This might disappoint you, but agencies aren’t just about billing consultancy hours anymore — that revenue model is really feeling the pressure. So, we thought it was about time to show-off our innovation skills, while focusing on the next big steps of our very own innovation agency, by explaining 12 different models we’ve considered during our own reinvention. Don’t expect us to be a Unicorn in one year, though. Rome wasn’t built in a day, as they say, and Bundl is still growing!
One of the key drivers during this inspiring journey was definitely ‘scalability’. Yes, you heard that right — but don’t let your critical investor mindset deter you from continuing.
In our quest for scalability we identified three different levers that we’re going to take you through. The first lever is financial return. Instead of getting your invoices paid, you seek for other kinds of financial return that could potentially grow in the future. Secondly, you can scale through methodology by making it easily transferable and applicable to other people. Last but not least, you can seek for a deliverable that is relevant to multiple clients instead of one client who is paying the whole bill.
1. Tipping model
First things first, we have the Tipping Model, which takes its name from American restaurant culture. Both parties agree that work will start at a lower-than-average rate, but know that if a certain standard of service is reached (e.g. milestones, KPIs), extra payments are unlocked.
“Like a waiter at your favourite diner — the better the service, the happier the client, the higher the payout.”
It’s a results-driven cooperation model, and clients are happy to pay high consultancy fees because the project was ‘worth it’. Of course, the most important factor behind this model is to clearly define and agree upon what success is for both parties, and how that factors into payment.
So what’s in it for us? To begin with, higher going-rates might scare away clients if they can’t really see how reaching the end of a long-term ‘meal’ together will be good for them. This model has less of a focus on billable rates and it reduces the financial risk for the client, so we can instead focus on creating something great together. This also gives us the incentive on our side to keep pushing — when the project is successful, our return is higher.
We’ve experimented with this model ourselves, and we have one big tip to share: only step into this if you pre-define those measurable KPI’s. You really want to avoid silly discussions after your project. But don’t forget, more risk means more money when the results are there.
2. Sweat for Equity
Next up, we have Sweat for Equity, which is much cleaner than it sounds.
“Sweat for equity in a nutshell means delivering your services to start-ups, but instead of getting paid in cash at the end of your contract, you receive shares of the company.”
It works by valuing your forecasted ‘efforts’ at a specific amount before you begin. This is then compared to the value of the company, and results in a specific percentage of the shares.
For us, as a service provider, the potential share value could go well beyond standard billable rates. For the start-up, there is less risk involved than going full-force alone, especially knowing that we’ll push hard and really go the extra mile for them. Perhaps the most important benefit for both parties is the long-term relationship that is built as you become partners in the business.
This is a model we’re currently experimenting with together with Yondr, Belgium’s leading agency for virtual reality applications. Other agencies implementing this: Frog, Ustwo, IDEO and many more.
3. Best Shot
This model works exactly how it sounds — we create what we believe is the Best Shot for a specific sector or domain. As an agency, we accelerate one of our own ideas into a working business plan, using our gut feeling as a basis. From there, we look for clients that can link our best shot to their own business to work as our ‘investors’. They provide resources, either financial or physical, to get the idea off the ground. The ideal scenario sees a spin-off launched together, or intellectual property sold to the client.
Alright, here’s where the fun part begins — what’s in it for us? With this specific model, we’re not tethered to anyone’s criticism but our own. We get to work on ideas that we like and believe, we can turn subcontractor co-operations into partnerships, we can hire the right people and onboard the best fits from the client’s company, and we have the power over our IP. Perhaps a better name for this model is “We Do What We Want”, but that closes the door on collaboration when, in fact, there’s room for anything in this space.
So then, what is the value for the client in this model? The ability to accelerate on specific needs in their market at low- to no-risk and effort, a clear vision and concept from us, and a decision to say either “Go!” or “No.”
This is another model that we have a lot of experience with through Didid, one of our success stories built with one of the biggest banks in Belgium.
Moving on to a methodology-based model brings us to Productising, something that we’ve really worked to develop over the last few years. At Bundl, we offer a few distinct packages, like our Venture On Demand, where we’ve wrapped both our services and consultancy hours into one tangible product. When our client has innovation needs, they can compare each of our packages and base their decision on a few different variables.
“It’s kind of like car shopping, but no crusty salesmen needed to be able to drive away with something great that suits your needs.”
Answering the ‘what’s in it for us’ and ‘what’s in it for the client’ questions seems a bit redundant. Our clients have different options that they can see without an initial meeting, since the services are much more comprehensible and tangible. This, in turn, speeds up our sales process. But it also allows us to train our people to execute the services that we’re selling with precision. A win-win, in case you were wondering.
In this model you have different scalability levels. A good example of a more extreme way of implementing this model is Innovatecards™, a thought-provoking team game to get you in the innovation mood.
5. Yearcycle Subscription
Let’s move on to another ‘package deal’, though this time the product is dictated by time. The Yearcycle Subscription works by defining an innovation roadmap for the whole year instead of working with a company on a project base.
“Instead of project by project, innovation is approached in a continuous way. We strongly believe innovation is not a one night stand.”
We empower our clients to steal our innovation flow and, through intensive collaboration, we train them in how to execute it effectively. We envisioned this cooperation model using three different layers:
Value Proposition Pitch (jump from scratch to a validated Value Proposition Sprint, with our design sprint methodology); Alpha Launch (build, launch and validate your alpha prototype in 3 months); and Startup Launch (launch your beta product on the market, grow your resources and become a business).
Strategically, this model has a great advantage in that it lets us work together with a company on a longer or recurrent basis. On the opposite side, our client can instead see our service as a subscription for continuous innovation rather than a one-time deal. Our ultimate goal is to create a much more responsive client who becomes more flexible, start-up minded, and easily adaptable to the speed of change on the market.
We’re still developing this model on our side, but check out this TEDx speech for a more in-depth explanation on why we believe innovation is not a one night stand.
The Franchising model is very straightforward in its aim. Once there’s a clear blueprint of the agency, it’s feasible to copy/paste this IP to other regions and kickstart existing or newly launched agencies with our knowledge, branding and global marketing efforts.
“Probably one of the biggest and easiest examples comes from the golden arches of McDonalds.”
As with most franchise agreements, we would receive a royalty fee based on the yearly revenue of the other agencies. On the client’s side, whether they are an agency or department, they are able to quickly accelerate their operations with our IP so that there is no time wasted and their focus can stay directly on billable projects. The brand strategy, merchandise, innovation templates and flows fall on us instead.
7. Digital Platforms
Here’s a model that’s already pretty well-known within our sector — building a Digital Platform to support the innovation process. This mostly starts for internal use, serving as the ideal validation tool before launching to other people. Once finished, the platform can be scaled towards other agencies or innovation departments.
“The possibilities here are endless — the platform can be whatever tool that makes the process faster, easier, more convenient or qualitative.”
Some good examples: Jovoto (crowdsourcing ideas), Crowdtap (idea validation), MURAL (digital brainstorming tool), Startup Rocket (idea-to-funding framework), Duco (practical guide to running design sprints), and Venyous (the Airbnb for creative spaces).
8. Concept Waste Database
Our final focus is on deliverables for the client. Another model with a ‘dirty’ name is the Concept Waste Database, which is honestly more like recycling with an edgy title. What we see here is that at the end of a project only about 20% of concepts created are used by the client.
“The idea with this model is to actually do something with the ‘waste’ left when a project is over.”
What’s not in it for us here? At one end, we could turn these rough concepts into initial visual translations and fill up a pretty large database, selling access to these ideas to an exclusive set of clients. This way, the un-profitable idea that didn’t work for one business can help another turn their first million (you never know!).
In short, we get the opportunity to generate recurring business with limited effort, while offering a constant stream of concepts to our clients.
9. Innovation Alert Service
A similar idea to concept waste is the Innovation Alert Service. Let’s start with why this is important. A lot of big corporations have a hard time figuring out what’s happening in their sector. Understandable — there’s a lot of information out there, and it can be difficult to filter through, or even find, the right sources.
“The idea here is that this alert service would be responsible for bringing the specific outside-perspective that the corporation is missing in small, snack-sized formats that are easy for big, busy groups to digest.”
But how can we get anything out of this? Like most agencies, we’re not sector specific. We do, however, have clients within the same sectors. When offering a similar service for multiple clients, we can scale our efforts to do what we’re good at, while our client gets a curated stream of inspiration and alerts.
Currently, some of our clients use Springwise to tackle this problem, but we believe that there are some much-needed additions in order to fulfill client needs.
As you can probably tell, we’re into being efficient at Bundl. We want to make sure that our choices make the most sense for everyone involved. That’s the motivation behind the Multi-Company Hackathons — by working with multiple companies at once, we’re able to be as efficient as possible in our own work, while creating and developing synergies between multiple companies. Let’s go a bit deeper into this one.
“We noticed that once you start an innovation track for one specific company, approximately 70% of the insights, ideas and/or concepts could also be relevant for other businesses.”
By defining who the companies are that could also benefit from this track, we quickly concluded that they have to be in the same sector. But to make this format feasible, it’s important to put complementary partners around the table, otherwise there won’t be enough transparency and trust within the group. If, for example, we focused on the ‘outdoor’ sector, complementary partners could be Marlux, Gardena and Etnicraft, among many others.
The benefits for everyone are great in this model. The same innovation efforts that we expend are relevant for multiple companies at the same time, and we’re also able to invoice more on the same track. A direct benefit for the client(s) sees shared profits (50/50) with participants on these tracks. In this way, they pay less for the same innovation track and we create relationships (synergies) among the different partners.
11. Innovation Reports
This next model is a bit of an amalgam of some previous types. With Innovation Reports, instead of starting on an innovation track for a client, we would first begin from a sector, creating a full report or guide on trends, ideas and new concepts relevant to the sector. This report is built in multiple formats, such as PDF and presentation, so that content can be easily shared within a company — all easily downloadable for a fixed fee.
“Though it steps back from innovating and working directly with a client, it’s easier for us to communicate our expertise to a lot companies within one sector.”
Though the price per transaction is lower, this model has the potential to yield a much higher volume of clients — meaning higher revenue and profits for us.
We’re pretty impressed with how PSFK works with these reports.
12. Best Kept Secret
Unfortunately your information flow ends here. We’re keeping our last model secret for now — but we’re working hard to launch early next year.
Until then, let us know your thoughts on how the agency is changing or any examples that we may not know of yet.
Want to learn more about revenue models and how to choose the right one for your business?