Agency Retainers: What You Need to Know

Retainers are becoming commonplace in the agency world, particularly with smaller or boutique creative agencies. Frequently touted as being a more attractive, strategic pricing model, retainers certainly have their benefits.

Beyond being paid up front, many agencies prefer retainer models because it allows them the time to really connect with clients and prove their worth. Marketing strategies take time to see results, and the longer term relationships of retainers provide agencies with room to experiment creatively and show results progressively, rather than feeling the pressure to “prove” their work’s value with vanity metrics too early in the game.

We’ll get into the definition of an agency retainer agreement, the pros and cons of retainer and project-based pricing, best practices, and how to spot red flags when you’re first navigating client retainers.

What is a retainer?

A retainer is a pricing agreement between an agency and client for a set rate and period of time. Agencies work with their client to scope out what work will likely need to be completed, agree upon a monthly allotment of hours and then work collaboratively to meet their marketing needs and goals.

What a retainer isn’t is an open invitation for clients to steamroll your agency with requests and additional work for one flat rate. There is no carryover of hours, meaning you’re trusting one another to provide a steady level of service without anyone taking advantage.

What are the pros of agency retainers?

Better, Longer Relationships

Agency retainers are built around long-term relationships. By positioning your agency as a strategic partner in your client’s success, more often than not, you’ll have the time and freedom to dig deeper, address more challenges, test strategically and create stronger solutions to meet your client’s goals.

Better Work, Faster

Once the onboarding process is complete and your team has fully invested in your client’s business goals, you’ll be able to create better work faster. Your content will improve because your team is now essentially a part-time employee of your client.

Improved Project Pipeline

Retainers help agency project managers determine project pipelines well in advance. Project-based billing can mean that one month your team spends 10 hours onboarding, and the following month you’re dedicating 50 hours to wrap up a web project. Retainer-based clients provide a steady stream of work month to month, making it easier to determine when your agency can take on new projects.

C.R.E.A.M. (and Improved Cash Flow)

Payment occurs before the work begins and is guaranteed, which improves cash flow and reduces collections nightmares down the line. Dolla Dolla bills, y’all.

What are the cons of retainers?

Time Tracking is More Important than Ever

Even though you’re no longer billing by the hour, this doesn’t mean your team is off the hook for time tracking. To ensure your agency retainer is actually making you money, you’ll need to track accurately and provide reports to your client listing where your team’s time was allocated.

Trouble Showing Value

Some clients have an easier time understanding the value of creative work when costs are tied to projects, rather than tied to progress. Even if you’re providing accurate time tracking, it can be hard to show value when clients feel they are paying for “a month of work” instead of a tangible deliverable.

Communication Breakdowns

When you’re downshifting from a large scale priority project like developing a new app to a retainer-based relationship for maintenance and digital marketing, it can be difficult to navigate the new flow of communication. Clients who become accustomed to on-demand emails and phone calls may think that is the norm, and you may find you’re wasting uncompensated time fielding requests and inquiries.

Potentially Complicated Breakups

If you’re stuck with a difficult client, the light at the end of the tunnel is project completion. If you’re in a retainer-based relationship with a difficult client, be prepared for a potentially complicated client breakup. Which brings us to the following…

When should agencies avoid retainers?

When You’ve Just Met

In short: you wouldn’t commit to a long-term relationship on a first date, so you probably shouldn’t commit to a retainer with a new client you’ve never worked with. Knowing how your client likes to work will be a major factor in deciding if an agency retainer is the right fit.

When They’re New to Creative Agencies

Some clients are aware that they need to partner with a creative agency but aren’t sure exactly what that’s going to look like. Maybe they’ve been bitten before, or maybe they’re completely new to marketing and aren’t yet sold on it’s value. With clients like these, you’ll have a harder time getting their full buy-in on a retainer, and you’re more likely to hit bumps in the road if they aren’t immediately seeing results.

When They’re, Well, Bullies

Some clients will see retainer agreements as a flat rate for your agency, fulfilling all of their creative dreams. These red-flag clients are usually spotted pretty easily by keen-eyed account managers. That’s not to say agency retainers aren’t possible if everyone is clear on your scope of work, but your project managers will need to carefully monitor these projects to ensure you’re not being bullied.

Like any contract, you’ll want to consider the following:

• The length of your retainer
• What happens when it’s time to renew
• What happens when it’s time to terminate
• Set out communication expectations, including how you’ll be reporting
• And of course, timelines and due dates still apply

Ready to set up your first agency retainer? Consider a trial period of 6 months (or less) for both you and your client to grow comfortable with the agreement. Rely on your project management software to increase transparency in your client relationship, allowing clients to view time tracking and project progress.

Function Point alleviates the chaotic nature of operating creative agencies, internal marketing teams and professional service firms. Used by over 9000 customers worldwide, the all-in-one agency management system helps teams connect each stage of project management. Our goal is to make productivity more personable; to warm it up and give it a heartbeat.

FP does more than just time tracking. Learn more about our agency management software by visiting our Product page or booking a demo with us.