Why SaaS Is Best for Freelancers to Model

349. Why SaaS is best for freelancers to model

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Brian: [00:00:00] Just about every single problem in your business right now that you are currently experiencing has been solved by someone somewhere else already. For example, you don't know how to generate new leads for your business. Someone has solved that somewhere in the world. It is a fucking solved problem. It's not like you have to invent lead generation or some brand new method. It is a solve problem that you can just put into your business and it will likely work with maybe a few modifications.

Brian: the issue is when you treat your problems as if you're the first person on earth to have to solve them and I see this again and again and again and again in freelancers is every single thing is this brand new thing that's never been solved before.

Brian: So you have to figure it out yourself. So you end up stumbling through the dark. For weeks or months or years, trying to solve the problem and failing, trying something new and failing, dabbling with this, dabbling with that,

Brian: never actually solve anything. So those problems that you have right now, the instability for month to month, the annoying clients you're trying to deal with and not sure what to say in those specific scenarios where they're mad because of one thing, or they expected something that they didn't get, Or you're tired of proposals that are taking too long to make or [00:01:00] you've got an empty project calendar

Brian: or stressing out because you have zero clarity on how much money you're going to make next month because this month was bad and you can't afford two bad months in a row.

Brian: Dealing with scope creep, dealing with late payments, second guessing your pricing because you have no idea how to price projects, especially for you project or quote based freelancers out there. The list goes on and on.

Brian: These are all problems that you have likely dealt with in your past. If not, you're dealing with them right this second. And if you're not, you will likely deal with these in the future. These are all solved problems.

Brian: And just for sake of example, I want to go outside of the freelance world and just pose a question to you. Just to drive this point home. just plop you in the middle of Maine somewhere. In a car. You have a car, you have headlights, you have gas. You don't know where in Maine you are.

Brian: You're probably not from Maine. And you have to drive all the way to LAX. That's the airport in Los Angeles. You have no GPS, no map.

Brian: How long does it take you to get there? Could you even get there? I don't know if I could possibly get from the middle of nowhere, Maine, all the way to LAX. I definitely could not give you a reasonable estimated time of arrival.

Brian: I don't know how I would get there. I wouldn't know what roads to take. I know that eventually if I drive West long enough, I'll hit the coast. And [00:02:00] from there, I'll figure it out. Maybe

Brian: if I've hit Canada, I've gone too far North. If I've hit Mexico, I've gone too far South. One day I'll get there. It could take weeks. Months? I don't know.

Brian: That's the approach many freelancers take with the problems in their business. They stumble through the dark trying to figure it out, hitting the other extremes. They've hit the Canada, they've hit the Mexico. They spent 86 hours driving north, 86 hours driving south. I don't know how long it takes to get from north to south, but they just waste a ton of time trying to do this.

Brian: Now, if I give you a GPS for the same exact thing, I can tell you it's a 3, 500 mile drive. It'll take me about 47 hours. It's almost two days. And with this information and knowing what route I'm taking, I can plot out where I need to stop for food, where I need to stop for hotels to rest, to sleep,

Brian: and what that will actually turn into as far as drive time plus sleep time, because I'm not going to drive for 48 hours straight. So I can give you a much more accurate estimate. If I have a GPS, that GPS represents the soft problem, the best route, the most efficient route, Google has already had all the data.

Brian: They have all the numbers. They know the best route from. Middle of nowhere, Maine to LAX.

Brian: Why would I need to go off and invent some horribly inefficient [00:03:00] solution because I refuse to use a GPS? That's how you're treating your business right now. So I want to talk through what I think is the best industry to model as freelancers when it comes to finding these solved problems.

Brian: Because yes, you can go to other freelancers and in many cases they have solved certain problems in a really efficient, good manner. But when it comes to just modeling an entire industry, freelancers in my opinion, should be following the SAS industry. That's software as a service. Yes.

Brian: This podcast is great. I'm biased. We have a lot of good information on here. Free to learn things. Yes. I do pull it from the SAS industry a lot. yes. There are other podcasts. Yes. There are other YouTube channels that help creatives like us,

Brian: but SAS has some of the smartest minds in the world looking to solve problems with that industry and their business model is very close to freelancers. Look at it this way. The SAS industry stands for software as a service. And so they're selling software as a service, ongoing service, whereas in our world, we're offering creativity as a service.

Brian: And so I want to talk through a bunch of different things in this episode that I think we can pull away from the SAS industry

Brian: because the SAS industry gets tens of billions of dollars of funding every year to draw some of the [00:04:00] smartest minds. So the most capable people, they have more data than any of us. It's the reason Google maps can so accurately predict how long the drive is from.

Brian: This middle of nowhere pin that I dropped in Northeast Maine, all the way to LAX.

Brian: And I think you're going to have a lot of good takeaways from this because again, they have solved the problems that we as freelancers are experiencing right now and they've solved it in the best, most efficient possible way. And you can just look to them as a guiding GPS to say, this is the best way to solve this problem in my business.

Brian: I don't have to reinvent it. If you're new here. Hello, I'm Brian Hood. This is a six figure creative podcast. This podcast is for creatives who want to earn more money without selling your soul. my goal here is to bring lots and lots of outside influences from other industries

Brian: and even lots and lots of different influences from within the creative industries. So we can all learn from each other and find best practices for those solved problems. So we don't have to reinvent the wheel every time. If that sounds interesting to you, you're in the right spot.

Brian: I've got about seven different topics. I want to cover here, seven different kinds of categories or areas or reasons why SAS is the best industry to model here. And I'm going to talk through what SAS industry is doing [00:05:00] in these kinds of seven different categories or areas how it applies to you.

Brian: And then also how I'm adopting it in my business. So at this point, my main business is six figure creative. I freelanced for over a decade. And at the point now Probably about a year and a half ago, I got to where if I wanted to serve the people that I want to serve in this business, I have to hire full time team.

Brian: We are up to five people. We're bringing on two more full time people this week, most likely, in the last stages of hiring round right now. And likely another one in the next month or two. So this has got to be my full time focus at this point.

Brian: But as I've grown and built this business, I've had to implement things from different industries that I know and love. And SAS has been a huge influence on how I built this business myself. And so last week, if you listened to that episode, I talked about how. Maybe I'll do an episode about how SAS is the best industry to model, which is what I'm doing here.

Brian: And then I also mentioned, maybe I'll talk about why six figure creative is such a good, stable, healthy business. And I'm actually kind of marrying these two episodes together. So if you listened to the last week, this is a good episode for you to kind of follow up on. So first kind of area I want to look to and SAS is so stable and this is most obvious if you just look at the SAS industry and know the SAS industry, it's [00:06:00] recurring revenue. I've beat this horse to death on the podcast. We have multiple episodes on recurring revenue, subscription, pricing, all those sorts of things.

Brian: and real quick, I'll give you three episodes in our backlog. If this is something you're like, I'm interested in recurring revenue or getting ongoing recurring income in my business as a freelancer, episode 276 shifting your clients from one time projects to monthly recurring subscriptions.

Brian: That was with a photographer on my Tonkin. She did that in her business. Awesome model for photographers to do. any other industry could find some way to implement that. There's also episode 306 and 307 kind of a two part series where I talked about offering recurring subscriptions as a freelancer, I called it the Holy grail of freelancing.

Brian: And then 307 was seven pricing strategies for recurring subscription, freelance clients. So that's why I said I've beat that topic to death. I feel like there's still more to say probably, but let's talk over a few things. Then I'm going to pull from this for this episode that I think are really helpful and enlightening.

Brian: And then also talk about how we're utilizing this ourselves. So with recurring revenue comes stability and predictability in income. And for any freelancer who's gone through that kind of feast your famine up or down life cycle cycle you've been on that roller coaster and especially if you're on a down right now and you've in that famine period, you understand the appeal of clients paying you every [00:07:00] month there's a book called automatic customer.

Brian: You don't have to go read it. But the theme of that book is when you have a customer paying you every single month, they're automatically your customer every single month. So you don't have to go find a new customer. If you have 10 clients paying you 1, 000 a month, you make 10, 000 a month forever until one of them cancels.

Brian: And so if you never want to increase your income, you can just coast with 10 clients on a recurring retainer for the rest of your life until one of them cancels, then you have to go find a new client. That is predictable. That is stable. It is amazing.

Brian: But if you look at the software industry, that's not how it used to be. I remember when I first started my freelance career, started in music production that's where I, my freelance career was for a decade I had to buy Pro Tools it was Pro Tools 7. 4 was the version they were on.

Brian: It was like a one time sale. And I'd spend five or 600. I can't remember how much it was to get Pro Tools 7. 4. And then Pro Tools 8 came out and I spent another four or five, 600 on it. And then Pro Tools 9 came out, bought that, you know, it's like every new iteration bought it. And number 10 came out and I stopped buying it.

Brian: And then I think Pro Tools 11 came out and I can't remember if I upgraded that or not, that was the model. They would release new versions [00:08:00] and then you would either buy it or you didn't. And the thought process was our world, in the recording world, if you have a stable version of Pro Tools.

Brian: Leave it alone. Don't update your computer. Don't update pro tools because the second you upgrade and you're like doing project to project, the project, something will break somehow and it'll ruin the project you're on. horrible method, horrible model, but that's how many industries were, I believe it was how Photoshop was.

Brian: I believe it was, how. Adobe illustrator was, I believe it was how pretty much every app that's been around for more than 15 years, how they used to sell was just one off sales. And so they had the same problem that freelancers have. They have these up or down roller coasters where one version wouldn't do well as the last one.

Brian: And so you have these big swings in income as a company, and it's really hard as you grow larger and larger to have this up and downs because then you have to fire and lay off people and hiring people. I'm going through hiring rounds right now. It is hard to hire good people. And when you find good people to hire and train up, the last thing you wanna have to do is let them go because you don't have the revenue to pay them.

Brian: So a lot of smart companies started doing monthly recurring subscriptions on the software, [00:09:00] which created stability in these businesses and it shifted the entire industry that way. Now, Pro Tools does not have a one off purchase as far as I know. They have a monthly subscription. because it's a better business model for the software.

Brian: And honestly, frankly, it's actually better for industry overall.

Brian: And the reason is you get continuous ongoing updates on the product. As long as you're a customer, it forces them to make the product better over time, because if a better solution comes along, people are going to cancel and go to that instead. So they have to continuously update and make the product better.

Brian: And they learn faster because of tighter feedback loops.

Brian: How does this tie into freelancing? There's a lot of parallels here other than the stability that you get by offering recurring subscriptions or retainers as a freelancer. And that bedrock of monthly recurring revenue that you know is there, the automatic customer. In other words, our automatic client in our world.

Brian: It also forces you to create a better service because if someone is unhappy, they're going to cancel. If someone's not getting value from your service, they're going to cancel. If someone finds a better value for a cheaper price, they're going to cancel. So it forces you to adapt continuously. [00:10:00] And because you're working with the same clients every month, and because If you're smart, we'll talk about metrics later.

Brian: You know, Your metrics, you can start to spot when cancellation's gone too high. You're getting too many clients drop off and because it's recurring subscription, you generally have better communication cadence with your clients can get better feedback from your clients. So when they leave, you have a much better idea why they left you versus what can happen in one time projects as freelancers is your client comes to you one time, maybe it's a branding project or my world.

Brian: They come to me for an album, a 10 song album. I'm not going to see him again for a year, year and a half, two years. In that time, I've lost touch with them. So if they go to someone else, I'm not going to reach out and have a good conversation like, Hey, why did you go with that producer instead of me?

Brian: Whereas if I was working in for two years, every month on something, and then they decided to go to someone else, I could have a really good conversation with them to learn why they went to the other person, which again, helps me improve my or my product so that people stick around for longer.

Brian: So in my own business, we do this. Our coaching is month to month. It's a monthly recurring subscription until you decide to leave. And because of that, we have to make a really good service that's really valuable, that makes people [00:11:00] want to stick around for a long time, that's getting more value than they're giving us.

Brian: And when you're paying someone hundreds per month for a service like that, how long are you going to stick around if you're not getting value from it? And we've gotten very good at getting people to stick around and very good at providing value.

Brian: On top of that, our monthly recurring revenue is above six figures a month right now.

Brian: and that number only goes up every month, every single month, our monthly recurring revenue goes up. It grows and grows and grows. So when I'm hiring two more people right now, I don't have to stress about whether I can pay them next month or three to six months from now,

Brian: the amount of clients that leave us every month is very small especially for somebody in our industry, for a coaching company like ours. And so we have this stability, this month to month bedrock that I can depend on every single month that if no other income came in, every bill is paid for, every employee is paid for, my bills are paid for, and we don't have anything to stress about.

Brian: So the sooner you can move to your monthly recurring subscription or retainer as a freelancer, the sooner you're going to reach stability and get rid of those feast or famine cycles.

Brian: And that kind of leads me to this second area of why the SAS industry is so damn [00:12:00] good to model for freelancers is they have a very high lifetime value. The big thing that, SAS companies or software as a service companies focus on is. LTV and to track LTV lifetime value, they track one holy grail metric, and that is churn.

Brian: How many of their customers stick around from month to month to month. Some industries like B2B might go their annual retention, but most softwares and service companies will look monthly churn or monthly retention. And the easiest way to give you that is if a piece of software has 100 customers in January.

Brian: And they have 97 customers in February. That means they lost three customers in January and they had a 3 percent churn rate. Three people left out of a hundred 3 percent monthly churn.

Brian: Is that high? Is that low? It depends. and like enterprise software sales, they actually have what they call net negative churn, meaning that every month they add more seats or more bodies or their revenue goes up for every month. And that is like a whole other universe, whole other world freelancers. You'll never have that. It's okay. None of my businesses have that.

Brian: That's okay.

Brian: But a general thing to look at if [00:13:00] you're a freelancer, if anything, you're under 5 percent monthly. As far as churn, if you can retain 95 percent of your clients every month, you've got a very healthy business.

Brian: and this is how this affects LTV. If you have a client paying you 1, 000 a month retainer, which is low in some industries, it's high in others. That's just a good round number to go with here. If they're paying you 1, 000 a month retainer and you have a 5 percent monthly churn rate, your average client is worth 20, 000.

Brian: You get that by dividing 5 percent into 1000. If you had 10 percent churn, your average client's only worth 10, 000. That's half. If you had 3 percent churn, you have a 33, 000 lifetime value of a client. That's why the Holy Grail metric is monthly churn. How low can you get your monthly churn number for any recurring revenue business?

Brian: That is the thing to focus on.

Brian: And in my own business, that has been a huge focus for us as well. cannot have a coaching company with a monthly recurring ongoing subscription that has no contracts, by the way. And survive with a high monthly churn rate. So over 2024 our monthly churn was [00:14:00] 3. 67%. That means we retained and I've got our metrics.

Brian: So we're going to talk even more metrics later on, but we retained something like 96. 3, something like that. of our clients every single month. That means we have a very high LTV with our clients and it allows me to spend more money on acquisition. There's a saying in advertising. It's he who can spend the most to acquire customer wins and.

Brian: if your client's only worth a thousand dollars, how much can you afford to get a client? Maybe a hundred bucks, maybe $200 max. You don't really want to go over 20% of your client value on paid acquisition, so you can spend $200 to acquire a client. We currently spend like 13, $1,400 to acquire a client, so if your client's only worth a thousand dollars, we'll beat you every time in the, the metal auction, because we can pay way more than you to acquire a client. Now there are companies that have way higher LTV than us, and so they can beat us in their auction, but then there are companies like Netflix who have actually a pretty high monthly churn and their lifetime value of a customer is only 291 bucks.

Brian: Compared to Starbucks. Starbucks is not a software as a service, but it is a reoccurring purchase. Meaning you go to Starbucks multiple times throughout your life. [00:15:00] Their lifetime value is like just over 14, 000. So this metric matters a lot.

Brian: And when you pair focusing on LTV and churn with a recurring subscription as a freelancer, that is how you build a really good, stable foundation. And some of our most successful clients that we have in our coaching program are people with recurring in our coaching program are people with recurring subscriptions or recurring retainers with our clients.

Brian: let's move on to number three here.

Brian: SAS companies are basically a product tie service delivered via software. There's a reason they can give a recurring subscription to a piece of software it's a solution in a box. So if you think about this, you pay a monthly recurring subscription for something.

Brian: In goes your money outcomes, some sort of output that is giving you. That is a product tie service. So my subscription for Canva in goes my 12 outcomes. The designs that I need for whatever stuff we use it for in the company,

Brian: we probably pay like 60 or 70 a month for. This app that I'm using right now called Riverside. So in go 70 outcomes, this video podcast,

Brian: my company uses Slack for communication and collaboration as a team. So in go [00:16:00] 75 or something dollars a month that we pay for that outcomes. Clarity, collaboration, et cetera. It's a well defined solution to a problem that somebody has that they're willing to pay money for.

Brian: Here's what it's not, though. It is not a custom built software for every single customer. Can you imagine if Slack built custom software instead of just having millions of customers?

Brian: They standardized their product for efficiency so they can resell it over and over and over again. They're not reinventing the wheel. They're not customizing in most cases. In most softwares, they're not customizing it for their customers. They're building a More or less one size fits all solution and it works.

Brian: And this is the thing that kills freelancers to think about that. There might be a one size fits all solution for their clients.

Brian: I hate to say it, but in many cases it does. You find the right client, you find the right problem to solve. You put together a very good product tie solution to solving that problem. And you have something that can be productized and anything that can be productized.

Brian: If done correctly, it can also be turned into a recurring subscription or recurring retainer.

Brian: Especially if you can figure out a way continue to deliver [00:17:00] ongoing value after you've solved the main problem that came to you for.

Brian: And the initial thing or the recurring thing does not necessarily have to be a done for you service. A lot of savvy freelancers, they have digital products. Some of them even launch software of their own or create some sort of automations with their own. Chatbots are kind of an example. People are making chatbots or AI agents for companies.

Brian: That's something you'll see a lot web design space, interestingly enough,

Brian: Basecamp, they started as a, web design agency. If you're not familiar with Basecamp actually they used to be called 37 signals back then they were just doing web design as a service.

Brian: And over time, they gradually shifted into a software as a service. And now Basecamp reached over a quarter of a billion dollars in revenue last year. They're up to 280 million in revenue. And I think they have like 50 employees, something like that. They might have a little bit more now, but they have a very efficient company. And they started again as a web design agency.

Brian: Many of you might be listening right now who are web designers.

Brian: So let me quickly talk about how we do the same thing here at Six Figure Creative. So people come to us for. Issues around client acquisition. They want us to help them build what we call [00:18:00] your client acquisition machine. And when you visualize a client acquisition machine or any machine, there's inputs of like gasoline and there's outputs of like power, horsepower or probably a better thing would be like the output of the problem you're solving.

Brian: I need to get to the grocery store. So I put gas in my car, my car gets me to the grocery store so I can get food so I can eat. Right. So how do we help solve that problem, but also keep people around for a very long time? Our average clients with us over a year, we have clients with this two plus years. Maybe even a client or two that's reached the three year mark with us. We haven't been doing this that long. So three years ago, I did not have many clients with this program.

Brian: We do it through something called loops and modules. And this is something I've, helped map out a lot of Our clients with, because this sort of thought process works really well in service based businesses.

Brian: So the first thing we look at is what's the on ramp for the client. In our world, there's an on ramp, right? And that on ramp is the client acquisition roadmap that we create for them. And while that roadmap is 100 percent customized to the client, we're not reinventing the wheel with every single client that we come on.

Brian: This is not like some sort of bespoke, crazy custom thing. We look at your business [00:19:00] holistically. And we say, what are you missing in order to get the outcome that you're trying to go for as a, freelancer? What elements are you missing that should be in a healthy freelance business? And then we plug those gaps with a plan.

Brian: And it's a very modular approach.

Brian: If you think about it like a picture missing pieces or a puzzle missing pieces, we're basically filling in the puzzle pieces that you need to be filled in your business. with appropriate metrics and benchmarks and things that you're shooting for for your specific industry. So we've productized the creation of these roadmaps

Brian: and completing these roadmaps is essentially our on ramp with our clients. We have to build a machine to get it running before anything else matters. That is the on ramp.

Brian: And in freelancing you have a similar thing where someone comes to you for some sort of project and it can look like, how can I possibly create this? Productized thing when they have all these potential needs. That's where you create these modules of things that need to be done for any potential client.

Brian: You can basically mix and match the modules to create a package or a fee associated with it. Or sometimes a one time project fee up front to do that work. And then an ongoing subscription on the back end for what we call the loop.

Brian: [00:20:00] Once our client has gone through what we call the on ramp, they've built the machine, then we go into the loop. And the loop essentially, is how do we make it as efficient as possible?

Brian: It is the answer of how we can continue to deliver ongoing value to our clients After we've solved the core problem that they came to us for

Brian: when you learn to generate a thousand leads There's going to be other issues in your business when you learn how to generate 40 calls in a month Like one of our clients americ that we recently interviewed you're going to have other issues to deal with, right? How do you sort through all these calls?

Brian: Do we take every call? What do you say in the calls? Are your close rates high enough? When you close too many clients and you're stuck on fulfillment, hell, how do you get through this part? How do you actually turn it into a recurring subscription on the backend? These are all questions that come up once you've gotten through the weeds of the on ramp and the secret to businesses is an infinite game, there is never an end point.

Brian: So clients don't cancel on us. Actually, I'll tell you the two reasons people will cancel on us. One is. They don't do any work whatsoever and nothing we do can make them do the work. And so they cancel because they're not getting value. That happens. And the other side is people get all the value that they feel like they can get from [00:21:00] us. we call that a graduation. They got what they came here for. We've continued to build them up as best we can. And then they feel like they can graduate out, but your business has some variation of this that works for you.

Brian: And instead of saying, I can't do this because of X, Y, Z, just shift your mindset to how can I, if you just approach it from that perspective of this sounds really cool. I like the on ramp plus the ongoing loop as an idea. What can I do to model that out? Get a whiteboard out, get Miro out, get whimsical out, get anything that you can write things, just a pen and paper out and model what that looks like out.

Brian: And this is kind of how you can turn this into something that's ongoing value and the other side of this not necessary from software, although they do this in the software industry is having an upfront fee and an ongoing subscription. We do the same thing. We have an upfront fee.

Brian: It's, we call your onboarding fee and we have an ongoing monthly subscription. When we work with freelancers, a lot of the times we figure out that there's an onboarding fee and there's a monthly subscription model to do in your business as well. And the reason that can work so well is because you have the cash influx of that upfront fee.

Brian: Plus you have the stability of the [00:22:00] longterm subscription. It's literally the best of both worlds.

Brian: Next thing I want to talk about is scaling through automation. The SAS industry has done a fantastic job of doing this. When you think about. Any like major software companies, you think about ClickUp, it's like one of the biggest project management softwares, HubSpot, one of the biggest like marketing automation or marketing platforms out there Shopify, one of the biggest e commerce SaaS company that there is they have all mastered automation.

Brian: There's no way you serve that many customers without perfecting automation in many, many levels. From customer onboarding to billing, customer communication, all these areas

Brian: freelancers can take a similar approach. This cannot be done though. A lot of these automations cannot be done if you don't take a productized approach to your business. again, imagine if any of these people were building custom software for people versus. Here's a software in a box. Use what you want of it. the customized approach does not work with automation because there's too many variables that change. So when you're trying to automate the customer onboarding, or in your case, your client onboarding, when trying to automate those steps, when the steps change for [00:23:00] every client, there's no way to automate it.

Brian: So productization comes first, productizing your service, making a very standard delivery that allows for more automation around the onboarding process.

Brian: So here's some areas that freelancers can automate that mirrors a lot of what the SAS industry is doing. You can automate all elements of your lead generation, your email follow ups.

Brian: So when someone books a call with you, reminding them when the call is happening, that can be all automated. Just like in the SAS industry, when someone signs up for a free trial, they're warming up the leads during the trial and they're notifying them when the trial ends. in order to try to collect payment.

Brian: Think about free trial period for software as a service as similar to the sales call going to have or consultation call as a freelancer. All the appointment scheduling should be automated through like a calendar or calendly type tool.

Brian: And I think even automating all your onboarding process, if you can, you can use tools like Zappy or go high level, like any sort of tool out there that helps with this can be amazing. Everything I just talked about, we fully automated when someone books a call with us, the pre call reminders, all those sorts of things.

Brian: And then even a huge part of our onboarding process. The only part [00:24:00] of our onboarding process that isn't automated is our one on one kickoff calls with the clients. Cause that has to be. face to face and the actual roadmap creation process. Every single step other than that is fully automated. There is some human touch if need be, but what we do is when someone joins, we automate sending out the client agreement, the onboarding questionnaire, the kickoff calendar, all that stuff gets automated and sequenced out one after another.

Brian: So there's no overwhelm. And then if a client stalls out somewhere, it'll send automatic reminders. And after three reminders, it'll be kicked out to my team. To manually follow up and see what's going on because sometimes people are confused and people might be stuck. Some people are just on vacation throughout a town, whatever, but at a certain point, it gets kicked off to a real human to take over manually, but this allows us to automate almost every one of our clients without having to.

Brian: Manually do some things that many freelancers are doing when you're manually sending out contracts and creating contracts. You're manually sending out questionnaires to clients. You're manually following up when they don't do it. You're manually trying to get the calendar, but all that stuff, huge waste of [00:25:00] time can't all be automated.

Brian: And I think the SAS industry again has done a phenomenal job of all of these things. Next area that I want to talk about is the SAS industries focus on differentiation. If you look at how hyper competitive the SAS industry is. In many spaces, it's insane. Like, Look at CRMs. CRMs, there's big players like Pipedrive, Close and then there's smaller players like Dubsado, HoneyBook.

Brian: And there's also Salesforce, obviously. HubSpot can kind of be counted as a CRM, but they're way more than that now. But it's very competitive. Marketing platforms, HubSpot, I consider more of like an all in one marketing platform at this point. GoHighLevel, ClickFunnels. They're all hyper competitive out there.

Brian: There's also communication platforms. If you've heard of Slack, discord twist is one that we use as well, but this is a really crazy competitive industry in every vertical, no different than freelancers, if anything, it's more competitive than freelancers because they have billions of dollars of funding.

Brian: So a lot of times. Software as a service companies differentiate through blitz scaling. They have just billions of dollars to burn through. So they'll hire more, they'll spend more to acquire more market share, and they'll just [00:26:00] outspend all competitors until They're the top dog, right? That's what Slack did.

Brian: But then you look to companies like Discord. I don't know if Discourse raised any money. Let me look this up actually. So They're going after large businesses. They got acquired by Salesforce for 27. 7 billion that Slack did. And then discord started in the gaming community, the features were built around video games. So if you're in discord, it would show what games your friends are playing.

Brian: You could join the games from discord. use it for voice chat while playing video games. And they've obviously expanded out well beyond that. I think a lot of crypto bros use Discord now. Who knows what it's all for. My wife has a Discord for her community.

Brian: But they started way more niche.

Brian: Either way, hyper competitive. They have to differentiate in some way, shape, or form. So they compete on features. They compete on making the best features. And doing it in a very expensive way. They do it through making very niche features that appeal to certain demographics. Like I don't think Slack customers care what video games there are people on their team are using, whereas discord, they [00:27:00] care about that feature.

Brian: Right? So it's niche features. Here's how this relates to freelancers,

Brian: SAS companies focus on. Solving problems through their software features.

Brian: Why did discord build out the feature to show what games other people are playing and allow people to join? It's because discord knows that if they get people to join the game and get more interaction on the app, people stick around longer, they'll use it more. And the value will go up as a company, right?

Brian: There's an old saying that I learned when I started learning software as a service of the SAS industry, it's sell benefits, not features. There's a big difference in selling benefits and selling features. I'll use like a CRM, for example, a feature might be automate your followups, right? That's like a feature. The benefit is close more deals because you never forgot to follow up with someone, right? If you've heard me talk about followups on this podcast before, when I was freelancing, I determined that more than half of my income came from followup number like six or seven or more.

Brian: It's like some insanely high number of income came from like lot of followups to clients. I was very aggressive. I'm using air quotes here. Aggressive. I was very nice and polite. I [00:28:00] was just very consistent with my fall. That's probably a better way of putting it. So when you think through selling the feature versus the benefit, the feature is automatic follow ups.

Brian: The benefit is getting more clients.

Brian: Bring this to freelancing. How many of you are selling your features, not your benefits? How many people are selling new websites, selling music production services, photos, selling videos? That's the features. What are the benefits? What are the actual outcomes that they're leading towards?

Brian: And when there's an exercise we do with our clients, we call it the five whys. If you think through this and like the five whys exercise, why are they hiring you? Because they want a new website. Why do they want a new website? Because they want

Brian: more leads. Why do they want more leads? Because they want more customers. Why do they want more customers? Because they want more revenue. Why do they want more revenue? Because they want more profit, right? You can do this a billion times. You can go really, really deep with this. And sometimes they don't just go deeper and deeper.

Brian: They branch out to like different trees. I'm not going to talk through it here, but at some point you're going to find a really good benefit to land on, to start promoting in conjunction with your features, because software does it both. They don't just say. Earn more money, they tie it to a feature.

Brian: Subsado, which is another niche CRM like HoneyBook [00:29:00] differentiated by going after service providers. So they don't have to compete with HubSpot. They don't have to compete with Salesforce. They don't have to compete with pipe drive. People who've raised hundreds of millions of dollars, but they might say.

Brian: We have automated follow ups so you can close more deals without spending more time doing it, right? They'll tie the two together.

Brian: But many times you don't think past the service to the actual problem you're solving. and because you're not actually focused on the problem you're solving, you never think about better ways to solve that problem. You never think about faster ways or cheaper ways to solve that problem.

Brian: You never think about more efficient ways to solve that problem. More friction is ways to solve that problem. So it's less friction for your clients to have the problem solved.

Brian: You never think about maybe who else has the same problem, who could be a higher value instead, you're trying to create websites for broke local businesses where your same exact skills could go to somewhere in an industry that's growing. For example, if you're making websites for newspapers, my God, can you imagine trying to be in that niche shrinking 25, 30, 40 percent every year?

Brian: Whereas if you're in an industry that's growing every year, you just have to maintain just coast. And you will still grow every year.

Brian: The other area this kind of ties [00:30:00] to is just niching down. Many of you are trying to be slack when you need to be twist. Have you ever heard of twist? No. You know how much I pay twist per month? I pay twist 1, 500 a month. It is more than worth it. It is like slack, but better as very specific niche features that are built more for asynchronous And because of that, I pay them 1, 500.

Brian: I pay slack about 50, 60 bucks a month.

Brian: So everyone's trying to beat slack at that game. Instead of coming up with unique ways to serve a smaller, but very powerful and very high value audience. So think about in your world, where are you failing to niche down?

Brian: you think that because you can solve all problems for all people. You should do that. You think, oh, I can design any sort of website so I can work with any sort of claim, or you think I can record any sort of music so I can work with any sort of musician?

Brian: here's the, the scary part, generalists like that you can make money, but it's a trap. there's a reason, there's a saying that the riches are in the niches or the, the riches are in the niches. there's a reason that's a saying though, is there is more money to be made in niches than trying to go mainstream and many times.

Brian: In many ways. [00:31:00] So think through how can you specialize? How can you niche down? How can you be the small, mighty, powerful, profitable base camp? Honestly, he's another one of those. They're not small. They're a small team, but they solve problems in a very unique, specific way. And they're not trying to compete with ClickUp.

Brian: They're not trying to compete with Asana.

Brian: And I've done this in every successful business I've ever had in my life. I did it with SAS. FilePass is audio collaboration software. We handle. All the collaboration between producers and artists, the payments getting timestamped comments on the song. So you know where the revision should be done.

Brian: All problems that I experienced as a music producer, right? Because this is niched down. I'm not trying to, compete with frame. io frame. io is massive. It is for the video market. They are a funded company. I think they've even been acquired. There's also versions of this in the design world.

Brian: There's also versions of this in the web design world as well. Things that allow collaboration and feedback on web designs. Instead of trying to make a software for all of those, we just niched down and did audio because that's what I knew. Same with EasyFunnels. How many Funnel Builders are there specifically for recording studios? Not many. I did this with Airbnb. I didn't try to [00:32:00] do an Airbnb that appeals to everyone. I did one that appeals to a very specific, high value demographic that no one else wanted to serve. And so I could charge as much as I wanted to charge for these people.

Brian: Bachelor parties. Nobody wants a bachelor party in their Airbnb. I did. I charged 1, 200 a night. They could have trashed the whole place every other weekend. And I would have still made money on that. I did the same thing in my freelance business with metal bands. I niched down. I only work with metal bands.

Brian: My first course was a heavy metal mixing course called from shit to gold. This podcast that you're listening to right now started as the six figure home studio, the first 150 episodes. we've now been. The six figure creative longer than we've been the six figure home studio.

Brian: But we started in an even smaller niche than we're at now. And even now we're still targeting creative freelancers.

Brian: And even now in this business, the coaching business, clients by design, we focus on solving a very specific problem, client acquisition, very defined problem to be solved.

Brian: So my question to you where are you not niching in ways that you could niche where you're not solving a problem the best way possible. To serve your people. And where are you not differentiating?

Brian: I got two more. We'll wrap this up. It's going along here. The [00:33:00] next one is SAS does not rely on word of mouth because they don't hate money. Freelancers. I feel like you hate money. It's an ego thing. You're like, Oh, I don't have to advertise. I don't have to promote my stuff. Word of mouth. That's all I need.

Brian: Think about it this way. If you look at huge B2B software companies, SAS companies, like HubSpot, like Shopify. right now, today, they're using paid ads. I looked at stuff, they're doing lead gen ads, they're doing branding ads, they're doing all sorts of paid ads, they're doing blogs, they're doing podcasts, they've got cold outreach, SEO, organic social media, email marketing, they're doing webinars, partnerships, affiliates, even more. They're doing all these things because they all work and they all make money. They all get customers for their software because they don't hate money.

Brian: And you know what? HubSpot is now a public company. So the CEO of that company is actually legally required to do the most they can to bring the profit margins up for that company. It's like their duty or something. don't, I don't fully understand it, but the CEO has to bring in as many customers as possible.

Brian: So if they only rely on word of mouth, not only would he be fired, it might even be considered legal. I don't know. It's either way. SAS companies have [00:34:00] figured out marketing. It is a solved problem. And if you can market a software as a service, then you can definitely market a productized freelance business.

Brian: And the reason software has solved this problem, other than all the other points that I talked about having the brightest minds, having more data, et cetera, et cetera, it's because SAS companies are more scalable. There is really no limit to how many customers a SAS company can take on. I haven't found that yet.

Brian: I don't know of a company who's had to shut down because of too many customers.

Brian: Netflix is technically a SAS. It's more like entertainment as a service, but it is software and it is recurring subscription.

Brian: They have over 300 million paid subscribers worldwide. Insane, insane but freelancers obviously cannot take on 300 million customers. So you do have an upper limit, but the goal with freelancers is get you to that limit and then raise rates. And at some point you hit this maximum income ability where you have filled your capacity and you've raised your rates as high as you can.

Brian: And if you raise your rates anymore, you'll lose too many customers and it's too hard to fill those spots back up, especially if you're in recurring. And if you lower it down and get back to the top and you find that perfect balance where you're not slammed all the time and you make good money.

Brian: And [00:35:00] from there, if you have a good productized service, you can go one of two ways. You can either turn it into an agency because it's product ties. You understand how you're going to deliver everything. And that's kind of what we did here at the six figure creative. I turned it into essentially an agency model of whole team, or you can take it the other way.

Brian: And that is where you teach it to do themselves. So you can go to keep it done for you, where you're an agency delivering on the service and you're hiring a team and you're scaling that way and taking away more clients, or you are. Helping your clients implement it themselves. So instead of building the website for somebody, you're showing them how to build their own site.

Brian: Instead of producing music for your clients, you're showing them how to produce their own music. We've helped several clients make that transition. And if that doesn't make sense in your niche, then you can also go the route that I went. And that is go the route of I'm doing music production. I did teach people how to make music as well.

Brian: So I went that route as well, but then I also. built a huge audience of people who love my production work, respected my business advice. And so I shifted towards helping people achieve the thing that I'd already done. look like made by James, we had made by James on the podcast. He's not going to teach businesses how to make logos.

Brian: He's going to use the [00:36:00] massive audiences buildup of other designers and teach them the skills they need in order to achieve some of the things that he's done. So that's kind of the third option you have is graduating for freelancing. If you fit that upper limit of how much you can possibly earn as a freelancer.

Brian: All of this cannot be achieved until you've hit that upper limit. And most freelancers will not hit that upper limit until you accept that word of mouth is not enough to carry you there. It can get you through seasons and you get some really good fee seasons from that. But longevity ongoing clientele come from actually taking this stuff seriously.

Brian: Made by James. His thing is Instagram stories. Dude crushes it. Hundreds of thousands of followers. He is doing amazing. Us. Last year I spent two hundred and eight thousand. $887 on paid ads last year generated 19,184 new leads. That's 1600 leads per month.

Brian: That's off of an average of $17,000 a month in ad spend. That's $10 a lead. Really high. That's a really high lead cost. I remember back when I first started advertising, I was getting leads for like 25 cents each, those leads were worth $2. , maybe a [00:37:00] dollar. So why am I willing to pay 10 a lead and spend 17, 000 a month on ads to generate 1600 leads a month?

Brian: Well, That leads me to the last point here, and that is SAS companies take data and metrics seriously. And freelancers do not. I do. We'll talk about my metrics. I'll share a lot of stuff with you. This will be a numbers heavy, section here. So if you hate numbers, this is not the section for you.

Brian: Or is it because again, the reason the SAS company is so successful is because they have modeled out everything. They have turned it into clear inputs, clear outputs. They know exactly what goes into the machine, what comes out the other side. They know how to generate revenue, how to generate profit.

Brian: They literally have data scientists on staff. What does a data scientist do? May you ask

Brian: data scientist collects, analyzes, and interprets large data sets using various statistical and computational techniques to extract meaningful insights and patterns. All that to say, look at all this massive data that SAS companies have access to.

Brian: They study the data and they come out with. Cool insights that the company can use to benefit. They realize things like

Brian: customers in a free [00:38:00] trial who take these specific six actions are 10 times likelier to convert to paid customers. And so now the product team can go in and make sure every single new trial person does those six specific actions. And then all of a sudden their trial to paid conversion rates skyrocket.

Brian: That's what a data scientist does. We don't have access to data scientists as freelancers. We have to become junior data scientists. I don't know if this is a term,

Brian: but we have to, first start tracking data. And we had an episode three 32, the seven must track metrics that will make you more money in 2025. Good start, track those seven metrics and you'll be better off than most people. But data scientists, they look at front end metrics on marketing and sales and get insights for that.

Brian: They track backend metrics, like user engagement, what happens after the sale to make sure people stick around for a long time.

Brian: And obviously they track retention, which is something that freelancers don't track And by the way, even if you're a one time project, if you ever have clients that come back to you, you should be tracking retention. What percentage of my clients come back to me one time, two times, three times.

Brian: These are all things that you can track. And here's the big thing that SAS companies do that freelancers don't Is that they don't make decisions based on gut or feelings [00:39:00] or gut feelings.

Brian: a simple example of this is a B tests.

Brian: Many freelancers will put a landing page up and they feel that's the better one. And then they redesign it and they tweak things, new headline, new this, new that thumbnail on the video, new this, just change words up, do a new design, revamp it. Ah, it feels better. And they launch that they'll let their feelings dictate what gets done in the SAS world.

Brian: None of that matters. What are the numbers say if version A is beat by version B, they're going to go with version B. If the landing page of version B that has bigger texts that has simpler design, less messy, objectively looks worse than version A, version B has a 50 percent higher conversion rate, they're going to use version B.

Brian: They don't go by guts.

Brian: And that leads us into kind of how I do this in my business. Again, I talked about the seven must track metrics. I track 30 every day

Brian: and here's why I'm willing and able to spend

Brian: over 200, 000 in ads last year to generate almost 20, 000 leads at 10 a lead. Why I'm willing to that much is because I know all of our friend in metrics and here's how it looks. I'll give you all the numbers. Open in the kimono here. That ad [00:40:00] spend last year generated over 4, 000 applications, 4, 102 applications for clients by design.

Brian: That's 342 applications a month. It generated 2, 796 book calls. That's 233 book calls a month. Most freelancers are happy to get four a month, 233 a month. That's, a crazy number. We're even higher now, by the way, that's been ramped up recently. We generated 1, 410 accepted leads.

Brian: So an accepted lead is when the way we do it and the way I recommend you do it as well, all of our clients do it this way is. They do a pre call questionnaire. We call it an application, but you call it a pre call questionnaire and then immediately get them to book a call because if you wait to communicate after the fact, getting them on a call your chances drop significantly.

Brian: So get them on the call right after the pre call question has been filled out. And then when you review the pre call questionnaire, if it's clearly not a good fit, you just cancel the call and let them down gently. And that's what we do. So we reject about half of those applicants after they book the call.

Brian: So we've. accepted 1, 410 of the applications last year. That's about 117 accepted applications per month. And then we had 1, 012 live calls. That's 84 [00:41:00] per month, 724 offers made. That's 60 per month and 149 new clients, which is just over 12 a month with 40 currently pending deposits of people that will likely still join, in the first few months of this year, those are my metrics for the last year.

Brian: And that is why, because I have my metrics dialed in so well,

Brian: I know that every lead we generate

Brian: is worth at the end of the day, about 67, a little more than that, because our retention goes beyond a year. our average client stays with us over a year, but about 67. So the question is, will you spend 10 on a lead if they're worth about 70 bucks? The answer for me is yes. The answer may not be yes for you.

Brian: That's weird, but that's, me taking my front end metrics seriously. Then on the backend, we track our client engagement. Because if you have a recurring subscription business and your clients are not paying attention to what you're doing, they don't care about what you're doing, or in cases like our coaching program, they're not utilizing your service or in the case of software, they're not using the software people are going to cancel.

Brian: So we have 153 active clients right now, 116 of those were active this week, 15 more were active last [00:42:00] week. 12 of those clients haven't done anything in the past 14 to 30 days. That's about 7. 8 percent of our clients. And 10 of them haven't done anything for over 30 days. That's six and a half percent of our clients.

Brian: We follow up, we text, we email, we call, we send handwritten letters to get our clients re engaged so they use our, service.

Brian: And because of that, in 2024, our retention metrics, we had a 3. 67 percent monthly churn rate. I talked about that earlier, meaning we retained 33 percent of our clients every month.

Brian: And this again is substantial to us and should be to you is because if you keep a client, that's an automatic customer every single month, like I talked about earlier. But if you lose a client, you have to replace them in your business to keep your business to the same level that it was. And every client for us costs us 1, 284.

Brian: 58 to get a new client. 0 to keep a client, 1, 284 to get a new client.

Brian: I only know this because I track our metrics religiously.

Brian: And I learned this all from the SAS industry. No other coaching business runs it like this. I've never heard in my entire life, [00:43:00] a coaching company talk about their monthly churn publicly, because according to Alex Ramosi, it is absurdly high over 10 percent in most cases means you lose one out of 10 customers or clients every single month.

Brian: So if you do recurring subscriptions, take the data and analytics seriously. This is the difference between building a business that is stressful. that has lots of uncertainty that keeps you up at night.

Brian: But if you have a good foundation with good recurring revenue as the bedrock of that, you understand all your metrics. So you can confidently spend money on ads It's January 29th right now. When I record this, this month will be over 30, 000 in ad spend.

Brian: And I predicted this before the month started. And I predicted how many book calls and how many. Offers and how many clients that'll bring on. as of right now, we still have a couple of days left. I'm accurate within plus or minus one or two clients. it's not because I can see the future.

Brian: It's because I just know the numbers well enough to make those predictions. And that sort of. Clarity in your business is so freeing. So I encourage you look to SAS. There's tons of great content out there in [00:44:00] the SAS industry

Brian: and find ways to parallel that to your business. I am not the end all be all purveyor of knowledge when it comes to the SAS world. But there's a lot of great SAS podcasts that you can learn from. But that's all I got for you today. as always, if you're interested in joining clients by design, you can always go to sixfigurecreative.

Brian: com slash coaching to apply, fill out the short application, book a call, become part of my metrics. If you're a podcast listener and you apply, I love you because I know that we convert podcast listeners probably three to four times higher rate than we do cold leads from, meta ads. Because I track my metrics.

Brian: So that means I love you a lot. If you are new, stick around a little longer, listen to more episodes, get to know us. There's a lot of good stuff in these 349 or 348 other episodes. When the time feels right and you're like, this is the guy I want to learn from for building my freelance business. Then we'll be here. I launched this program in 2020 to a cohort of three people.

Brian: I brought about seven more clients on in 2021, another 15 or 20 in 2022. And then when I felt like we're in a good [00:45:00] place, I started scaling and hiring and that's kind of where we're at now, 2023, 2024, 2025 and beyond. And I'm very excited by some of the new hires we're making because we are getting people that are smarter than me in this company, which is an awesome feeling to have.

Brian: So that's all I got for you this week. Looking forward to next week. I'll see you on the six figure credit podcast. Peace.