The anti-retainer (random idea of the day)

Retainer:

• Fixed cost per month;
• Agency reports on time spent on that account each month;
• Client continues to pay up until the relationship has run its course

Anti-retainer:

• Monthly budget limit agreed by client and agency;
• Agency reports on results and tangible progress achieved each month;
• Client pays whatever they feel the results and progress are worth, up to the budget limit;
• Either party can cancel if the deal becomes not worthwhile.

Could this work? Is there a better anti-retainer model?

Comments

[Gaetan Priour]

Hey Tom, interesting idea. Would you report the hours spent by the agency too or just the results? I think this would really work for the client as they have a fix budget per month and can only spend less than the limit, never more. So really the agency (you) would be taking all the risk. My guess is that it would work great with long trusted clients.

[Tom Nixon]

I reckon hours are for show and results are for dough, ultimately.

It shouldn't be too risky because it wouldn't be in a client's interests to underpay if you're doing a great job. But it would feel less risky to the client, which is cool.

Trying to figure out what sort of client of ours could be suited to this. If something comes up I'll give it a try and then blog the results.

[Phil Bloomfield]

Tom, you radical, you. I'd be interested in hearing what happens when you put this in to action. Personally, every fibre of my consultancy being screams 'danger' but I'm willing to be proven wrong! I'm old fashioned in my belief that retainers are an indication of trust from both parties and the basis of a solid relationship. With anything that requires an interpretation of results and what their value might be (such as you seem to be suggesting...or such as payment by results) I can see a monthly ding dong taking place with each side coming from differing viewpoints. A client may believe that a certain result has less value than you do - which would require extremely detailed negotiation at the beginning of the relationship and strict perameters put in place. Also, surely this would make sales forecasting almost impossible?
P.

[Tom Nixon]

Thanks for the comment Phil. I can't remember which company it was, but I heard of a management consultancy once who used to agree fees with clients for projects, then give them permission to pay as much of it as they liked. The clients love it because it guarantees value for money, and the CEO of the consultancy loved it because his people made sure that customers were delighted and understood the value of the work, and it gave him an instant customer satisfaction feedback mechanism. In almost all cases, the clients paid up in full. Why don't you trial it with a client? You never know, it could work out great, and then you could be the radical revolutionary!

[Helen Aspell]

I like this. Brilliant ideas and outputs don't necessarily takes ages. It's ROI that's key. The client's business and understand what the client wants to acheive becomes core. Trust is developed so the agency can work as an extension of the team without feeling the need to justify to the nth degree the hours spent on a retainer.