After you have decided to invest in new sales tools you need to come up with a budget. While often overlooked by salespeople and marketers, having a budget prior to finding a partner is important because it informs how you will create and evaluate the best tools for you. Without a budget it will be difficult to establish goals, calculate ROI and determine what level of features you are willing to purchase.
Each company is in a unique situation and that only is compounded when creating a fully custom product. Ask yourself what the end game is and figure out steps to make it a reality. Here are five steps we have put together to help you create the perfect budget:
1. What is your strategy? If you are releasing a brand new product line then spending a little more on how it is presented would be a good idea since you will be marketing it a lot and you want to wow potential customers. However, if you just want to update your sales tools for an existing product you can afford to spend a little less. The key is to determine why you want to invest in new sales tools and how that will drive your budget. Even updating them because customers need a more user-friendly tool to interact with can be compelling if that helps you stand out from the competition.
2. How competitive is your industry? Speaking of which, the competitive landscape is another aspect to take into consideration. Being in a cutthroat industry may necessitate doing anything to be unique and capture the attention of customers. If your competitors are already investing time and money into creating new sales tools then the last thing you want to do is fall behind. Nobody wants to be the company that is outdated. Yet, if you are the only company that is considering getting new sales tools then you might want to make a splash and go all in so that you establish a new tier of quality and customer care.
3. What is your measurable goal? An overall strategy is important but it’s also vital to create a measurable goal so that you can gauge the level of return and evaluate the tools after purchase. Imagine a wall tile company called Jefferson & Son. They make $2 million on average per quarter and are looking for this new sales tool to give them a boost in revenue. Controlling for all variables, they think that their new tools can improve sales 15% next quarter to $2.3 million. If that 15% forecasted increase is considered sufficient then they would be willing to set aside more money than if it was just a 5% increase. Similarly, if they calculated that investing even more money could increase revenue by 30% to $2.6 million then that would be another enticing option. Whatever the investment, there needs to be a measurable goal in order to assess the purchase.
4. How much are you willing to spend to attain that goal? Coupled with your measurable goal is the amount of money you are willing to spend in order to reach that goal. Although everyone would love a 30% increase in sales, the initial investment may simply be too much or seem too risky. Not every company has the capital or organizational backing to put a lot of money into their sales tools even if the return is tempting. That’s why you have to be aware of what the sales goal is, how much money is willing to be invested and whether those two things are realistic. A budget of only $3,000 is unlikely to produce $300,000 in sales. Decide how much money you are willing to part with in order to make that goal and if it’s unrealistic then come up with a new one.
5. Talk to a salesperson and improvise. The last thing that you need to do is talk to a salesperson so that you can get a quote and see how much your project costs. Generally this is done by picking the design and features you want and then finding out the price. You may feel discouraged by putting in all this time and effort into the budget only to find out that the quote is more than you originally thought. Maybe the materials that you had in mind cost a lot more than you anticipated, the design requires special construction or the quantity is too small to spread out all the costs. This is the reality of completing a custom made project as you simply do not know all the expenses involved in each feature. The important thing is to continue in the process and find solutions rather than hault it altogether. If a certain look or set of features is absolutely necessary then be flexibile with the pricing. Otherwise there are ways to save money if you are willing to compromise on other options.
Another possibility is to tell your salesperson your budget upfront and he/she can try to maximize the features you want within that budget. It will place some constraints on the creative process but there are unique ways out there to save money and still get a product that you are thrilled with. This also makes it easier for our estimators as they know how much the quote should be and you won’t have to go through the requoting process. Either way, revision allows you to see the potential pathways and pick the direction that makes the most sense for you.
There you have it. I hope that this guide helps you come up with a budget and you refer back to it whenever you are having any trouble. In the next couple of installments, we will post a blog about sales tools and ROI so that you get a full picture of the process.