How much is your team overdelivering?
Getting retainer clients who pay you a fixed fee every month is one of the best ways to make your revenue more predictable. It’s incredible to know that you’ve got $45,000 from 5 clients coming in on the first of every month!
But there’s a problem with fixed monthly fees — what are you delivering against those fees? How do you make sure that the fee represents an excellent value for the client and is profitable for you? How do you monitor the effort that’s being expended month after month for each client?
Price right, then reign them in!
The first part of that equation you take care of in the sales process. By setting clear expectations of progress and value, you can ensure that the client is comfortable with their value.
But the cost side is more difficult!
Your team wants to do a good job, they want to please the client and keep them coming back for more, so they’re inclined to over-service every client to keep them happy.
It’s usually little things. The client asks:
- Can you do one more revision on this?
- What about this idea? Could you do some investigation and tell me what you think?
- I saw my competitor executing this tactic, would that work for us?
And how do you (or they) say no?
Before you know it, everyone on your team is running around like chickens with their heads cut off, and you can’t figure out why you’re short for payroll!
Monthly retainers can be profitable if they are priced right at the beginning and managed correctly through the life of the project:
- Price retainers with a healthy margin for you. Don’t cut the price to get a retainer!
- Give your team clear boundaries for what’s “in and what’s “out” (and don’t say, “why don’t they read the contract,” they aren’t used to reading contracts).
- They need a procedure for what to do with requests that are out of scope.
- Your team needs to be more afraid of overdelivering than they are of losing the client’s approval.
What have you tried to keep your retainers profitable? What’s worked for you and what hasn’t?
Hit reply, I’d love to hear about your experiences.