If you’ve been in the agency world for a while, you’ve heard this debated countless times.
How long should you require a client to commit to your services? What does your contract look like?
A lot of agencies require 6-month contracts. Some offer a discount if you’re willing to commit to a year. Others require 3-month contracts with a month-to-month option thereafter.
There are dozens of approaches, and there isn’t one right answer because every agency deals with different overhead, different services, and different industries.
All of these variables make it difficult to claim there’s a one-size-fits-all solution.
Nonetheless, in this post, I’d like to share an argument for month-to-month. Straight up.
No commitment beyond a thirty-day notice.
It's how we do things at Good Growth.
I know, I know, this is a scary idea for many agencies. What if your three largest clients leave in the same month?!
How can you prepare for that?!
I agree that it’s nerve-racking, but the pros are sweeter than the cons are sour (imo).
Here they are. My list of pros and cons for month-to-month contracts for digital marketing agencies.
Pros
1. Easier for prospective clients to commit
It’s crazy to expect a client to sign a year-long contract for thousands of dollars a month with a partner they barely know. Month-to-month contracts lower the barrier to entry, making it easier for clients to take the plunge and start working with you. This flexibility can be a significant selling point, especially when dealing with cautious or budget-conscious prospects.
2. Establishes trust
By offering month-to-month contracts, you’re showing potential clients that you’re confident in your services and are willing to earn their business repeatedly. This can establish a strong foundation of trust from the outset. We care about winning your business every month, and that commitment to continuous excellence can foster a positive and transparent relationship.
3. Gives us an equal playing field
Month-to-month contracts mean both parties have the freedom to walk away with minimal notice. This can be empowering for both the agency and the client. We can both end this anytime, ensuring that the relationship remains mutually beneficial. This equality can lead to a healthier, more dynamic working relationship where both parties feel valued and respected.
4. Clients don’t want to change partners every month
The common misconception is that clients are generally finicky and will leave quickly if you don't lock them in. Clients typically don’t want to change partners every month. They want stability and consistency. If you’re helping them succeed, they want to stick around. By delivering exceptional results and maintaining strong communication, you can build long-term relationships without the need for long-term contracts.
5. Encourages ongoing performance
With month-to-month contracts, there’s no room for complacency. Your team will be motivated to continually prove their worth and deliver high-quality results. This ongoing performance ensures that clients receive the best service possible and that your agency remains agile and responsive to their needs.
6. Reduced administrative burden
Managing long-term contracts can involve a lot of administrative work, from renewals to renegotiations. Month-to-month contracts can simplify this process, reducing the administrative burden on your team. This allows you to focus more on delivering excellent service and less on contract management.
Cons
1. Easy for a new marketing director to get hired and immediately fire the agency
All it takes is a promotion, a restructure, or a new hire for everything to change, at no fault of your own. A new marketing director might want to bring in their own preferred agency, leading to sudden and unexpected client churn. This can be particularly challenging if you’ve built a strong relationship with the previous team.
2. Tough to forecast revenue
Month-to-month contracts can make it challenging to forecast revenue and plan for the future. This uncertainty can affect everything from staffing decisions to investment in new tools and technologies. Building a buffer and diversifying your client base can help mitigate this risk, but it remains a significant concern.
3. Potential for short-term mindset
Month-to-month contracts might lead to a short-term mindset for both your agency and your clients. Clients might prioritize quick wins over long-term strategy, and your team might focus on immediate results rather than sustainable growth. This can hinder the development of comprehensive, long-term strategies that drive sustained success.
Conclusion
Month-to-month contracts offer a unique set of advantages and challenges for agencies. They can make it easier to attract new clients, establish trust, and maintain a flexible and responsive working relationship. However, they also come with risks, such as revenue unpredictability and increased pressure on staff.
Ultimately, the decision to offer month-to-month contracts should be based on your agency’s specific circumstances, goals, and capabilities.
Whatever route you choose, the key is to maintain a focus on delivering exceptional service and building strong, mutually beneficial relationships with your clients.
In the end, the quality of your work and the strength of your partnerships will be the most significant factors in your agency’s long-term success.
What do you think? Is it time to give month-to-month contracts a shot?
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