Maximizing monthly recurring revenue (MMR) is a goal for most business owners.
Knowing that we are going to have that retainer payment coming in each month makes it so much easier to plan our cash flow, our staffing and makes it easier to sleep at night. When I talk to agency owners they want as much retainer work as they can get.
But when I look under the hood on these deals I see a lot of squishy thinking and questionable profitability.
Retainers are a bog of over-servicing!
When we sell a retainer we are frequently selling the client on, “this makes it easier for us to serve your needs.” Which sounds to them like, “Here’s an all you can eat smorgasbord!”
When we over service our retainer clients we lose a lot of the advantages we gained, we can’t plan our resources well, we have cash coming in, but how much of it is going out? There goes the sleeping well at night!
I hear other clients trying to hold back the over-servicing by selling retainers as a “block of hours,” but this is a quagmire too. Now we’re inviting a discussion of why this project took so many hours, and why we can’t get this done more quickly. We put the client in charge of their resourcing their own project which is a guaranteed disaster!
What are you doing?
I’d love to hear how you are dealing with retainer agreements with your clients. How do you set expectations for what’s “in” the retainer? How do you push back against new requirements? How do you keep them profitable?
Hit reply and let me know what’s working for you.
I’d love to hear your ideas, and I’ll bundle up the best ones and share them with you.
