The salesperson is the most critical person in the budgeting process for any radio station, cluster, or company…and we are the most unreliable at times.
I watched Audacy VP of Finance Stephen Clare give a RAB seminar on budgeting last Wednesday. It is good for all salespeople to understand where corporate is coming from on issues like budgeting. It is much easier to give them what they want when you know why they want it. Clare went through corporate budget timelines, revenue, and expense details.
COVID-19, and now the delta variant has thrown the bean counters a curveball. Typically, corporate accountants would start crunching next year’s numbers any day now. Budgets can take them anywhere from one to three months to prepare. With COVID-19, everything is up in the air, and the budgeting process is almost a quarter at a time process.
I have seen one of two methods of next year’s budgeting process roll downstream to the AEs:
- We forecast what we think we can do and give them a number broken down monthly and annually; submit that, and corporate comes back with our budget.
- We are given our budget, and it usually is 1-10% more than what we did the previous year.
In Boise, Idaho, most operators will make their once-a-year sale in the late 3rd/early 4th quarter to lock in business for the following year for the first quarter and any weeks that have perennially low demand. Then AE’s go with #1 or #2 above.
Clare explained that when Audacy works on annual budgets, they get the forecasts for the industry from BIA, RAB, and Miller Kaplan. They take that increase and turn it over to the AEs, and they hope to meet in the middle or as close to the industry forecasts as possible.
I did learn two things that are important to know.
First, most companies, radio included, are weighing their options to downsize their office spaces permanently. With more employees working from home, the idea of home office reimbursement has come up. When we work out of our house, we use office space, the internet, and furniture. It would help if you wrote that off on your taxes, or MAYBE, soon, your company will reimburse you. Audacy hasn’t come up with a set policy on this but is crunching the numbers as you would expect. Make sure you read this from Entrepreneur to set up your home workspace.
The other big takeaway I had was how unreliable salespeople are seen in the budgeting process. I think we have earned that in most cases because we don’t know what our clients will do with us next year, how many will cancel, or how much new business we will earn. That takes a lot of planning from salespeople, and only the best and most stable do it well.
Sales trainer Todd Caponi discussed a pet peeve of mine on a podcast. Caponi wrote The Transparency Sale, an approach I will discuss next week. Have you ever been asked for a pacing number in a month and been given percentages you are sure it will happen? Say you have a $5,000 contract pending for August. You think there is a 50% chance it will happen. So, the manager turns in a $2,500 forecast for August for you. WHAT? You said there was a 50% chance you would get $5,000 and a 50% chance you would get $0! If you get $0, you are now being counted on 100% to find $2,500 for August! I should have put that in my letter every young seller should receive post. Remember, time is like a mountain. It is tough to budget.
Jeff Caves is a sales columnist for BSM working in radio and digital sales for Cumulus Media in Dallas, Texas and Boise, Idaho. He is credited with helping launch, build, and develop Sports Radio The Ticket in Boise, into the market’s top sports radio station. During his 26 year stay at KTIK, Caves hosted drive time, programmed the station, and excelled as a top seller. You can reach him by email at jeffcaves54@gmail.com or find him on LinkedIn.
