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Dylan, Pete and Brian
These are some of the names that realised the money potential in drop-servicing early and are now making around $100k+ per annum.
A Drop Servicing company provides service for a high price, then finds another way to do that job at a lower price and receives the difference as revenue. Drop-service business owners basically act as an intermediary between clients and service providers.
TABLE OF CONTENTS
Here's the in-depth article about the complete Drop Servicing model and the ways to do it smartly.
Drop Servicing: What Is It and How Does It Work?
Dropservicing is simply offering an online service to a client under your brand tag and having that service fulfilled at a lower cost by freelancers, agencies, contractors, service providers, or independent professionals working on a contract basis.
Here, the contract basis means those service providers are charging per task performed.
You, on the beneficiary side, are enjoying the difference between the money paid by your client and the lesser charges of service providers.
Drop servicing is defined differently many times. It's totally dependent on you whether to disclose the information (about being an intermediary between clients and service providers) or not.
Don't worry, you'll not be in trouble. Drop servicing is completely legal, and in fact, it is based on the basic model of buying low and selling high. As an intermediary, you're helping the service providers get jobs.
On the other hand, many clients (mostly business owners) have no time to surf the internet searching for a professional service provider. You are helping them get their job done with professionals, which really saves their time.
You might be thinking that the Business Model of Drop servicing looks relatively similar to the Dropshipping. Ever wondered,
What's the Difference Between Dropshipping and Drop Servicing?
Dropshipping is where owners go around selling low-cost products (bought from suppliers) to customers for higher prices and thus pocketing the difference made. The fun part here is that the supplier manages the delivery, storage, packaging, and labelling of the products, and you just have to make a sale via the internet.
This is exactly what we do in drop servicing, with the only difference being that we offer services instead of selling products.
The Best Practises used in Drop servicing
Now, you're more familiar with the term 'Drop Servicing'. Let's understand some of the methodologies used by some of the best players, like Dylan Signey, in this business industry.
APPROACH #1
Although Drop Servicing is a popular money-making business model that can be performed without a website, like by using emails and phone calls to communicate and get to know about clients and service providers on multiple online and social media platforms,
But for bringing some ease and automation into our drop-servicing business procedure, the best practises must include creating a website to reach potential customers all over the world.
APPROACH #2
One of the best ways to run a profitable Drop Servicing business is to find clients from countries where the cost of living is much higher and then fulfil the order by hiring a service provider from countries where the cost of living is relatively lower.
This will benefit you by increasing your profits throughout this procedure.
You don't have to think about the location barrier, as all the services are delivered online through the internet.
Example,
Let's say David runs a Drop Servicing business online and finds a client from the USA, where the cost of living is higher. The client paid him $5000 to build a simple mobile app.
Smartly, he hires a professional freelancer from low-cost countries like India, who charged him $2000, and in this way David got the rest of the $3000 in his pocket. Thus, he made a whopping 60% profit even if he has no skills in mobile app development.
How to Start a Drop Servicing Business in 2023?
Starting a drop servicing business is a simple task, which is why competition is fierce. Many startups struggle because they lack discipline and patience and follow irrelevant procedures.
Below are some of the crucial things to know before turning your drop-service business into reality:
1. Perfect Players Play with a Niche
No, it's not a necessity or limitation. You can always use all kinds of products from all kinds of niches.
But question is
Should you shuffle services in drop servicing business model?
You must select a niche that you are aware of and at least know how it is done (an overview).
If you decide to provide graphic design services to your clients, you should at least be aware of the different themes used in different situations. This will benefit you in better understanding your client's needs and thus providing them with the best possible results from service providers in the drop-servicing business.
2. Finding and Categorising Service Providers.
In drop servicing, you need not always be on the freelancing platform or somewhere else to keep searching for the best service providers.
You should select, filter out, and prepare a list of service providers whom you believe could be the best option according to your niche. Find out which providers are perfect at their work and are happy even with low costs (to keep your profit margin higher).
Okay, But
How will you decide on a service provider to drop service with?
As we saw earlier, you should be somewhat knowledgeable about your niche if you want to get your drop-servicing business off the ground. This will help you in reviewing past work and portfolios better and thus making good decisions.
Check out ratings, reviews, communication and understanding abilities, online presence, recommendations, and the value they give. Figure out as much as you can.
Optionally, you can also test their abilities by hiring them for practise work.
3. Researching Should Not be Neglected in Drop Servicing
This is probably the decision-maker for your drop-servicing business. Researching the trend will help you find the countries where the most potential clients are. Business research helps identify opportunities and threats.
Every niche is profitable. Find out who your targeted audience is. Take a look at the below questions.
1—Which online platform would be the best option to advertise on?
2—Which skill is trending in the market from your niche? Follow other drop-service business owners on social media platforms to focus on current events that are important for your business.
3—What specifically do most clients want from your niche?
4—How much are people actually charging for a specific service in a particular region?
5—What's the average time needed to complete a project, and how good are the deadlines most clients give on average?
6—How much should I charge for a specific service in a particular country?
Use Social media and Google to find answers to your questions and make your drop-service business run smoothly.
4. Creating a Brand Identity and a Sales Funnel for Your Drop-Servicing Business
A sales funnel is basically a place from which you can get clients for your business. A website is a great choice. Building a brand and sales funnel is important for any business, including drop servicing.
Here are some steps you can take:
- Make your brand's identity: Create a brand identity that resonates with your target audience once you have identified them. This includes the name of your company, logo, colour scheme, and voice. The values of your target audience should be reflected in your drop-servicing business brand. Make use of powerful graphic design software like Photoshop, Adobe Spark, and Canva.
- Build a website: The centre of your sales funnel is your website. A website plays a significant role in establishing trust and attracting potential Google search traffic. Additionally, it will assist you in explaining your service list to customers. It should be professional, easy to navigate, and optimised for conversions. Make sure your drop-servicing platform includes a clear call-to-action (CTA) that encourages visitors to take the next step. Without having to touch the coding part, creating a website with the assistance of hosting providers like Hostinger, GoDaddy, Namecheap, etc. will reward you with a professional appearance at a lower cost. A pro of using a hosting provider is that they manage the back-end technical complexities to keep your website at its best.
- Develop content that aligns with your drop-servicing niche: Develop content that showcases your expertise and provides value to your target audience. This could include blog posts, videos, or social media content.
Remember to always focus on providing value to your target audience and building trust with your leads if you want to see your drop-servicing business at a desired place in the market.
5. Marketing Is the Most Important Aspect of Drop Servicing
Now, it's time to showcase your services. Driving traffic to your website will generate leads and thus help you sell your service to a large number of clients.
Once you have a website and content, take advantage of online advertising to make people aware of you in the market. This can be done through search engine optimisation (SEO), social media advertising, or sponsored content that goes parallel to your drop-servicing niche.
Every platform is different, and thus the cost differs if you need to advertise (check for CPM and CPC), but don't forget that you can also promote your drop servicing business for free with great content marketing strategies.
Finally, it's not wrong to say that you've come through a system that will generate needed revenue if done perfectly.
Some important actions need to be looked at:
- Capture leads: If a visitor lands on your drop-servicing website, you need to capture their contact information so you can follow up with them. This can be accomplished with a lead magnet, such as freebies or discounts on a particular service.
- Nurture leads: Once you have captured a lead, you need to nurture them with targeted email campaigns and other communication. Provide value, build trust, and position yourself as an expert in your field.
- Close the sale: Finally, you need to close the sale. This may involve a phone call, a proposal, or other methods depending on your drop servicing business. Make sure you clearly communicate the value of your services and how they will benefit your client.
Attend some online lectures on digital marketing to have a clear background for better results.
How Much Does It Cost to Execute Your Drop Servicing Startup?
Testing service providers with practise work (optional) —
Your service provider should be great at his job so that you can give the best quality possible to your clients. Interview Freelancers, Test the quality of their work and their skills by hiring them for a practise job. This wouldn't take much time, as many freelancing sites are now offering their own recommendations for skilled freelancers.
This would cost you, on average, around $5 to $500. But it's entirely optional.
Drop-servicing Website —
Creating a good website from Web developers will cost you around $500 - $15,000, but if you're in the beginning stages, you should consider some hosting providers, which will cost you mostly around $7 - $10 per month.
Marketing and brand promotion —
This holds the most importance. The cost will depend on the CPC and CPM (roughly around $0.60 to $4) of the particular platforms on which you're advertising. Attending marketing lectures (if necessary) will cost around $5–$20.
Conclusion
Drop-servicing is a legal way of outsourcing (the practise of hiring a third-party to perform certain tasks) your clients' services at a lower cost and thus making a profit from the difference.
It is both cheaper and easier to start, which is why it attracts many business-minded personalities and results in intense competition.
Like dropshipping, drop servicing is practical, and a lot of people are already doing it successfully. Sometimes, you aren't just skilled enough, but you still want to start a skill-based business.
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