A new report from Localogy and Mono Solutions takes a data-driven look at a question many digital solutions providers are asking. Do the millions of freelancers out there providing services to small businesses represent a promising reseller channel?
The report focuses on the European freelancer market. It establishes that freelancers hold an influential position with their clients. Yet relatively few of them leverage this influence to generate income by representing software providers. So how can software providers tap into this resource on their behalf? It might come down to messaging that overcomes some misconceptions freelancers have about what it takes to be a successful reseller. More on this below.
Fast Growing Labor Segment
The report, “Are Freelancers the Long-Tail Channel of the Future?” [download your free copy] taps into a survey of more than 500 European freelancers (in Germany, Sweden, and the UK) seeking a deeper understanding of what motivates them to adopt this business lifestyle.
One thing is clear. The freelancer market is large and growing. Statista tells us there were 33 million self-employed Europeans in 2019. This figure is a little noisy since it includes small business owners and farmers. A study conducted for the European Commission estimated there were 11 million freelancers operating in the European Union in 2017. This makes it the fastest-growing segment of the EU labor market.
Meanwhile, in the U.S., Upwork’s “Freelancing in America” study shows that in 2019, 57 million Americans, or about 35% of the workforce, admitted to doing freelance work. About 16 million Americans were working as full-time freelancers in 2019. We believe this figure grew substantially in 2020.
Why They Freelance
Reasons for freelancing are multiple and complicated. But it generally boils down to a handful of reasons. Lifestyle, earnings potential, job loss, and work-life balance were the leading reasons. The report found significant generational differences in the reason for freelancing. Younger freelancers were generally drawn to the free and flexible lifestyle. Older freelancers (35+) tended to be drawn in by greater earnings potential, or the need for a more flexible schedule for family reasons. Job loss is a driver that spans generations.
By and large, freelancers are happy with the lifestyle. But there are some gaps that may point to reselling as an option to plug gaps in income that many freelancers experience. And the income shortfall is more pronounced among younger freelancers.
Only 44% of freelancers ages 18-34 are hitting their financial objectives with freelancing. Meanwhile, 62% of freelancers 55-64 say they are making enough money. Some of this is the result of tenure. You tend to be more successful as a freelancer the longer you do it. And some of it relates to the kind of work. More younger freelancers work as virtual assistants. And older freelancers over-index for higher-paying roles like management consulting.
Is Reselling the Answer?
Currently, only 16% of freelancers say they have reseller relationships with a software company. Yet 62% say they recommend software to clients. This gap highlights the opportunity for digital solutions providers. However, the data also suggests there is a messaging hurdle to overcome.
The majority of freelancers that are not currently reselling hold onto some misconceptions about what the process involves. For example, 54% said they were reluctant to resell because they didn’t think they would be good at it. This suggests a lack of confidence in their sales ability. Yet the reselling process among freelancers is more likely to be consultative. So anyone worrying about having to do the hard sell are likely misguided.
Also, fully half of the freelancers surveyed said they were not aware of opportunities to resell. These results point to a need for outreach to freelancers about the opportunity to resell. Not to mention the truth about the skill set required.
Please download and read the full report for more detail. Also, Localogy and Mono Solutions will also discuss the survey findings on a Localogy Webinar on June 17 at 2 p.m. Eastern Time. Stay tuned for information on how to register for the webinar.