For many solo consultants, signing-up clients on retainer is the “holy grail.” Most new consultants dream of the day when they will have five or ten clients on retainer, paying them thousands of dollars in monthly fees, while the consultant is out playing golf or sitting on the beach in Florida.
These consultants will eventually find out they can't spend all day playing golf while still getting paid, but the truth is that having clients pay you on retainer is often the best outcome for both you and your customers.
If you've been reading this site for awhile, you know that I argue heavily against charging clients by the hour (you can learn why that's a bad idea by reading The Dangers of Hourly Billing for Consultants). Instead, I recommend charging clients on a project basis (charging for a set scope of work) or on a retainer basis. A retainer means that the client pays you every month based either on a set amount of work that you do for them each month, or based on simply having access to you when needed. For more on how retainers work, click here.
While both project-based fees and retainers will work for most consultants, retainers offer you maximum flexibility and stability because you're guaranteed a set income each month. In addition, both you and your client know ahead of time what amount of work you will be doing and what the expected outcomes of your monthly scope of work will be. In this article, I want to show you how to turn your project-based clients into retainer-based clients, which will help you grow your business and bring in more recurring revenue.
Consulting Retainers and Me
When I first started out as a consultant, I focused almost exclusively on project-based fees. I used my website, my e-mail list, and lots of other marketing strategies to attract new clients. I would then sign those clients up for a project, complete the project (always trying to overdeliver), and then send the client on their way. I made it a point to check in with past clients two or three times per year to see if they needed more help (i.e. wanted to sign-up for another project), but most clients worked with me for one project and that was it. This created a situation where I needed to constantly bring in new clients in order to generate income.
It was this constant turnover in clients that made me realize there had to be a better way. I looked around and saw what larger consulting firms were doing: bringing in new clients and then signing them up for monthly retainer contracts, focusing on keeping the customer happy, and always looking for new ways to deliver value. I realized this was the key to stability and growth in my business… signing-up longer-term clients and working with them for months (or years).
The change was profound. I was quickly able to sign some of my current clients up on retainers, and it made a huge difference in my business. Today, I focus on both retainers and project-based contracts. I try to maintain a stable base of retainer clients, while also working on some one-off projects. Often, my project-based clients turn into retainer-based clients, and the mix of revenue streams provides a great way to earn a stable income without needing to be as focused on client churn.
The Strategy: Going from Project to Retainer
If you're just getting started with retainers, I recommend starting your clients with project-based contracts, then moving them to retainers. Sure, you may be able to sign some clients directly on retainer, and as your build a track record, your success in signing-up clients directly to retainer will grow. But in my experience, the easiest path is to start your clients on project-based contracts.
Here's the strategy I use to successfully move clients from projects to retainers:
#1: Be Smart When Designing Projects
The first step is to be smart when designing your projects and writing your project contracts / agreements. This starts by making sure your projects have an appropriately limited scope. There's a temptation when pitching a project to throw everything in, because you imagine that will make the client happy. What ends up happening, though, is that the projects drag on and never seem to wrap-up. When they finally do, you're so removed from the “big wins” that your client had during the main part of the project that it may be more difficult to get them excited about an ongoing relationship. Design all of your projects with a limited scope.
Also, be sure you don't undercharge when working on client projects. If you charge less than you're worth (or than you would like to earn) when working on a project, you are anchoring yourself at that level for all future work with the same client – including retainers. If you charge a client $1,000 to develop their new marketing strategy, it will be nearly impossible to turn around and sign them up for a $4,000 per month retainer to consult with them on implementing that strategy. On the other hand, if you charge $5,000 or $10,000 for the initial strategy, signing them up for a $3,000 or $4,000 monthly retainer is much more doable.
#2: Overdeliver on the Project
If you want to turn project-based clients into retainer-based clients, you need to focus on overdelivering. You need to make sure that your clients are so happy with your work on their projects that they can't imagine life without you. You want them to worry that if they don't keep working with you, they won't keep getting the amazing results you achieved for them as part of their project. Make sure that you design your projects so that you can overdeliver, and then do it.
A key part of overdelivering is communicating with your clients. You can be doing amazing work, but if your client doesn't know (or understand) what you are doing, or feels like you are out of touch for long stretches, it won't seem like you are overdelivering, even if you are. Make sure that you are keeping your clients updated constantly, answering their questions, and returning their calls.
#3: Figure Out “the Next Step” and Turn it Into Ongoing Work
This step is the most important thing for successfully turning projects into ongoing retainers. You need to figure out what the “next step” is for your project, and turn that into ongoing work. This means figuring out all of the things your client will need to do on their own – after the project is completed – to keep the work of the project going and achieve maximum success going forward.
For example, if you're a fundraising consultant and your project is to write a fundraising plan for a non-profit, the logical next step is that the non-profit is going to need to implement that plan. Why not work with them on retainer to oversee that process? Likewise, if you're an SEO consultant who just finished up an SEO strategy and keyword research for a client, the next step might be content creation or backlink outreach… both things that would work well for a consulting retainer.
It's up to you to figure out how to turn the work you have already completed for the client into the launching point for a new, longer, and well-paid retainer relationship.
#4: Be Direct and Make the Ask
Once you've figured out the logical next step and designed a scope of work or outline of what type of deliverables you can offer your client as part of a retainer-based contract, it's time to make the ask. Your best bet is to be direct and highlight all of the benefits your client would receive by continuing to work with you. Let them know you're open to continuing working with them, and tell them the outcomes they can expect from your ongoing guidance and work product. Be sure to tell them why a retainer-based contract would be the best model for the ongoing work you would be doing on their behalf. Then make the ask.
It's that simple. Go into every project with the idea that you're going to turn the client into a retainer-based client once the project is completed. Before you know it, you'll have a stable base of retainer-based clients that will provide you with a steadily growing income as you build your consulting practice.
Photo Credit: Jason Goodman on Unsplash
