If you run a seven- or eight-figure agency, you already know: retainers aren’t optional. They’re the backbone of predictable cash flow, your best tool for staffing stability, and the easiest way to protect margins. In fact, I rarely see an agency over $10 million in revenue that doesn’t rely on retainer-driven recurring revenue for the majority of its business.
Yet too many agencies let retainers go stale. They lock into fixed scopes, leave pricing unchanged for years, or train their team to treat retainer clients as automatic. That’s where even good recurring revenue models break down—and where you risk turning today’s cash cow into tomorrow’s churn statistic.
In this article, we’ll cover why retainer-based recurring revenue is more important than ever—plus how to optimize your approach so it’s future-proof, profitable, and ready to scale. We’ll also tackle how to get your Account Management team aligned—so they protect and grow your retainer base instead of quietly letting it erode.
Let’s dive in.
Why retainer-based recurring revenue still wins
If you’re operating at scale, retainer revenue is table stakes. Here’s why it’s still the gold standard:
- Predictable cash flow: Recurring revenue makes financial forecasting far easier, giving you confidence to make long-term investments in people, systems, and your own leadership team. Especially if you’re planning a future exit, consistent revenue is what buyers look for.
- Staffing stability: Unlike project-based work, retainers help you build predictable resource loads. You know there’s work to do, and you know you’ll have the money to pay the team delivering it. This helps you hire more confidently.
- Reduced reselling fatigue: Projects require constantly re-closing the client. Retainers shift the conversation from “Are you going to hire us?” to “How do we keep growing your results together?” That’s a stronger, more strategic partnership.
- Higher lifetime client value: Retainer clients tend to stay longer, spend more, and deepen their engagement. That helps you smooth out demand spikes and build a more resilient agency.
- Better valuation: If you ever plan to sell your agency or partially exit, buyers place a premium on recurring revenue. A retainer-heavy book of business shows stability, predictability, and reduced risk.
Bottom line? Retainers help you build the business you want to lead—and eventually exit on your own terms.
Where retainer models go wrong
Even agencies with great retainer revenue can slip into bad habits. Here are some of the biggest pitfalls I see at agencies with 50-100+ team members:
- Set-and-forget scopes: It’s easy to lock in a retainer scope, get approvals, and treat it as permanent. But clients change, and your pricing power should evolve, too. If you haven’t refreshed a scope in 18 months, you’re probably leaving money on the table.
- No performance framework: If your team can’t clearly measure and demonstrate retainer outcomes, clients will eventually question the value. That opens the door to reductions or churn.
- Underpriced retainers: Agencies sometimes discount retainers to win a signature, then regret it. Underpricing doesn’t just hurt your margins; it pressures your delivery team and makes upselling nearly impossible. Here’s how to raise your prices.
- All-you-can-eat expectations: If your scope language is too vague, clients assume unlimited access. That’s a recipe for scope creep and team burnout. Retainers need guardrails.
- Weak change-order process: If there’s no formal method to adjust scope, you’re constantly stuck in one-off negotiations. That trains clients to expect exceptions, not boundaries.
- Neglect from the AM team: Even with a strong Account Manager roster, retainer clients can feel ignored if your team isn’t proactively delivering insights and next steps. A neglected retainer client is halfway out the door.
Think of retainers as a garden. Ignore it too long, and you’ll be shocked to find weeds—or worse, nothing growing at all. Don’t let your team take clients for granted.
How to optimize your retainers for a grown-up agency
Mid-sized and large independent agencies already run on recurring revenue—but it’s time to level up. Here’s how to build profitable retainers that work for your next growth stage:
1. Redesign scope language for flexibility
Instead of overly rigid deliverables, consider structuring retainers around outcomes or priorities. That gives you room to adapt as the client’s needs shift, without renegotiating every time they change their mind. Pair that with clear capacity limits (hours or team allocation) to avoid the “unlimited” trap.
2. Use tiered pricing to protect margins
Rather than a single retainer level, offer three or four service levels with clear scope differences. This gives you a built-in upsell path and prevents clients from shopping you on price alone. It also supports staffing, since you’ll know what level of resource commitment goes with each package. Here’s more on productized services.
3. Establish annual or semi-annual renegotiation windows
Bake in scope and pricing reviews to keep things fresh. That way, you’re not stuck with a three-year-old retainer that’s out of alignment with the client’s results—or your costs. A periodic review is also a natural opportunity to expand the retainer if your client is growing.
4. Build a capacity model for staffing
Use your retainer data to forecast resource loads month over month. If 80% of your revenue is locked into retainers, you can plan hiring and contractor usage with far more precision. That’s better for your team, your clients, and your margins. Here’s an example of an agency that grew MRR from 10% to 90% in a year.
5. Design “stretch” scopes for upsell potential
Some clients will need more mid-retainer. Plan for it. Have a pre-approved menu of strategic add-ons (e.g., a new research project, a CX workshop, a campaign strategy refresh) so the AM team can upsell without waiting on senior leadership approvals. This is one of the simplest ways to grow a retainer’s value without re-selling from scratch.
6. Formalize your change-order process
Don’t leave scope changes to back-channel emails or hallway conversations. Build a simple, documented change-order workflow so everyone knows what happens when a client asks for more. That protects your team and trains clients to respect boundaries. Send your team to my How to Stop Scope Creep training, to help them operate more independently.
How to get your Account Managers aligned
Even with a solid retainer strategy, your Account Management team can quietly undermine it—often without realizing. Here’s how to get them rowing in the same direction:
- Train them on outcomes, not deliverables: Many AMs grew up tracking tasks instead of results. If you don’t shift their mindset, they’ll have a hard time showing value—and defending the retainer when budgets get tight. This is especially important if your AMs are actually more like PMs.
- Incentivize retention and growth: If your AMs only get credit for holding revenue, they’ll miss upsell opportunities. Blend incentives to reward both retention and healthy expansion.
- Encourage proactive conversations: Quarterly business reviews (QBRs) should feel like a strategy summit, not a status report. Train AMs to bring new ideas, insights, and opportunities to every retainer check-in.
- Audit client communications: If you haven’t looked at AM emails lately, you might be surprised. Coach your team to lead conversations, rather than react to client demands.
- Model boundaries from leadership: If your senior team routinely gives away free work, your AMs will learn the same habit. Show them how to hold the line with confidence.
Retainers live or die with your AM team’s consistency. Even a great recurring revenue strategy can collapse if your frontline team doesn’t execute.
Don’t let a profitable retainer turn stale
If you’re running an eight-figure agency, you and your team can’t afford to sleepwalk through your retainer relationships. Sure, the recurring revenue feels stable today—but market shifts, budget cuts, and leadership changes on the client side can all put that revenue at risk. One of my top-performing clients tracks monthly churn to two decimal points.
Staying proactive means:
- Revisiting scope and pricing at least annually
- Training your AM team to lead, not just react
- Protecting your margins through clear boundaries
- Designing upsell opportunities in advance
The best retainer isn’t just profitable today—it’s designed to stay profitable tomorrow.
If you want support refreshing your recurring revenue model, let’s talk. Through the Agency Growth Diagnostic (AGD), we can help you stabilize, scale, and future-proof your retainer strategy, so you’re not leaving money (or opportunity) on the table. Ready to level up? Let’s make your recurring revenue as scalable—and as powerful—as you need it to be. Please get in touch.
Question: What can your leadership team do this month to strengthen your recurring revenue?
