Use spray paint to mark the ground where the retaining wall will be built. Locate the lowest point along the painted line. This point marks the starting point. Decide how tall the retaining wall will be. When you begin to dig the trench, add 1 inch of depth to every foot of wall height. For example, if your wall will be 3 feet tall, dig down an extra 3 inches.
Start at the ground's lowest point and begin to dig the trench. Make the trench deep enough to accommodate 6 inches of gravel plus the number of inches you determined in step 1 and wide enough to fit the wall's blocks into. Place one end of a drainage pipe onto the first step. The drain pipe's end must exit slightly past the retaining wall. Uncoil the drain pipe up the slope.
Use a plate compactor to compact the first step's soil. Place a level on the first step. Add soil back to any low areas and run the plate compactor over the step again.
Pour gravel over the first step and spread it with a metal rake to form an even 6-inch layer. Run the plate compactor over the gravel and lay a level on it. Add gravel to any low areas and run the compactor over it again.
Dig out the second step. The second step's surface height must be equal to the first step's gravel. Run the plate compactor over the second step. Lay a level on the second step and make any necessary adjustments before you run the compactor over it again.
Set retaining wall blocks onto the first step's gravel. Pour gravel onto the second step until the gravel's surface is equal to the retaining wall block's surface. Compact the gravel and check its surface with a level.
Dig out the third step so that the step's surface is level with the second step's gravel surface. Compact and level the third step. Lay blocks on the second step and pour gravel onto the third step. Level the gravel's surface with the block's surface and compact it.
Begin to add more blocks beginning at the first step. Build your wall up to your desired height. Fill in the space behind the blocks with dirt after every two or three block layers. Remember, to even out the top row the first step will have more block layers than the other steps.