For a long time, I was a big believer in long-term contracts.
It’s what everyone tells you and like other pieces of advice from others, it was well-intentioned but not as straightforward as it first appeared. The standard advice was to get clients onto 12-month terms, even 24-month terms on larger contracts. Lock in the revenue. Give yourself some stability in a business model that doesn’t naturally have much of it.
I bought all of that. Long contracts were the default and anything shorter felt like a compromise we made when a client wouldn’t commit.
Of course, this was a shift that we needed to make because when we first started out, we didn’t push hard for long-term contracts at all. In fact, we did the opposite and given that we were new, we used a narrative that worked really well:
“We’re not like the bigger agencies, we won’t tie you into a long-term contract because we believe in the value of our work.”
Then the agency grew and what I was actually experiencing started to tell me something different.
The renewal cliff (and the Christmas that proved it)
The problem with fixed terms isn’t any single contract. It’s what happens when you have lots of them – which is inevitable as you grow.
As we took on more clients, renewal dates started to bunch up. Some quarters were quiet. Others had several contracts coming up at once and those quarters were intense in a way that had nothing to do with the actual work.
One Christmas stands out in particular. One of my team and I had a lot of renewal conversations packed into the week before the break. After the last one, we were both exhausted. We both got sick shortly after. I remember heading home after the final one and just feeling my body and mind breathe a huge sigh of relief.
I don’t put that down to bad luck. We’d crammed a lot of high-stakes conversations into one week, right before everyone was meant to switch off.
There’s a quieter cost to this as well and arguably, this is the more important one than your health and wellbeing! At least when you look at this from a commercial perspective.
A client on a rolling contract renews by default because nobody has to decide anything. Ask them to sign up for another year and you’ve turned that non-decision into a decision.
And decisions invite a review from the client. Sometimes that means someone senior on the client side takes a harder look at the results that you’re driving. Sometimes it means other agencies get asked to quote – “just to check” that they’re still getting a good deal.
The security you get from a longer contract can come with a much tougher conversation up front and then another tough conversation when the period is coming to an end.
Meanwhile, our rolling clients never created any of this pressure. No cliff and no week before Christmas stress and burnout.
What the data actually showed – both then and now
I expected rolling clients to be the flaky ones. That’s the whole premise of the long-contract advice: without a contract holding them in, clients will drift off the moment something shinier comes along. It’s that feeling you have that they are always looking for an opportunity to leave – so you can’t give them it.
That’s not what I found. Our older, legacy clients on rolling contracts were still happy and they didn’t look any more likely to leave than the clients on longer terms. Admittedly, due to them being legacy clients, the budgets weren’t always the most attractive. But still, they were in a good spot and generally very happy to continue without a contract locking them in.
Which made me question the whole default. If rolling clients were staying just as well, the contract clearly wasn’t what was keeping them.
The same is true now with the agencies who I currently advise. I’ve sometimes been asked whether they should be trying to lock clients into long-term contracts and unlike before, I hesitate a little and don’t simply say yes.
The honest caveat
Before anyone points it out, there’s an obvious objection and it’s a fair one – survivorship bias.
Those legacy clients were on rolling contracts partly because they’d already proved they were sticky. They’d been with us for years. Of course they weren’t leaving out of the blue. Comparing them with newer clients on 12-month terms isn’t a perfectly fair fight.
However, I don’t think that kills the point.
Longer contracts are useful when a client relationship is new or unpredictable, providing a notice period that acts as a buffer if they leave. However, once a client demonstrates long-term commitment, a lengthy contract offers little extra protection while still exposing you to the risks of a renewal deadline that may sit alongside other clients too.
So I’m not arguing against long contracts. I’m arguing against treating them as the default for every client.
Your options (beyond “just get a 12-month contract”)
There isn’t one right answer here and I’d be wary of anyone who tells you there is. These are the options worth having on the table. The right mix depends on your clients and on how much renewal pressure your team can realistically carry.
So, whilst I can’t tell you exactly what to do in every situation here. I can lay out some options that you can consider and take each case as it comes. Yes, do aim for consistency and have a position that is ideal for you – but try to avoid treating this as a default and the only way of working.
1) Fixed term
The 12-month contract still has its place, particularly for new clients or ones you think might be volatile. Just go in knowing the review it can invite and when that scrutiny may fall.
2) Fixed initial term, then rolling
Start with a longer commitment while the relationship is new, then move to rolling once the client has proved they’re staying. The contract matches the stage of the relationship rather than a default rule. This also ensures that you get the time you need to demonstrate your value – which can take time.
3) Rolling with a longer notice period
Monthly or quarterly rolling, but with enough notice to give you runway to fill the revenue gap if a client leaves. You keep most of the protection without creating a renewal event.
4) Staggered renewal dates
If you use fixed terms, don’t let them cluster around a single month. Spread renewals across the year so no single quarter (or the week before Christmas) carries all the risk.
I’ll admit that this can be hard, particularly as you grow, but it’s worth keeping in mind just in case it’s something that you can control.
5) Straight monthly or quarterly rolling
For established clients who’ve been with you for years, this may be all you need to continue with rather than trying to shift them onto a fixed-term contract. For new clients, you can make a judgement call on whether this may be good for them (and you).
Whichever way you lean, check your own data first. Look at retention by contract type across your client list. You might find the same thing I did. You might not. Either way, you’ll be deciding from evidence rather than from advice everyone repeats because, well, everyone else repeats it.
Choose it, don’t default to it
Most agency advice treats the 12-month contract as best practice, full stop. I don’t think it’s anywhere near that clear-cut.
A contract can’t hold a client who’s already decided to leave. It can only buy you time (okay, and revenue). That time is valuable, but it has a cost and for a lot of your longer-standing clients you might be paying it for no real benefit.
So pick the contract length deliberately, client by client.
And maybe keep an eye on the calendar in December. I wish I had.
