, have they changed accounting firms recently? Sure, sometimes justified - but often not (due to bad numbers).

2. Cuts Keep Coming
Growth and trim backs are natural in business - but what does the latest cut mean? Have they reduced benefits to the employees? Have the cuts in personnel been deeper than normal? Are they selling off parts of the company or other assets? Keep an eye on these - even moving offices (specifically to a cheaper area can be a signal).

3. Customers Clam Up
Are your customers (or prospects) not flooding the phone/email lines anymore? Are support renewals down? For license based business - are you hearing more about your customers moving to a SAAS based model?

4. IOU But Can't Pay You
Have you determined your prospect's debt rating? This evaluation from S&P shows how risky an investment in cash in the company is.....

How cash rich is the company?

5. Executives Dump Stock
Watch what folks do, not what they say. If the company is publicly traded, and they are an officer of the company - and they are dumping stock....not a good sign!

6. News You Don't Need
Watch for acquisition targets, SEC violations, etc. There are many company-related blogs that discuss what is happening behind the scenes (hey, leaks happen) and it doesn't hurt to pay attention to them. Based on the 80/20 rule, there is often a kernel of truth to whatever rumors are out there in cyberspace about a company.

7. Name Adorns a Stadium
Self-promotion is great, advertising is needed - but do you really need the prime Super Bowl spot or the company name on a stadium? With the economy the way it is, look closely if the company in question has its name to ego-based endeavors like a sports stadium. If they are spending it there, they may not be spending it on your technology a few months from now.

The KISS question is, "what do you know of your customer or prospect's financial holdings?"

This blog is derived from a WSJ report (bullet points provided from WSJ) from eons ago.