We are rebooting this article from last year as it is a timely reminder about budgeting season.
By Kristen Hayer
Welcome to budget season!
“No one really knows how the game is played
The art of the trade
How the sausage gets made.
We just assume that it happens…”
-The Room Where It Happens, Hamilton
Ever wish you knew where your numbers came from? Wonder how on earth you are supposed to hit the goals you’ve been given? It’s time to be in the loop on your budget. Here’s how:
Ask About Your Budget Now
If you’re on a calendar fiscal year, now is budget season and you need to be spending quite a bit of time in your finance leader’s office. You need to know what they need from you in order to build their budget for the coming year. In general, most of the budget for a CS team is headcount, but it might also include some tools, training, and travel. You need to understand the expectations and limitations that your finance team has for your budget, how they want to see it, and what it needs to include.
Have a Plan
The biggest part of your plan should be your headcount, and it shouldn’t be based on “gut feel.” Gather the sales projections for the coming year and break them down into the number of customers your sales team is expecting to add, month over month. Each month, take out the expected churn, and the result will be the number of customers your team will need to manage during that month. Use a top down and bottom up staffing model to determine the right ratio of staff to customers for each role on your team, and you’ll be able to determine how many of each role you’ll need during every month of the coming year.
Explain Your Plan
Once you’ve built your plan, review it with your HR and Finance teams. HR, to ensure that you’ve thought through all of the hiring logistics. Finance, to make sure that they are on board with your model. In addition, you’ll need to discuss any expectations for expansion revenue with your finance team, and be on the same page in terms of where that revenue will come from. This needs to take the form of a plan that you can easily explain to your team, since they are the ones who will need to deliver on it.
Adjust Your Plan
Not every plan makes it through Finance, so be ready to negotiate. One of the ways you can make sure that Finance understands the tradeoffs of hiring fewer people than you have in your budget is to review the details of each role with them. Then, if they are asking you to cut the budget you are ready to explain what that means in terms of the customer experience. Be sure to present this in concrete terms (like how much time it takes to deliver on your customer journey components) instead of in an emotional plea.
Request a Working Budget
The reality is that most companies don’t actually get their official budget approved until a month or so after the fiscal year has started. This makes it tough when your budget is primarily team members and you have some hiring to do. Work with your Finance team now to determine what you can and can’t do at the beginning of the year, and solidify your working budget. This will allow you to do some hiring, if needed, while the company is waiting for the final budget.
Don’t allow your budget to get set without your input. As the head of customer success, you need to be in the room where it happens!
Want more leadership pointers? The Success League is a Customer Success consulting firm that offers a CS Leadership certification program which features classes including Team Metrics & Goals and Reporting on Results. Visit TheSuccessLeague.io for these and our other classes and business coaching offerings.
Kristen Hayer - Kristen believes that customer success is the key to driving revenue, client retention and exceptional customer experiences. Her areas of expertise include developing success goals and metrics, designing the optimal customer journey, selecting technology, training teams, and building playbooks. Prior to founding The Success League, Kristen built and led several award-winning customer success teams. Over the past 20 years she has been a success, sales, and marketing executive, primarily working with growth-stage tech companies. Kristen has her BA from Seattle Pacific University and her MBA from the University of Washington.