Future-Proofing Your Agency: Strategies to Diversify Revenue Streams
Dreaming about the future of your agency blends excitement with introspection. You find yourself playing out "sliding doors" moments, wondering how different decisions could shake out, and how these decisions could impact your clients and employees. Although this visualization helps you think about how you might invest your time, the real challenge lies in bridging the gap between these dreams and reality. This transition from ideation to execution is where many of us stumble. It's one thing to envision the future; it's entirely another to mold our agencies into those dreams.
This scenario is all too common among agency owners. Transitioning from dreaming to doing requires a different skill set. However, I've observed that ideas linked directly to revenue generation are generally more embraced within your organizations. And this insight now shapes my approach in assisting agency leaders to actualize their future state.
Revenue Diversity
Instead of fantasizing about what could be, let’s explore how diversifying your revenue can transform your dreams into tangible outcomes.
My guiding question for thinking about revenue diversity is this:
"What are all the different ways you can solve your client's problems?"
Many of us bring the same tool to every situation. If we only have a hammer, every problem seems like a nail. In the same vein, many experiential agencies steer their clients towards brand activations, while creative agencies might emphasize the importance of the “big idea.” My guiding question is designed to encourage you to evaluate the problem first, then consider the most effective solution. Viewing your operations through the lens of revenue diversity, you may discover that while your clients require outsourced creative talent (traditionally billed on a retainer), they also seek insights to inform their decisions. One innovative solution could involve developing a proprietary research study and offering it as a subscription service. This is just one example. As you review the list of potential revenue sources, you'll begin to envision a broader future for your agency.
Revenue Sources
Below are potential revenue sources you can leverage to shape your agency’s future. I’ve included simple definitions to help you think about how you might integrate these into your business.
Hourly Billings: Charging for services based on actual hours worked. This approach is straightforward and easy to implement for projects with undefined scopes.
Retainers: Where a client pays upfront to secure your services as needed. This model guarantees steady income and provides clients with on-demand access to your services.
Fixed Bids: Charging a set amount for a specific project. You are paid upon completion, regardless of the actual hours worked.
Performance-Based Contracts: Compensation tied to achieving specific outcomes, like sales or leads. It aligns your incentives with the client's goals, potentially leading to higher rewards for successful campaigns.
Memberships: Charging a fee for joining a group. Agencies might form mastermind groups for clients to collaborate with peers.
Licensing: Allowing clients to use your proprietary assets, such as software, branded content, or intellectual property for a fee. This one is tough because many agencies don't have IP they can license to their clients.
Subscriptions: Offering clients recurring access to an asset, such as proprietary research.
Events: You could put together workshops, seminars, or conferences related to your area of expertise. Income can be generated through ticket sales or sponsorships.
Each of these sources offers a unique blend of value for your clients and revenue potential for your agency. By using each one of these as a jumping off point for your brainstorms, you are expanding the scope of problems you can solve for your clients, making your agency resilient and future-ready.
Don't Be a One-Trick Pony
Dreaming about what your agency looks like in the future is simply another way of saying -- how will we make money in the future. So as you reflect on your agency's current revenue sources, ask yourself:
Are we too dependent on a limited range of services or a small client base?
What untapped skills and talents could unlock new revenue streams?
This reflection should serve as a call to action. I want to challenge you to look beyond the familiar and comfortable. In an era where generative AI and other emerging technologies are rapidly evolving, vigilance in diversifying your agency's revenue streams is required to build an enduring business.