On paper, retainer agreements between clients and creative agencies seem like a win-win. The client can more easily plan their marketing budget, and the agency has a guaranteed steady source of income. However, agencies would be wise to put some safeguards in place to protect themselves. Be sure to look out for these behaviors retainer clients may exhibit, as well as the mistakes naive agencies may make.
The Take-and-Take Relationship
In an ideal world, an agency retainer would work on the take-a-penny, leave-a-penny model. We don’t live in an ideal world. When an agency goes over the agreed upon retainer, the client is all-too-happy to feel like they’re getting a real bang for their buck. But, when the agency is under budget, clients may feel like they’re entitled to a prorated refund.
How To Solve It
Negotiate a six-month retainer test. If the agency comes in under hours on average, the retainer is lowered. If the agency comes in over hours, the retainer is adjusted accordingly. It goes without saying that you should always accurately record time, but we’ll get into retainers and Time Sheets in just a minute.
Scope Creep
Scope creep is when more and more jobs suddenly seem to fall under an existing retainer. Little favors and tiny tasks build up over time; it happens slowly, then all of a sudden. And, it hurts the agency, because you miss out on earnings that should have been out-of-pocket billings.
How To Solve It
From the beginning, be sure to establish a detailed scope of work that both the agency and the client agree to and sign off on. Then, stick to it. Be on the lookout for added features and new ideas that pop up as projects progress. Delineate between retainer work and work considered out-of-pocket. (Ever heard, “We’ve still got hours on the retainer, just bill it to that?”) A signed, sealed and delivered scope of work contract protects the agency from that sort of bullying.
Solely Retainer
While retainers have their benefits for both client and agency, putting your eggs all in one basket can be risky. No matter how strong the relationship between agency and client, when it comes time to be budget-conscious, retainers are typically up on the chopping block.
How To Solve It
Again, establish a detailed scope of work. Project work makes a great compliment to retainers and demonstrates an agency’s wealth of capabilities and value to the client.
Losing Track
Just because a job’s on retainer doesn’t mean you can slack on keeping track. Recording accurate hours on retainer jobs keeps the agency honest and helps indicate if and when retainers should be renegotiated. Be sure employees don’t dump time into retainer jobs and pad their Time Sheets.
How To Solve It
Treat retainer jobs just like hourly bill-out jobs, and urge employees to turn Time Sheets in promptly. Need tips for that?
Thanks for reading, and be sure to retain this knowledge!