What is Drop Servicing? A Beginner’s Guide to Outsourcing Services and Scaling Your Business
Drop servicing is a relatively new concept that is gaining traction among entrepreneurs and small business owners as a way to scale services with minimal effort. But what exactly is drop servicing? How does it work? And how can you get started using this business model to grow your own company?
In this beginner’s guide, we’ll break down everything you need to know about drop servicing, including:
Whether you’re just learning about drop servicing or are ready to dive in, this guide will provide actionable insights and advice to help you leverage outsourcing to build your ideal business. Let’s get started!
What is Drop Servicing?
Drop servicing involves providing services to customers that are fulfilled by a third-party supplier or freelancer. Essentially, it allows you to sell a service that you outsource to someone else to deliver. You handle the sales, marketing, and customer relationship end while “dropping” the actual service fulfillment off to your supplier.
For example, a drop-servicing business might sell social media management services to clients but outsource the actual posting, community engagement, etc. to a freelancer. Or a web design agency might sell website building services but outsource the design and development aspects to an overseas company.
The key to drop servicing is that the customers don’t know you’re using a third-party supplier. To them, you are the one providing the service they purchased. This allows you to focus on customer acquisition and relationship management while outsourcing the delivery of the actual service.
How Does Drop Servicing Work?
There are five key steps to the drop servicing business model:
1. Find a Service to Offer
First, you need to determine what service you want to sell. Popular options include social media marketing, web design, graphic design, SEO, and administrative services. However, almost any service can work with this model if you find the right supplier.
Make sure there is sufficient demand for the service you choose to ensure profitability. Do keyword and competitor research to validate the opportunity.
2. Find Suppliers Who Can Deliver the Service
Next, you need to find qualified suppliers who can actually provide the service at a reasonable rate. Great places to find suppliers include:
- Freelancing platforms like Upwork, Fiverr or Freelancer
- Word-of-mouth referrals
- Specialized marketplaces like Design Pickle (for graphic design)
Vet suppliers thoroughly by reviewing past work, testimonials, availability, and portfolio. Make sure they can consistently deliver high-quality work on time and on budget.
3. Build a Website and Brand for Your Business
Now it’s time to build out the sales and marketing side – starting with your website. This is where you present your services, build authority, generate leads, and convert visitors into paying customers.
Your website and overall brand should establish you as an expert in the services you’re offering without mentioning your supplier relationships. This maintains the illusion that customers are doing business solely with you.
4. Market Your Services
Once your website is ready, it’s time to start marketing your services. Some effective marketing channels to leverage include:
- SEO – Optimize your website and create blog content around keywords related to your service offerings. This helps you get found by people already searching for those services.
- Social media marketing – Build an audience on platforms like Facebook or LinkedIn. Use paid ads to promote your services.
- Email marketing – Collect emails on your website to build an email subscriber list. Send regular emails to generate sales.
- Content marketing – Create YouTube videos, podcasts, and guest posts on authority websites in your niche to showcase expertise.
The key is to implement multiple marketing channels to maximize reach and conversion rates.
5. Fulfill Orders and Deliver for Clients
When you close sales, you simply pass the order details and any relevant files along to your supplier with instructions to fulfill the service. Customers pay you directly.
You keep the profit margin between what you charged the client versus what you’re paying your supplier. Manage all client expectations and communications. Provide excellent customer service yourself to nurture the relationship.
For example, if you charge a client $1000 to provide social media management services for 1 month, but you pay your supplier only $500 to deliver those services, you pocket the $500 as profit.
This provides passive income while your supplier handles the labor intensive delivery aspects. You get to focus on the parts of business you enjoy most – marketing, sales, and customer relationships.
Benefits of Drop Servicing
There are many compelling benefits that make drop servicing a popular business model, including:
Low Startup Costs – Because you don’t need physical products or inventory, the costs to launch a drop-servicing business are minimal. Usually, it’s just the costs of registering your business, building your website, and starting advertising campaigns. This makes it accessible even if you have a limited budget.
Passive Income – After orders start rolling in, your work becomes mostly hands-off. You simply manage order intake and communication while your suppliers deliver the services. This provides an enticing recurring revenue stream.
Easy to Scale – Since fulfillment tasks are outsourced, scaling your business is straightforward. You can take on more clients without linear increases in your own workload. Just line up more suppliers or boost supplier capacity as needed.
Flexibility – Drop servicing provides freedom to run your business from anywhere with an internet connection. You can travel or relocate while suppliers handle service fulfillment. It’s also easy to adjust your role and workload preferences.
Leverage Supplier Expertise – Gain instant access to skilled suppliers who have already invested time and money into mastering their craft, rather than having to learn skills yourself. This makes it easier to start selling specialized services beyond your own abilities.
For those reasons and more, drop servicing has become a go-to model for solopreneurs and small teams looking to build a scalable business.
Types of Services You Can Drop Service
The services you can provide via drop servicing are almost endless, but some popular options include:
Web Design and Development – With a pool of web designers and developers at the ready, provide site building and custom coding services without doing it yourself.
Graphic Design – Offer graphic design for logos, branding, promotions, ads, and more by leveraging unlimited freelance talent.
Digital Marketing – Provide the full range of digital marketing services for clients including SEO, PPC, email marketing, and more by outsourcing to experts.
Social Media Management – Manage accounts, post content, run ads, and engage followers for clients across all major social platforms.
Bookkeeping – Provide small business bookkeeping services like payroll, taxes, accounting, and financial reporting with the help of experienced bookkeepers.
Administrative Services – Virtual assistants can help with a wide range of administrative tasks like data entry, email management, calendar management, and more.
Copywriting – From website copy to blog posts to white papers, freelance writers can fulfill all client copywriting needs in your niche.
Business Consulting – Consultants can provide virtual coaching and strategy for clients around business planning, marketing, HR, management, and much more.
There are few limits on services that can work with the drop servicing model. Focus on services with recurring demand that can be delivered remotely via your suppliers.
How to Find Drop Servicing Suppliers
Sourcing high-quality and reliable suppliers is crucial to succeeding with drop servicing. Here are some tips for finding great partners:
Start on Freelancing Sites – Upwork, Fiverr, Freelancer, and Guru all offer access to freelancers skilled in just about any service imaginable. Post jobs to invite freelancers to apply.
Ask for Referrals – People who have worked successfully with freelancers and agencies often have referrals to spare. Reach out within your network.
Join Relevant Facebook Groups – For specific niches, Facebook groups like Designers, Developers, and Creatives are great for networking with suppliers.
Browse Marketplaces – Some marketplaces like Design Pickle and Mojo Virtual connect you directly with proven, vetted talent for your niche.
Search Locally – Don’t overlook local suppliers, which can sometimes yield higher reliability and communication.
Look Abroad – Countries like India, Ukraine, Philippines, and Mexico have skilled talent who often charge less than US-based suppliers.
Attract Suppliers Directly – Once established, share that you’re seeking new suppliers on your website and social media.
The key is to cast a wide net and properly vet suppliers before committing. Test them out first with smaller tasks to ensure a good fit.
Tips for Success with Drop Servicing
Ready to dive into drop servicing? Here are some top tips to set yourself up for success:
Pick An In-Demand Niche – Choose services that have recurring, evergreen demand from many different businesses to maximize your market size.
Price Competitively – Research competitor rates and find a sweet spot that leaves ample profit margin but is still very competitively priced.
Focus On Customer Experience – Go above and beyond responding quickly, communicating proactively, and ensuring satisfaction.
Build Your Personal Brand – Establish yourself as an authority in your niche through content creation and thought leadership.
Automate Where Possible – Use tools like CRMs, payment processing, and email nurture to streamline operations.
Reinvest Profits – Continually allocate a portion of profits into growth opportunities like paid ads, content creation, and your sales process.
Master SEO – Ranking high in search engines is critical for attracting new leads. Learn SEO best practices.
Monitor Supplier Performance – Check in regularly on suppliers to ensure fast turnarounds, good communication, and quality work.
Have Backup Suppliers – Maintain relationships with multiple suppliers in case any have capacity issues or need to be replaced.
Stay Ahead Of Trends – Keep an eye on your niche so you can adjust service offerings to meet evolving customer needs.
By selecting the right niche, nurturing suppliers, focusing on automation and customer experience, and reinvesting into growth – you can build a highly profitable drop servicing business.
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Conclusion
Drop servicing provides an opportunity to leverage skills like marketing, sales, and customer management to build a lucrative service-based business – even if you have no expertise in the actual services being provided.
By essentially brokering services to clients and outsourcing fulfillment to capable suppliers, you can enjoy the benefits of business ownership with far less risk and effort.
Now that you understand the model, it’s time to start researching niche opportunities, connecting with suppliers, and laying the foundations for your new ventures.
Drop servicing makes it possible to turn your passions into a sustainable income source – without doing all the heavy lifting required in a traditional service business. So pick a niche, find great suppliers, start selling, and join the many entrepreneurs building freedom through drop servicing.
