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Retainer-based Relationships
The time, money-saving and strategic benefits of retainer-based agreements
by Kelley Briggs
People often ask us at Hudson Fusion how we bill for our services. Understandable question – the answer depends on the client’s needs. As with most marketing and creative service firms, we use four common billing methods:
- an hourly rate, for “quick fixes” to existing projects
- a per project fee schedule for customers who require only a few projects every few months
- a retainer-based plan for clients who “outsource” and consider us their external marketing and communications department
- commission-based, relying solely on discounted fees from media placement
More and more companies now see the value of outsourcing their marketing and creative functions to talented professionals. As these companies see greater return on their investment (ROI) from an integrated marketing plan, retainer-based arrangements with marketing and creative firms are once again becoming popular.
What is a retainer?
A retainer-based arrangement involves the hiring of an outside source to perform certain responsibilities or activities for a specified fee. Activities and initiatives are pre-established between the client and the outsourced company, and are detailed in a proposal or “statement of work” document. Generally, retainers exist for a specified length of time -- 6 months or 1 year -- and have a pre-determined fee, which is divided into consistent monthly payments and billed at the start of each month.
When retainers work best
Retainers are most appropriate for companies that approach their marketing goals with a “multi-channel” or integrated approach. Savvy companies know that the chances of reaching their target audience and persuading them to buy increases dramatically when multiple channels like advertising, direct mail, television, radio, web and PR all work together with a unified message. Retainer-based relationships allow agencies the freedom and flexibility to develop a strategic approach using all channels, and creatively design and execute that strategy to offer an integrated marketing campaign. And because retainer- based work is part of a cohesive plan, results are easier to track, enabling the company to determine program success or failure more efficiently. Which companies are best suited for retainers?
Retainer-based arrangements work best for clients that have committed themselves to a budget (typically a percentage of gross sales) and are committed to the idea of working with an outside resource to clearly define and then implement their marketing plan. These agreements are also best suited for companies that recognize the value and importance of building a long-term relationship with a marketing and creative firm. Your company should be willing to let your marketing and creative firm get totally immersed in your business so they can work more effectively to support your goals.
When retainers are not appropriate
Not all marketing initiatives are a good fit for a retainer. If a company only requires an individual print ad campaign or direct mail piece, a per-project fee would be more appropriate than a retainer. A firm familiar with all fee structures can help you identify the best solution for your company’s needs.
NOTE: Not all creative firms offer marketing services and not all marketing firms offer creative services. It is important to identify integrated firms that can provide both marketing strategy and creative execution, in order to maximize the value of your marketing dollars.
Sharing your plan
When identifying the marketing and creative firm that you want to work with as an external resource, it is important to review your current marketing plan in its entirety with them. This will help uncover areas that may have been overlooked and allow your firm to create a project plan for seamless execution. If you don’t have a plan, don’t worry. Begin by setting goals, so that a plan can be established to reach those goals and measure the results.Revealing your budget
It is very important to review any budget constraints you may have with your marketing and creative firm. This will influence the marketing channels selected to reach your goals. While some companies may be apprehensive about revealing their budget, it is difficult – and often a waste of time – to plan a course of action without a budget. Knowing your budget enables your firm to set a course of action that is appropriate for your budget.
To illustrate, let’s use a car-buying analogy. When you are ready to buy a car, you approach a dealership that offers cars in your price range. If you go to a BMW dealership, you have mentally prepared yourself to spend a certain amount of money and therefore are not shocked that the BMW is costlier than a Ford. In essence, you wouldn’t walk into a BMW dealership and expect to pay what you would for a Ford, and vice versa. The same holds true for marketing — you spend within your budget and you get what you pay for.
A marketing and creative firm well versed in providing retainer solutions can offer the most extensive creative design and strategic marketing plan possible – and still have a positive impact on your bottom line.
Retainer value vs. internal costs
To avoid “sticker shock,” it is important to be armed with all of your company’s internal costs before you review a retainer agreement from a marketing and creative services firm (i.e., the cost of having to hire and manage additional staff or multiple vendors). This will enable you to analyze the numbers, compare costs and accurately determine the strategic value of using such an arrangement. Summary
If you are making the transition from a project-based to a retainer-based relationship with your marketing and creative firm, be sure to involve them in every marketing decision. Not only will you gain from their valuable insight, knowledge and experience, but you’ll also have a resource to keep you on-track, so you can reap a greater return on your retainer investment.
Hudson Fusion is an integrated marketing firm that takes a synergistic approach to its clients’ sales, marketing and business growth goals. They offer a full spectrum of marketing services including strategic planning, brand and corporate identity, website design, print collateral, search engine optimization, direct marketing and advertising. Hudson Fusion is located at 30 State Street in Ossining. For more information contact Cindy Penchina, Executive E-Services Director at cindy@hudsonfusion.com or Kelley Briggs, Executive Creative Director at Kelley@hudsonfusion.com or call 914.762.0900.
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