You have no items in your cart.
Are Retainer Clients the Holy Grail for Agencies?
I spent much of my time as an agency owner seeking retainer clients. You know those clients that pay you a fixed fee every month for the delivery of a defined service.
There’s no more worrying about getting paid; you get excellent, predictable revenues and secure cash flow. You can even position yourself as the ‘strategic partner’ you’ve always said you are, rather than a supplier.
It’s a pretty typical pricing model and, for agency owners, feels like the gold standard. After all, if you commit your clients to a long term contract with a fixed fee, you can plan your resources easily enough.
You know what to deliver and when you are going to get paid months in advance. You can even justify hiring to deliver the work too, rather than adding it onto the todo list of your already stretched team.
As Bernard Matthew’s would have said, ‘bootiful’.
But is it?
What’s the reality of retainers and do they make sense for your agency? Could you be better off seeking juicy, profitable project work?
Here are some reasons why retainers might be what’s holding your agency back.
1. You Always Over Service Retainer Clients
In my experience, clients paying a retainer nearly always get more than what’s in the agreed scope of work; especially the unsophisticated clients. And by that, I mean clients that don’t regularly work with agencies.
In your eagerness to please your client I guarantee you’ll end up doing more than you scoped and budgeted for, whether it’s extra hours or extra services.
I’ll give you an example. At my agency, we were retained by a B2B design and build contractor to run their PPC, content marketing, social media and SEO. We were doing quite nicely. Social following and engagement through the roof. First page on Google for their target keywords. Web traffic up and ultimately inbound leads for the first time.
When the time came to rebuild the client’s website, we also took on the task of finding and briefing the web dev agency. And when the client’s copywriter dropped out at the last minute, we wrote the website copy too.
How much extra did the client expect to pay for this? Zip. Nothing. Not a penny. Yes, you read that right. We were their marketing team, so the retainer covers this. Correct? Well, no.
You can imagine the client relationship went well after this.
2. You Take Each other for Granted
It’s just as easy for you to take the p*ss out of your retainer clients too.
You know you’re getting paid at the end of the month. If that report slips by a few days, or you miss half a day’s service this month to pull your team into a pitch, it’ll be alright. You can always make up the extra hours next month.
You might find your team starts filling timesheets with unnecessary tasks to justify the billing too. You’ve never seen such a well ordered project file or such a beautiful GANTT chart. It’s as colourful as Joseph’s coat.
3. You Become Lazy in the Creative Department
To make a decent margin on retainer clients, you need to think about efficiency. And this is a word that doesn’t work well with creative teams. It generally means standardisation.
You’ll recognise it in your agency because you have a consistent approach to onboarding new clients, taking briefs, managing reporting, document and asset management etc. And this is precisely what you need. But that’s all operations.
It’s when standardisation drifts into your creative output that it becomes a problem. You know what I mean. You have a standard WordPress theme, a template for press releases and lead magnets and Insta stories and ebooks and… all of a sudden, everything starts to look a bit, well, samey.
You also stop thinking big too. You can’t produce anything overly new or innovative because the hours available restrict your thinking time. You might not even notice this happening.
4. You move from Strategic Advisor to Execution Only
The first time I heard this was from a client I had at a large London agency. We started out helping the client to develop a strategic event marketing plan. We ended up packing handouts and making name badges. We even became human signage — nothing much strategic there then.
You can guess what happened next. Our fees got squeezed, and suddenly we were competing on price. Not a pretty place to be for a ‘strategic agency.’
There’s more to retainers than meets the eye.
You might want to think about whether you carry on in your quest for the holy grail as retainers are sometimes not so divine.
Perhaps it is time you focussed on getting those big juicy projects instead? Well, yes and no. Project work is excellent for your creds and bank balance, but they come with their own set of risks.
To find out what your peers are doing, why not join the Agency Squared community. It’s a place for agency owners and senior leaders to network, build partnerships, find business opportunities and get the help they need, from those who have already walked a mile in your shoes.