Drop Servicing Guide: The Drop Servicing Business Model and Blueprint
Drop Servicing: The Only Guide You'lll Ever Need
It literally dawned on me a few days ago…
Now, bear in mind this was the 3rd ‘point of contact’ I’ve had on this subject over the last 6 months. The first was back in September 2019. The Second was in November 2019 and the 3rd was in January 2020.
All different conversations, with different people, in different countries – but all centred around the same topic. And, when something ‘pops’ up in conversation showing the same sort of patterns, I sit up and listen.
And, that’s what’s happened this time.
The first conversation back in September involved 2 friends. We had been meeting up weekly for a coffee. We’d discuss everything from travel and books to personals stories and philosophy.
Eventually we got a point in the conversations where we speaking about business. We had come up with an idea: combining all our skills together we wanted offer paid advertising social media services to small and medium sized businesses to didn’t have the time or know-how to do it themselves.
There was one catch though.
We weren’t looking to do the grunt work ourselves. We wanted to charge the client a set amount every month for the service but outsource the actual work to another business for a lower price and then, well….bank the difference.
Ultimately, that business idea fell by the wayside. It happens, not a problem. I’ll put the idea in my list of things ‘To Do: Someday’ and move on forward with my own business.
The second conversation came in November. This time there was only 2 of us, but it had strikingly similar patterns…
This idea wasn’t that different from the first…
…we wanted to offer premium SEO services to MMA Gyms. I had the SEO experience and know-how and he had sales skills and experience working in the MMA industry. So selling a premium a service over the phone seemed like a great idea.
Again, not wanting to do all the leg work ourselves we were going to outsource the work to another company and collect the profit.
Yet again however, the idea fell away. This time for different reasons – but, the result was still the same. No action was taken. So again, I went back to focus working on my own business. Not really seeing that there was pattern starting to emerge…
By the end of November I had sold my business. I took December and January off to go spend with my family and travel with some friends.
One of those friends, who I had met in Chiang Mai, Thailand wanted to start a new business. He was a photographer and videoagrapher and wanted to offer similar services to small businesses.
And, If you haven’t guessed it already….
He didn’t want to the work himself. He wanted to be the middle the man. Find the clients wanting the work, charge them a premium and then outsource the work to someone else.
Now at this point I’ll shamefully admit I still hadn’t seen the pattern. It took another conversation with this same guy for it it to finally dawn on me…
Not only was there a pattern in the type of work being spoken about even though this was with 4 different people, in 2 countries, 3 cities and within a timeline of 6 months in the timeline…
…but, I had already been doing it in one of my other businesses for well over a year now and had worked in this business model for well over 5 years previous to that.
What we talking about here?
Drop Servicing: (Service Arbitrage): The Next Frontier of Business?
Every single one of those conversations involved what is now being coined as ‘Drop Servicing’.
Drop Servicing (or Service Arbitrage) is where you find a client who needs some work done and then outsource the work to someone else who can do it for cheaper than what you’re charging your client. You then pick up the difference and bank the profit.
So for example: You find a client who needs someone to manage their social media accounts. You charge them say $800 per month. You then find a company or individual that can do the same service for $400 per month.
You my friend are now making $400 profit every month without doing the leg work.
Drop Servicing: The Argument for Ethics and Values...
Okay I understand, especially in the world we live in at the moment, you might have some reservations on the morals and ethical conduct of this kind of business.
- ‘Isn’t that just sneaky?’
- ‘Hmmm, I don’t know, it doesn’t really feel right…’
- ‘But, isn’t just taking advantage of someone else?
Aside from prostitution and possibly war, it’s definitely up there with one of the oldest industries in the world.
Now I understand that prostitution and war aren’t the best comparisons to make, but I make this point to re-enforce that this idea isn’t new – it’s been around for a LONG time. It’s just matured and developed.
Here’s a more ethical example…
In the UK, I used to do a lot of community work. Now, I wasn’t a volunteer, I got paid for the work I did. I (and a few others) would go into schools around London and deliver their sports programs and activities.
Now it’s important to note we weren’t full time employees. We were ALL freelancers who worked for other organisations doing similar work.
This is service arbitrage. The owners of our companies never did the work. The just got us to do it and then banked the profit. This is essentially drop servicing in the offline world.
Now let me give you an online example.
Drop Servicing: Online
I have freelance copywriting business. Where I provide copywriting services to businesses and agencies.
My work falls into 2 clear categories:
Category 1: Enjoyment
This where a client sends me an interesting copywriting project to complete. I feel fuzzy and excited inside to complete the project. So after understanding the brief, I pull up my sleeves, drink a few cups of coffee and get to work.
Usually, i’ll finish it within 48 hours. It may come back for a revision or 2. But in general, the project gets completed with high quality work completed and minimal issues.
But then there’s category 2…
Category 2: Please Leave Me Alone
The ‘Please Leave Me Alone’ category involves projects that land on my lap that not only look boring but are a pain in the backside to complete. While, I want to say ‘Please Leave me alone’ we all know, this isn’t as simple as it sounds.
Listen, there’s a whole community out there that say ‘love the work you do’ and turn everything else away. That’s great if you’re earning $10,000 for a single project last less than a week.
But, for the rest of us, there’s going to always be a certain amount of work we have to do (wether your own business or a job you might have) to keep the cash flow coming in until we build and develop the right systems in our businesses where we are in the privilidged position to turn away work.
Drop Servicing Example
So, I have few of these projects that land in a Whatsapp messages, emails or trellos boards every month.
One in particular involves creating 1500 word SEO optimized content for a travel company. I can do it. Better than most – but, it’s like pulling teeth for me. It could take up to a week (sometimes more) to complete one of these pieces of content.
And even then, there’s a very good chance it’ll come back with more revision requests than 5 of my more excited copy projects put togther,
And to put the nail in the coffin? These types of projects almost always pay less. Sometimes up to 50% less than those more enjoyable copywriting gigs.
Why on earth would I want to stick those pins my eyes, beat my head against my desk and stress myself out?
I didn’t. So, I outsourced the work.
I found a writer on Upwork who would research, write and edit the content for less than the cost I was charging my client. I then banked the difference.
This is Drop Servicing.
Drop Servicing Using Fiverr
A big wave in happening at the moment. There’s been a lot of talk about it.
Drop Servicing using Fiverr.
It involves finding clients on Upwork, by cold calling or through paid ads and selling them a service that you can then outsource for cheaper on Fiverr.
Not a bad a strategy. There a tonne of services on Fiverr you can outsource and if you find the right niche your quids in…or dollars in…or whatever currency you use…’IN’.
You’ll be able to make some nice profit.
My hunch though is this funnel will become saturated pretty quickly. So, to stay in the game you’re going to have to casting your net a little more unique and possible wider.
Take ‘Logo Design’ for example. You could, use this service as your drop servicing idea. However, I probably wouldn’t recommend it as it’s one of the first things people will search for when they start their Drop Servicing career and is already overly saturated.
If you’re serious about your drop servicing agency, you’ll need to dig a little deeper….
Before we get into some the details of setting up your drop shipping agency, let’s just explore the funnel and the processing of drop servicing first.
Drop Servicing Business Model: Blueprint & Process
Pick a Niche
Close The Sale
Fulfil The Order
Drop Servicing Funnels
Now, there are more steps to this process – obviously.
Your funnel is extremely important. Without it you’ll be doing all your efforts a huge dis-service. A funnel is essentially a direction in which you send your traffic. You feed them through the top of the funnel (TOFU), have a few systems and processes in place with the end goal of getting them to the bottom of the funnel (BOFU) paying your for your services.
Here’s that in a more visual format…
The Inbound Drop Servicing Funnel:
There are essentially 2 funnels you’re likely to come across when selling your services. The first being the ‘Basic Funnel.
Your Basic Drop Servicing Funnel (BF) will have minimal steps involved. While each persons might look a bit different it’ll usually involve the steps in the image.
The benefits of a BF is that they are relatively quick (and cheap) to setup and require very little moving parts.
Suited For?: Basic funnels are suited for lower priced services or when you’re using a freelancer marketplace to get clients.
The Premium Drop Servicing Funnel
The Premium Drop servicing funnel (PF) is better suited for services that require a large sum of money to deliver. I’m talking anything above $100 depending on the service and clientele.
Why? Well, Unless your agency and service has already built up a huge amount of reputation and trust for the services you offer, people aren’t going to lay down $500 for some social media management service before speaking to a real person on the phone – they’re going to want to take time to make a decision, get video explainations and want to ask a lot of questions. For this funnel there are more steps involved.
Here’s how a PF would roughly look:
Best Suited For: Premium services and monthly retainers that require more money. This sort of funnel would also be advantageous when trying to sell your services to cold leads.
Starting Your Drop Servicing Agency
So now you’ve got a better understanding of:
- What Drop Servicing Is
- How Drop Servicing Works
- The Overall Process
- And, the 2 main drop servicing funnels you’ll use
…it’s time to get started in setting your drop servicing agency up. Click on the images below to get started…
Drop Servicing: Is It Here To Stay?
So we return back to our original question: drop servicing, is it the new frontier of business?
Well the short answer is NO.
It’s not new. It’s been around in business for longer than you’ve been alive. It’s so prevalent so much in the offline world that even when I drop my clothes into a hotel reception to get them washed. They’ll outsource the washing and drying to another business and collect the difference in the cost.
So while it’s not the new frontier of business…it’ more like the new frontier of ONLINE business. While savvy marketers have actually been doing it for years, it’s now starting to take a more mainstream approach.
But, there is a catch…
I was watching a video the other day and I came across a comment underneath from a girl who was complaining that ‘Drop Servicing isn’t for everyone.’
Well, it kind of is, IF you are willing to put the work in. While there is considerably less work involved than say starting an Amazon FBA business, authority websites or actually doing the service yourself…
…there is still some work to do.
Now like anything else, there are ways to shortcut, ways to increase profits and reduce your time spent on the business. But, in these case you usually make a trade.
You trade your money for example for more time. Instead of setting up the funnel yourself you might pay for a Clickfunels subscription or even get someone else to build the funnel for you.
There’s also the skills you have to be aware of. Yes, you could theoretically set your agency up in services you have no knowledge about. And it would work if you were smart enough in other areas of the business.
But, to really increase the chances of success you’re going to at the very least, understand the services you’re offering – which is especially true if you’re offering a premium service. You may even need to update your skills.
I’ve watched many business models come and go 10 years of working online. Some disappear as marketers exhaust there capabilities. Other stick around.
I believe drop servicing will be one that sticks around but not before a whole of people jump on the bandwagon and try setting up their own agency. It won’t be easy though.
As with dropshipping, the winner will be the early adopters, those with a bit of business and marketing know-how the the dedicated individuals.
The rest? Well, they’ll give it a half-hearted effort, not the like results, give up and find the next thing jump on that.
Or even worse, complain on Youtube video saying complaining they don’t have the skills necessary to take action.
Don’t be one of those people.
Stand up. Take responsibility and deliver a valuable service that people want.
And remember, you’re not just building a business, you’re building a better you.
How much more motivation do you need?