Drop servicing is a very profitable and fulfilling business model.
It enables you to manage a team behind the scenes to supply services to your clients without getting your hands dirty with the execution details.
Drop servicing involves selling services like copywriting, graphic design, and social media management to customers.
However, instead of providing these services directly, you employ freelancers to do it.
After that, your work is forwarded to your clients.
The market isn’t as saturated because drop servicing is a relatively new business strategy.
However, you’ll face challenges such as high-quality sourcing freelancers at a reasonable rate.
In this post, I’ll show you what drop servicing is, how it operates, and where to begin in the United States of America, the United Kingdom, Canada, Australia, Germany, Netherlands, Sweden, New Zealand, India, Pakistan, The Philippines, Brazil, Nigeria, South Africa, Ghana, Cameroon, Egypt, Ethiopia, Tanzania, Kenya, Zambia, Zimbabwe, Uganda, Senegal, Dubai, Malaysia, and perhaps anywhere else in the world.
Let’s get started.
What Does Drop Servicing Mean?
Drop servicing, also known as service arbitrage or white labeling, is a profitable business strategy through which a company provides services to clients and then hires lower-cost freelancers or agencies to finish the task.
The drop servicing company essentially serves as a liaison, acting as its clients’ primary point of contact.
The work is done behind the scenes by freelancers or agency partners.
Let’s say you’re the owner of a graphic design firm.
You charge $6,000 for branding packages. You hire a freelancer for $3,000 for a branding package rather than doing the work yourself.
As a result, you get $3,000 from the transaction.
Some drop servicers will keep this a secret from their clients, while others will inform them they have a team.
Whether we realize it, we’re surrounded by drop servicing on large and small scales.
Here are a few examples:
- You hire a social media marketing firm that outsources your day-to-day management to a freelancer or another firm.
- You hire a pest control company to send a freelance representative to your home to deal with your pest problems.
- You purchase a digital download from a company that licensed the content from a freelancer.
What Can You Drop Service?
As a drop-servicer, you can offer any service that you can offer as a freelancer.
The only difference is that you’re not doing the task yourself; instead, you’re delegating it to your team.
A wide range of services is available for drop service.
- Social media management
- Virtual assistant services
- Video creation
- Guest posting
- Ad copywriting
- Video editing
- Content creation
- Graphic design
- User testing
- Search engine optimization
- Link building
- Résumé writing
- Lead generation or nurturing
It’s usually ideal for giving a service you’re familiar with. Because if you discontinue service for something you don’t fully comprehend, you may find it tough to manage and suffer a loss.
I’m not saying you need to be an expert in the service, but you should have a basic understanding of how it works.
Is it necessary for you to be an expert in the skill you’re drop servicing? No, but it assists. And it will almost certainly make your life easier.
For example, if you start as a freelance writer, you’ll learn the entire process, including gaining writing projects, gaining writing experience, and learning what clients like and don’t like.
After that, when you have too many clients to handle, you gradually begin outsourcing.
That’s the most natural progression. However, if you’re an expert in marketing and sales and don’t care about mastering the skill, you can skip this step.
The biggest advantage of doing what you’re familiar with is quality control.
If your freelancers disappear or submit substandard work, you’ll know what to do.
You could always pay an editor to help you with this, but the more you outsource, the smaller your margins will get.
Steps to Starting Drop Servicing Business
Here are the right steps to start a profitable drop servicing business:
1. Choose a Niche
First, what service will your company be based on? As previously said, there are many alternatives.
In a lot of circumstances, your creativity is your limit.
If you don’t see a drop service niche that immediately appeals to you, consider:
- Are there any ideas that I already have experience and knowledge of?
- If not, which of the following ideas appears to be the most workable or fascinating to learn?
- Which ideas appear to be the most straightforward to develop and implement?
- Which ideas appear to be in the most demand or necessity on the market?
- Which ideas are most likely to increase my company’s profit margins?
In choosing a niche, there are many options.
Consider what is most important to you and use that as a starting point.
2. Recruit and Train Your Service Providers
This may be a simple task, but it’s critical to pick your team wisely.
After all, they’ll be the lifeblood of your drop-servicing company.
When interviewing and evaluating people for your drop servicing team, consider drafting a checklist:
- What is their level of experience with the service you want to provide? Enquire about specific examples.
- How much training will they need to operate following your expectations and standards?
- Will they be dependable and complete their assignments on time?
- Is it simple to communicate and collaborate with them?
- Is there a substantial time difference between them and you since they live in a different part of the country?
- Is this going to be a problem to complete projects?
You can look for freelance jobs on FlexJobs, FreeUp, 99designs, Guru, Upwork, and Fiverr.
Please give them a test project to check their performance once you’ve narrowed down some strong candidates.
3. Create and Bring Your Brand to Life
It’s time to build your firm now that you have a game plan and a competent staff!
If you want to attract customers online, the first step is to establish an online presence.
The most significant component is your website, but you should also try creating and managing social media profiles.
Shopify, Wix, WordPress, and Squarespace are just a few website builders available.
Many companies provide a free trial period, so you may get started on your website before making a financial commitment.
Include the following components on your website and also other branding materials:
- A unique logo that reflects your brand’s tone and personality.
- Background information about your brand, why you are doing what you do, and why you are the best option.
- Describe your services and what clients can expect from them.
- List your costs and use an ecommerce-friendly website builder which enables you to accept online payments if you wish to go the e-commerce way.
4. Use Marketing to Attract Customers
Any business’s marketing strategy is crucial. Isn’t it pointless to have a fantastic brand and website if no one sees it?
In creating your company’s reputation, attracting new clients, and keeping old ones, you have many alternatives.
Here are a few examples:
Marketing Through Referrals
The most cost-effective marketing tactics available.
Begin a referral program to encourage current customers to promote others.
Content marketing involves the creation to educate, entertain, and boost brand awareness and invest in multimedia material, including blogs, videos, emails, graphics, e-books, and even a podcast.
Marketing on Social Media
Is your target market a social media user?
Determine the platforms they use and develop a customized content strategy to engage them on those platforms.
5. Make Your First Sale, and Don’t Stop!
Some claim there’s nothing quite like the sensation of making your first sale.
It could be simple or really difficult. The most important thing is to be committed and not give up.
You’ll learn what you should and shouldn’t do as you have more interactions and talks with potential clients.
Pay very close attention to whatever these leads and customers have to say.
Is your price unreasonably high? Are you overlooking an essential aspect that everyone expects? Is it difficult for you to keep up with your competitor’s reputation?
How to Find Clients for Drop Servicing?
Every other online drop servicing guide will tell you that one of the first things you should do is create a website and a lead generation system.
I’ll politely disagree with you.
Keep in mind that we’re creating a lean startup.
Until we verify our business and gain traction, we want to keep things simple.
A website is currently merely a time-consuming distraction. I’ll say it again: You don’t need a website to get your first client.
The main aim is to show to potential clients that you are trustworthy.
But working with folks who already trust you and know you’re legit is the quickest method to get your first clients.
Yes, you will want to create a professional-looking website at some point.
For the time being, all you’ll need are some strong samples and excellent people skills.
After you’ve paid your freelancer to create some samples, start reaching out to people.
- Friends from high school
- Friends at the gym
- Members of the congregation
- Choose people you know who appear to have good connections and strike up a conversation with them. When you inquire about their work, they will inquire about yours.
You’ll start getting clients if you speak to enough people and offer a skill that’s in high demand.
The first client is the most difficult to secure. It will be considerably easier if you have built-in trust from a referral.
Once you’ve landed a client, you’ll have to impress them. Make it impossible for them not to recommend you to their colleagues and give you a lovely recommendation by doing everything you can to make it impossible for them not to do so.
If you keep doing this, your client list will develop solely through word of mouth.
There’s no need for a flashy website or marketing tools. It would be best to try creating a YouTube channel, website, social media, blog, lead magnets, marketing systems, lead generation funnel, whatever suits your fancy once you’ve accumulated a few testimonials and helped your clients achieve outstanding outcomes.
Cost of Starting a Drop Servicing Business
Depending on how you go about it, the cost of starting a drop-servicing business will vary. However, because of the nature of the business, it is usually fairly affordable to start.
The following are some typical costs:
- Your website’s price: Your website, hosting provider, domain name, and other digital running costs will all have a monthly price.
- Costs of hiring a freelancer: Your freelancers charge for completing a task.
- Marketing fees: The cost of marketing your services via email, content creation, SEO, PPC, and social media advertising campaigns.
- Other business-related expenses: Consider the expense of using a spare room at home as an office and the cost of printing or stationary equipment.
Is Drop Servicing Legal?
Drop servicing is a perfectly legal business. However, it’s good to double-check which services you can offer in the state where you’re establishing your business.
There may be limitations on how services are provided or the type of certifications you require.
Before establishing a drop-servicing business, studying your tax obligations is also a great idea.
To stay legitimate in the eyes of the government, you may need to file specific tax return documents yearly.
Follow these procedures to keep your drop servicing business out of trouble:
- Create terms and conditions to ensure that your clients are informed of the services they will receive.
- When offering “contractor” services, know your tax and VAT rules.
- Make sure you’re covered for things like personal indemnity.
Is Drop Servicing Profitable?
Drop servicing can be quite profitable if you provide the correct services, such as regularly required ones.
Blogging, for example, is a service that many website owners want monthly.
However, your actual profits will be determined by the pricing strategies you employ for your services.
It would be best if you aimed to charge 2 to 4 times above what you pay freelancers.
If a contractor is paid $5 for a project, the end-user will be charged $10 to $20.
You’ll also have room to cover any marketing costs associated with gaining new clients.
To discover a normal price range, look into other companies that provide similar services to yours.
You may increase your rates as your reputation grows.
Drop servicing isn’t simple, but it’s rewarding! You may have heard gurus say that drop servicing will bring you millions of dollars overnight.
While this isn’t entirely true, there is some truth that if you work hard, plan intelligently, and will develop with your company; you may have a lot of profit.
Always pay attention to the people and businesses around you.
They’ll provide useful information to apply to your business and learn something new every day.