7 Best Strategies for Creative Agency Retainer Agreements

Creative agency retainers provide a way for clients to purchase your resource without the risk of not knowing what they will get.

It is an excellent way to build a consistent customer backlog by selling your labor and resources at discounted rates, which can be paid in full or on a monthly basis.

Marketing agencies have been using this type of agreement for years, but creative agencies are just now catching up.

A creative agency retainer can be an excellent method to lock in recurring revenue while also providing value to your clients.

Agency Retainers are also a great way of getting recurring revenue from clients who don't want big projects outside of their monthly retainer agreement.

This is especially helpful if you're just starting out, as it allows your clients to be less worried about how much money they'll need for each project.

What is a Creative Agency Retainer Agreement?

A retainer agreement is a contract between an agency and client in which the client pays at least one installment before any work begins. The amount of time, resources, or both required for the project are not outlined in advance by either party.

Creative retainers allow agencies to work with their existing clientele on a more consistent basis so that they can maximize the amount of time spent working together and deliver great results!

This type of arrangement requires that you have several projects on your books to ensure that there are always clients who need work done.

This can be quite risky, especially if you don't have a good way to communicate with your clients about updates and changes to the scope of work. This is where Creative Retainers shine!

How to design a creative agency agreement?

For designing an agency retainer, you need to follow the following steps:

1. First of all, think about what value your services/products bring to clients. It should be something that is beneficial for them and provides a competitive advantage in their industry.

By doing this research, you can better understand where your ideal client resides on the Experience Curve and what type of services you should offer.

2. Design a retainer agreement that helps to create the kind of long term relationship your ideal client would need in order for them to switch from their existing agency/vendor.

This involves understanding what they are currently paying, why they are choosing an alternative vendor over working with their current team member(s), and what you can do to help them solve that problem.

3. Finally, work with your team on the creative agency retainer agreement so that everyone understands how it works!

This is especially important for designers or other creatives who are just starting out because they may not have much experience within this type of arrangement.

By having a clear plan in place and talking about the process, you can build a better relationship with your clients before starting work.

Keep in mind that there are many different ways to structure an agency retainer agreement! It might be best for you to experiment with several options until you find one that works well for both parties.

Types of Creative Retainer Agreement

1. Time and Materials

This is the most basic type of retainer agreement within this industry. It's a good place to start, but it may not be ideal for everyone because you'll have to keep track of how much time has been spent on various projects in order to get paid at the end of each month or quarter.

You might also need to send a creative invoice for each project, which can make it harder to keep track of hours spent and money earned.

2. Percentage Retainer

This is similar to the time and materials retainer except that you'll be paid at a fixed percentage rate instead of an hourly or per project fee.

In this case, clients will pay a percentage of the total project cost (for example, it might be 20% or 30%) and you'll keep track of how much work has been completed in order to get paid.

3. Fixed Term

This is another option for creative retainers that requires a flat fee up front in exchange for your services throughout a specific timeframe.

There's usually a minimum number of hours that must be worked in order to receive the full payment at the end.

4. Combination

You might find a combination retainer agreement works best for you, which means clients pay an initial fee and then additional fees if certain milestones are reached throughout the project timeline.

This is usually when they want updates or changes made to the project or they would like additional features added.

Retainer Agreements can be hourly, weekly, monthly, quarterly and yearly! There are no set rules here so it's up to you to decide what works best for your particular situation.

As long as both parties understand the process involved with retainer agreements, then there should never be any issues.

Also read: Mastering Creative Agency Project Management Strategy: A 2023 Guide 

What are the benefits of creative retainer agreement?

Creative retainers agreement become an integral part of any creative agency's workflow because they offer value in many ways:

1. Advance Payment

One of the most common problems with creative agencies is that they have a hard time getting paid on their work.

Clients are incentivized to wait until an invoice lands before handing over more cash, which can be extremely frustrating if you're running out of money and need to pay your employees!

This leads to very difficult conversations and the occasional (and very public) rant on social media.

This is where creative retainers shine! Clients will often pay up-front for work if they feel that it's something of value to them, which can make your cash flow a whole lot smoother and more predictable.

Retainers also keep you from losing business by allowing your clients to prepay for work. This also means that they are less likely to shop around if you have a good relationship with them, which helps build your brand loyalty even further!

2. Effective Client communication

Creative agencies knew that how difficult it can be to get in touch with someone who knows what's going on.

You can spend months working on a project and not hear from your clients until it's time to make changes or start the next one, which is extremely frustrating as an agency owner!

This is where creative retainers shine even more; because you're constantly talking about what needs to be done with each client (it only makes sense that they would be part of the conversation), you can ensure that there are no surprises or misunderstandings.

This is especially important if your client has a tight deadline, as it's much easier to keep them in the loop when everything is up-to-date and accurate!

Creative retainers allow for ongoing communication with clients by taking away the risk of getting paid late.

It also means that you can better manage time and resources, which helps to eliminate wasted hours on projects where nothing is happening because your client isn't ready for it yet!

3. Scheduled Working Hours

One of the most important benefits to consider when creating your agency retainer is that you get complete control over how much work you can do.

If each client has a set number of hours per month, then it's easier for them to estimate what they're spending on your services and adjust their budgets accordingly!

It is important for creative agencies to allocate the appropriate time for the task at hand, so they can deliver the best results for their clients.

By scheduling and tracking the working hours, you'll also find that it makes life easier when it comes to invoicing and reporting!

4. Consistent & Stable Workflow

One of the biggest reasons that agencies lose money is because they have a hard time maximizing their efforts.

Creative retainers allow for an agency to do just this, as you're able to work with your clients at all times so you can be sure that there's enough work being done!

It also means that if anything comes up unexpectedly (client emergencies, etc.), you can work with them to make changes without throwing your entire schedule off.

This consistency and stability will help you grow as an agency owner by allowing for more predictable cash flow!

5. Better Customer Service

Creative Retainer  Agreements are just one of many ways that you can offer value to your clients. They allow for a more collaborative relationship where both parties have the opportunity to voice their concerns and work out solutions together!

This means better communication, which leads to fewer mistakes (which is great news for everyone!). It also means happier customers who get what they need when they need it, and the agencies that provide these services get to take on more clients!

This is one of many ways creative retainers can help you build a stronger brand by working with your clients throughout their entire journey.

You'll be there when they're in the initial stages of finding out what's going on, continue to service them as long as they need you there, and even help them find new solutions when it's time to move on!

7 Best Strategies for Creative Agency Retainer Agreement

Managing retainer agreements effectively is crucial for sustaining long-term client relationships and ensuring steady revenue streams. 

ClientVenue emerges as a game-changer in this arena, offering a comprehensive solution for handling retainer agreements with finesse and efficiency.

ClientVenue is a specialized tool designed to streamline the management of retainer agreements. Its suite of features addresses various aspects of retainer management, making it an indispensable asset for creative agencies.

Read More: Top 5 Project Management Software for Creative Agencies Worth Trying 

1. Starting Early: Advance Billing for Retainers

• It's advisable for agencies to bill retainers before the month begins. This approach ensures the agency allocates time for client work in the upcoming month. Retainers provide a reliable monthly income, aiding in financial stability. 
• Advance billing guarantees clients have the necessary funds for their commitments and enables them to explore new ventures.

This practice also sets clear mutual expectations. Clients understand that they have secured the agency's services for the next month, allowing them to plan effectively. For the agency, it's an opportunity to organize resources and manage the workload efficiently.

To streamline this process, leveraging agency management software is beneficial. For instance, 

ClientVenue offers features to set up recurring billing cycles for retainers. This automatically generates and dispatches invoices each month, minimizing manual tasks and saving time. Such a system ensures the consistency and accuracy of invoicing.

2. Establish a Robust Retainer Agreement

Dedicating time to develop comprehensive retainer agreements is key to preventing unfair treatment. It's crucial to educate your client on the processes and outcomes, and assess if their expectations are feasible.

Establish explicit project timelines and clarify any constraints or limitations. It's essential to concisely define what the client wants and what your agency can feasibly provide.

It's also important to clearly specify in your agency management software the extent of work covered by the retainer. This helps your client understand that they are purchasing your time, rather than an unlimited service commitment.

Furthermore, if there's a need for changes during the retainer period, it's advisable to draft a change order or an amendment document. Keeping a precise and current scope of work helps prevent misunderstandings and effectively manages client expectations.

Also Read: Top 8 Creative Agency Project Management Software in 2023 

3. Enhance Communication and Collaborate Effectively

Effective communication and collaboration are vital for the success of any retainer arrangement in a creative agency. These elements help unify the team and align efforts towards a common objective.

To optimize communication and coordination with clients, consider the following steps:

• Regularly check in with clients to provide updates on project status and address any concerns.
• Implement a system for tracking progress and exchanging feedback.
• Encourage a culture of open communication.
• Organize monthly brainstorming sessions to develop new ideas, address challenges creatively, and identify areas for improvement.
• Foster a collaborative and innovative environment, encouraging team members to contribute fresh ideas and perspectives.

ClientVenue's client portal is an effective tool for enhancing communication. It enables secure and efficient collaboration between clients and agencies, offering features like file sharing, project collaboration, and feedback provision. 

This portal also allows for progress tracking and reporting on key metrics, facilitating a more streamlined workflow, stronger client relationships, and improved outcomes.

4. Set a Reasonable Price

Determining a fair price for creative agency retainers involves thoughtful analysis. Here are key considerations for setting your retainer rates:

• Account for your costs and overheads, including salaries, rent, utilities, software, equipment, and other indirect expenses. Apply a sensible markup to ensure a profitable margin.
• Consider the value your agency brings to the client, encompassing your expertise, quality of work, and service level. Also, factor in market competition and the pricing strategies of similar agencies.
• Proactively create a compensation structure for additional work outside the retainer's scope, like rush projects or extra revisions. Establish a clear fee system for such work and communicate it to the client in advance for transparency.

ClientVenue's retainer management software can assist in effectively building rates and estimating costs.

Read More: How to Start a Creative Agency And 14 Quick Tips to Lead It to Success 

5. Implement a Retainer Management System

Introducing a retainer management system can significantly enhance the management of creative agency retainers. Given the complexity of executing successful projects, having a unified system is crucial for maintaining organization, adhering to timelines, and staying within budget.

ClientVenue stands out as an exemplary project management tool for handling creative agency retainers. This software encompasses a comprehensive range of functionalities, including project planning, budgeting, time tracking, task management, and invoicing. 

It enables the seamless creation of project timelines, assignment of tasks to team members, and real-time tracking of progress.

Moreover, ClientVenue streamlines team collaboration and communication through its integrated platform. This ensures everyone is aligned, reducing the risks of misunderstandings, overlapping efforts, and missed deadlines. 

Utilizing ClientVenue enhances efficient time use, boosts productivity, and heightens transparency and accountability towards clients.

6. Monitor and Communicate Progress

A key strategy in managing creative retainers effectively is the vigilant monitoring of ongoing projects. This practice ensures that projects are progressing as expected and helps in identifying any potential issues needing prompt resolution.

Equally important is the use of detailed reporting. This not only showcases your agency’s value to clients through tangible data but also highlights the efficacy of your services. 

Regular monitoring and reporting contribute to ongoing improvement, enabling your agency to consistently meet or exceed client expectations.

ClientVenue enhances your ability to oversee project progress and provides a clear view of your performance with its real-time tracking and customizable business reporting tools. 

These tools allow for the generation of comprehensive reports on various metrics, such as project status, budget adherence, and profitability. 

Utilizing these insights, you can better understand the dynamics of your current retainers and make strategic decisions to improve your operational processes.

7. Organize Biannual Reviews

To mitigate the risk of clients discontinuing their retainer due to underutilization, it's beneficial to schedule biannual reviews. 

These reviews serve as opportunities to assess the regular deliverables and to highlight the exceptional work your agency is delivering.

 Incorporating this review into the retainer agreement through your agency management software enables both parties to discuss the process candidly and, if necessary, renegotiate terms for the rest of the year.

ClientVenue stands as a top-tier, comprehensive project management solution tailored for advertising agencies, design studios, and internal marketing departments seeking to optimize their operations and manage retainers efficiently. 

Our integrated software merges multiple functionalities — project management, time tracking, agency, financials, and business reporting — within a single cloud-based platform. This integration simplifies project management, making it more effective and efficient.

Read More: Top 6 Marketing and Creative Project Management Tools

Conclusion

Creative agency retainer agreements are fundamental in establishing a stable and mutually beneficial relationship between agencies and their clients.

These agreements set the groundwork for consistent revenue streams for agencies while providing clients with reliable, high-quality creative services.

Crafting an effective retainer agreement requires a clear understanding of both parties' needs, transparent communication, and flexibility to adapt to changing requirements.

As the creative industry continues to evolve, these agreements must also be dynamic, accommodating new trends and client expectations. Agencies should focus on delivering value, fostering trust, and maintaining transparency to build long-lasting client relationships.

Ultimately, a well-structured retainer agreement is more than just a contract; it's a partnership roadmap that paves the way for collaborative success and ongoing business growth.