FSM Quick Sales Tips: Why the Structure of a Retainer Matters

Barry Thomason, FSM Senior Account Executive
Barry Thomason, FSM Senior Account Executive

“It’s kind of like maybe diet and exercise. It’s like, I don’t want to make those kinds of commitments or sacrifices, but if you structure these kinds of retainers the right way, they’re better for everybody.”

When consulting firms offer retainers it’s often a “call me when you need me” relationship. Even though that might sound good, it ultimately won’t help the client be successful. Fast Slow Motion’s Barry Thomason explains why.

I hear a lot of discussions about the idea of a retainer for consulting services. Often retainers will be described in terms of being a bucket of hours. The idea being, the customer will sign up for some number of hours and then use those as needed. If something comes up and if you really think through that, that’s not a good way to look at an ongoing professional services relationship. There’s a couple of problems with it.

One of them is that it implies a “call me if you need me” mentality in which you have these hours available. It’s like saying, “Mr. Customer if you need some help, give us a call – we’ll answer the phone.” The other thing about it that can be really problematic is that a lot of times when people do these bucket of hours retainers, service providers will say “You’ve got 30 hours a month and what you don’t use you can roll over.” On the surface, that looks really nice from the end customer’s perspective, but it’s really bad for everybody. And the reason is this – if the relationship is “call me if you need me,” those hours are probably not going to get used every month, furthermore, they’re going to get used in a reactionary fashion.

In that situation, you’re more than likely going to roll over some hours every month. And then from the service provider’s point of view, some months down the road all those hours come due. The service provider may not have the staff handle that volume of hours all at once. If you multiply that across a portfolio of 10, 20, 50, 100 clients, the service provider is going to struggle to stay in business. You can’t staff a professional services firm based on ad hoc work like that. It ends up being bad for everybody.

The way we address these issues is that, in our monthly retainers, you use the hours in the month that you’re in. It does a couple of things. The first thing is it says, “You, as the client are making a commitment to make progress.” You’re saying we’re going to do a certain amount of work every month in Salesforce.

And on our side as the service provider, it says “Okay, we’re going to have resources for you at the right level based on what we’ve agreed to and we’ll own some of that progress.” We’ll schedule meetings, we’ll have things planned, and we’ll drive that work because we’ve committed to it. You’ve said we’re going to do 40 hours a month and we’ve said we’re going to do 40 hours a month and so together we’re going to make it happen. What you end up with in that environment is a commitment on both sides to making progress and to make that work.

You put structure around it – it’s not a “call me if you need me” type arrangement. It’s – okay, we’ve got a certain number of things we want to work on this next month. What’s the priority? And then, on a weekly basis, we’ve got assigned tasks we’re measuring – things we’re pushing through the cycle from inception to design to implementation to test and deployment. So the work is managed, and you as the client can see what’s going on. You see the progress and everything is in the light of day. That approach is a little harder to think about. It’s kind of like diet and exercise – it’s like, I don’t want to make those kinds of commitments or sacrifices, but if you structure these kinds of retainers the right way, they’re better for everybody. As opposed to going with that bucket of hours concept, which sounds really good and fair on paper, but in practice, it’s bad for both the client and the service provider.