When you’re trying to scale your agency, putting time, resources and focus into its growth, seeing the revenue rise and fall each month can cause huge stress. No matter how much effort you put in, business planning is harder and often a best guess without a predictable revenue stream.
I’ve worked with agencies who have tens of thousands of monthly retained business and I know others who achieve 6-figure sales, starting from zero on the first of each month. I tell you from experience that those agencies with a substantial proportion of their revenue guaranteed from month to month, are in a far better position to grow rapidly and sustainably.
What is a Retainer?
A retainer is an agreement or contract between the client and your agency. Each month the client agrees to pay a fee and in return, you provide an agreed level of service. The length of the agreement can be as little as 1 month, but more commonly these are 12-month contracts. Throughout each monthly contract, the client may use your services up to the level of the agreement or you will provide deliverables agreed upon.
Clients on a monthly retainer are the gold standard. They provide significant benefits for agencies.
- Stability of cash flow and predictable consistent revenue. Imagine you had several clients on retainer each month that covered all expenses in your agency. Rather than starting from zero, any additional or new projects would put you in to profit automatically.
- With a retainer or retained client, there’s a fixed period for the contract. This helps with your sales as your team no longer need to think in 30-day cycles, but rather the length of your contract.
- From a resource perspective, this also allows you to plan our team needs and staff levels. We all have spikes in work volume across the calendar year, but with retained business, we can smooth this out and plan well in advance.
- With an agreed contract in place, we would expect our retainer clients to be much tighter on their payment schedules.
A retainer is a contract and it’s important to ensure your retainer includes the full scope of work to be completed as part of the contract, all expectations you have of your client including engagement, payment terms and what happens if these are not met.
How to Sell Your Clients on a Monthly Retainer
If I was planning to grow my agency, I’d look at how we can build out our retainer client base. And that would be the same whether I am a new agency or planning to grow my established agency.
But selling retainers to clients isn’t easy and many agencies struggle with this, especially those where clients primarily focus on project work. Yet many of the challenges you face are not what the clients believe, but your perception of this.
- You can ask clients if they’d prefer to be on retainer. They can only say no.
- You may struggle to define and communicate the value of the retainer to clients
It might seem hard now, but it shouldn’t be and the good news is that the rest of this article will walk you through the steps to help you launch, define and sell your services on a retainer.
1. Get your foot in the door first
It’s easier to sell to existing clients than it is to new ones. This is true for new business and especially true when we try to get our clients to change to a retainer model.
Existing clients are paying for your service. They wouldn’t be doing this if they weren’t happy to do so. When approaching existing clients about signing up for a retainer, its always best practice to recap and summarise your current service offering. Focus on aligning your retainer service with the client’s long-term goals and explain the value proposition for switching to a retainer.
When choosing which clients to approach for a retainer, I would first look at those clients who use your services relatively regularly but are sporadic in nature. Say every couple of months. With the retainer business, we’re trying to fill in the gaps between orders. Explain how the retainer will benefit them and how you can use the additional time to focus on their business growth plan. It’s rare that a business doesn’t need help and use this approach to support your clients with their most pressing business needs.
2. Sell value, not hours
With our clients onboard for a retainer contract, it can be tempting and often easier to package up hours to meet the value of the retainer and call it a day. If your plan is to maximise the output of your agency, that may well be a good idea. But if you want to maximise profit, we need to reconsider selling time. Instead, we need to sell value or a “product”. Let me explain.
The majority of clients don’t care how long you spend on a project. They care about the result. This is especially true for those clients where our service is integrally linked to their business objectives.
Think about this
Client A – needs a one-off flyer designed. The first question they ask is “How long will it take?”. The second question is “How much will that cost?”. They directly related the cost of design to the time taken. Now many of us will price this by project value negating the time taken, but that is how many clients think.
Client B – is our retainer client. They have agreed to a certain level of work from your business and a cost is fixed against this. They no longer care how long the projects take, as long as the results meet their expectations. There must be a defined output such as a campaign creative including XYZ assets or a series of specific tasks to be completed. It’s important that the client places value on these tasks and understands the service being provided. From the agency’s perspective, repeating similar projects each month will increase efficiency and reduce time taken. Alternatively, with a regular focus on design, working collectively with the client, we will get a better understanding of their business objectives and hopefully provide a much better/refined service.
3. Air-Tight Contracts
Now you’ve got a few clients on a monthly retainer, you need to share your scope of work or contract with them. Your Scope of Work is the contract between you and your client. It will detail what their expectations of service will include and what your expectations from them are.
When creating a Scope of Work, leave as little to interpretation as possible. Define the start, the end and everything in between making sure you use a language that both you and your client will understand.
Be clear on what falls within the scope of work and what might be additional costs the client could be charged with. Travel or expenses are often charged extra as an example.
4. Show your worth
If a client trusts you enough to sign up for a monthly retainer, they are putting their trust in you. Show them your worth.
How often have you had the thought that if your clients could only give you freedom on a project, how good could it be? Now is the time to put that theory into action.
The success of long-term relationships is how well you deliver the service you offer and ultimately the results this provides for your clients. Every retainer client should be provided with a monthly report and a monthly meeting where you discuss the outputs and outcomes of any projects completed in the past month.
Every quarter or every 6 months, a larger review or progress meeting should be scheduled to ensure any challenges to the retainer are addressed. This provides reassurance to the client that you are thinking about them, without the client having to prompt this.
Getting more clients on a monthly retainer is a great way to build a stable platform of business on which to grow. The steady source of cash flow each month can smooth the peaks and troughs that our agencies face across the year.
Working to build a retainer-based business isn’t easy. It takes time to develop a service that clients will be willing to pay for month by month. Scope creep is the biggest challenge agencies face and without a solid Scope of Work agreed at the outset, the profit can be siphoned away slowly but surely.
When implemented correctly, getting more clients on a monthly retainer can be one of the quickest and most sustainable ways of growing your agency.