With a long-term contract, the agency is able to solidify the service offer, present relevant results and make the client’s operation based on its work
Fortunately, here at Resultados Digitais, we have signed long-term contracts throughout the year. That’s why we think it’s important to compile this content into a post so that you can return to it whenever you need to, using it as a guide to closing accounts in the best way possible.
But why is it important to close a long-term contract?
I’ve separated the answer to that question into two parts: client retention and agency profitability.
Impact of contract length on customer retention
For most customers, Inbound Marketing is a new service and for this reason, it is common for them to request shorter contracts. Perhaps because they still do not understand the new methodology, or do not see value in the new suggested practices, this ends up generating some uncertainty when closing new deals.
Therefore, to align the importance of a customer’s contract time, it is necessary to explain what Inbound is , the time of each planned action, the need to wait for scalable results and, mainly, that it is not a strategy with deliveries from overnight. The length of the contract also helps the client and the agency to get to know each other better and progressively mature their relationship.
Making an analogy with love life, a short-term contract for an Inbound Marketing project is like dating someone who is going away for a few months: it’s a contract that already comes with a stumbling block, a problem clause, which is time.
Inbound is like a marriage in which the relationship is built gradually, and designed to develop a lifetime of great happiness (and prosperous results!). The long-term contract, therefore, helps to maintain this healthy and well-structured relationship.
With a larger contract, the agency is able to solidify its service offer, present relevant results and make the client’s operation based on its work. With this, loyalty is created, strengthening the ties between their businesses. We have to remember that when a contract expires, we aim to renew it. When the contract period is short, the wear and tear on a renewal is greater.
Think of a 12-month contract where you do quarterly reviews with your client. When it comes time to renew your contract, you will have already gone through 4 review meetings and the renewal will sound natural, continuing what has been done.
You have to have customers who want to be with you, who are betting on the Inbound strategy together. After all, a contract represents a bilateral bet: from the client to the agency and from the agency to the client.
Many agencies are still reluctant to understand the importance of calculating the costs that a client generates and therefore do not mind making smaller contracts, as they have a good sales team that brings in new accounts all the time.
It’s like trying to fill a bucket with holes! All the effort made to make new sales ends up only covering losses along the way and does not represent the real growth of the business.
Even before a client enters, he has already generated a cost for the agency. For this cost to be paid, time is needed, in addition to profits along this new journey.
If you have questions about how to calculate your agency’s acquisition cost and minimum turnaround time, read this article or, if you are our partner, talk to your consultant.
At the time of negotiation, it is important for the agency to analyze whether the client is a good client for the agency and how its objectives are aligned. Clients who want short contracts often don’t have a complete understanding of what an Inbound job is or have had a bad experience with another company.
In these two cases, it is recommended to return this Lead to the marketing team so that a greater job of nutrition can be done. The customer needs to have a clear objective that Inbound Marketing is a forever solution and needs to alleviate the bad experience they had previously by being patient about delivering results.
And how to convince the customer?
You bet on the customer at the same time he bets on you. The agency must always organize itself to serve the client in the best way possible. So, if the client has a longer contract, it is natural that the agency will allocate more qualified professionals to the project, or even hire new professionals to better serve it, generating value for this long-term investment.
When you have more contract time, the agency has more time to go deep into the client’s business and, as a logical consequence, the results will be better. And this starts with a longer planning, a 12-month action plan, where all the actions will be done with confidence that everything will be put into practice and the results will be presented as the project is being executed.
Gaining market authority for your client takes time, and several actions are needed to be conquered on a perennial basis. As an example, imagine doing all the actions proposed for content development in a period of fewer than 12 months: text planning, agenda definition, author definition, recurring publication of blog posts… All these are strategies that take time to be well executed with consistent results.
And it’s not just in content that this applies! Now imagine an AdWords contract. Surely with a 3-month contract, you can present some results for your client, but to deliver the best results, such as optimizing your conversions, improving CPC (Cost per Click), among others, the agency needs to have time and your customer, patience.
The deliveries that the customer will receive and the quality of these deliveries are directly related to the length of the contract and your dedication to the stipulated plans. Therefore, ensure a good alignment of project, actions and results from the beginning of this service provision.
Think about gym plans:
Monthly amount without contract: BRL 189
Monthly amount with 12-month contract: BRL 129
At first glance, we think that the discount happens in the plan with a contract, when in fact the real value of the plan and that the gym wants to earn is R$ 129. This is done because in the gym, as in Inbound, the person who if you don’t commit for a long period, you won’t see results and will give up. It would be good if with 1 month of sport it was possible to get in shape for the summer after a sedentary year!
So what the academy does is add the risk factor to the monthly fee and this makes it increase the price of the amount without a contract. This risk, in the example, is indicated by the addition of R$60 as a “safety” factor for the company.
Long-term contracts must present more attractive values for the client, not because the agency is granting a discount, but because the risk for the agency is greater in short-term contracts. In other words, the short-term contract is more expensive because it presents a greater risk.
You can put bargains in the negotiation as protection from readjustments during the term of the contract and other benefits.
Just don’t forget what we said earlier: Reduction and contract orders are alerts to the sales team that the prospect may not be mature enough to buy an Inbound Marketing strategy.
With all this in place, we have to put ourselves in the customer’s shoes and understand that Inbound is a big bet for them, with no return guarantees and, therefore, in addition to all the arguments suggested, it is important to showcases, pointing out the success of other customers and thus generate reliability in your service.
At Resultados Digitais, for example, we have a page full of cases that help us show how our clients leveraged their business with their investment in Inbound Marketing. You can check out this page here.
I hope this post helps in the next negotiations! If you have any doubts, count on us for this