Why Most Marketing Retainer Contracts Don’t Last Longer Than 3 Years?

There is no single correct answer that applies to all businesses out there.

  1. Some companies go bankrupt.
  2. Businesses adjust their budgets on a regular basis – so employing the same agency may no longer be applicable.
  3. Clients may hire an agency that isn’t suitable for their type of work (or the size of the business).
  4. Companies evolve on both ends – clients and agencies. A customer may grow and require a different type of expertise that the vendor doesn’t offer. Or the agency may morph into a vendor profiling into a specific field.
  5. Competition is fierce – and a competitor may pitch a client a seemingly better offer.
  6. Clients may look for specific services that the agency doesn’t specialize in, and end up working with several agencies at once.
  7. A business may move their marketing workforce in-house by building an internal marketing department.
  8. Businesses get acquired and assimilated by larger brands with effective marketing teams.
  9. The agency may underperform – or simply deliver a different type of solution than the client asked for in the first place.
  10. There may be a mismatch between expectations and reality – mismanaged on both ends.

Those are just a handful of reasons why businesses may decide to terminate a marketing retainer.

If you dig deeper into any business relationship, you will easily find other factors that come into play.

  • Employees come and go – and the same process may be implemented differently with other folks working on the agency’s side.
  • Some marketing managers may join a competitor and try to steal their former clients.
  • Product managers often job-hop – and a new decision maker may come up with a better offer for the business.

Sometimes, a crisp communication may help increase the retention rate of a vendor. But there are lots of side factors that may influence the decision of a business in terms of offloading their marketing work to their existing vendor.