23 May 2016
Retainers - an income stream that you control
If you have clients who use your services on a regular basis then retainers can establish real and lasting value for your business and create ongoing customer loyalty.
Whilst retainers are common place in many service professions, their adoption has been slow in financial services.
A well-planned retainer with a client allows you to not only plan your work in advance, but also gives you the freedom to make time for new clients when you’re ready.
However, the most powerful attraction of a retainer programme for any business has to be that it gives you stability, as you control the income which comes into your business.
So what is a retainer?
A retainer is a fee paid for professional services. You and your client agree a yearly fee in advance for an agreed level of service.
A retainer agreement is signed and the client normally pays each month for these services usually by direct debit or standing order. Though in some cases a yearly upfront payment is made.
It really is up to you and the client.
At the end of the year you can review the work done and compare the income to the work completed.
If you believe there is a shortfall you can renegotiate an increased retainer in year 2 and so on.
What could a retainer programme look like?
As you may have guessed you need to be careful when putting a retainer program together. Having a poorly planned and more importantly poorly communicated retainer agreement can and has resulted in businesses being taken advantage of.
At the beginning your clear goal has to be simplicity.
The first stage in a retainer programme is to decide what you will offer your clients. The best way to find this out is to ask them and the answer is usually they want you.
You then have to decide what access to you they will receive and through which mediums.
A simple starting point for a retainer offering which can be built on over time could look like this:
The most important part of any retainer program is explaining in fine detail just what you will do, when you will do it and how much you will commit to. You also have to explain what you won’t be doing as part of the agreement.
Additionally, you’ll want to keep tabs on a new agreement as time goes on. One of the best ways to make sure your retainer is working out for you as well as your clients is to closely keep track of your time.
Selling the concept of Retainers
Positioning your retainer proposition is vital. It is important to develop both a verbal and written pitch that correctly sells the benefits to the client of a retainer arrangement with you. The clients to target first are those that you do most work for, who are probably a smaller segment of your overall client bank.
There are five key elements to every successful retainer pitch:
If this sounds good and you’re ready to start making moves on getting clients on retainer, let me offer one final word of warning—you must get certain things down in writing or you’ll end up in trouble.
It’s not rocket science either, just a few basic, iron-clad parameters that will keep you safe. Any understanding client will see the need for it and won’t offer you resistance. These are:
I will leave you with this, there are several benefits to reselling to previous customers versus acquiring new ones. First and foremost, it usually costs less. That alone is reason enough to spend more time focusing on your current customers, however, there are additional benefits as well.
According to research, customer profitability rates tends to increase over the life of a retained customer and a two percent increase in customer retention has the same effect on profits as cutting costs by ten percent.
Finally, the more times a customer purchases from you, the stronger your relationship becomes. It’s these strong relationships that cause customers to champion your products and services, effectively creating powerful referrals and word-of-mouth marketing that will help drive new customers and profitability.
John Joe McGinley
Glassagh Consulting May 2016
Follow mw on twitter @glassaghconsult