What is Drop Servicing? By Dylan Sigley
Are you wondering what exactly drop servicing is? Well, you’re going to find that out as well as how to go out there and start one of these businesses yourself. Better yet, I’m going to show you the steps and some ideas around the types of drop servicing businesses you can get started with.
Essentially, it’s leveraging the fact that we can hire teams from around the world and get access to the global labor pool and find the highest quality teams at the lowest price, then using that create offers around those services, and then deliver those services to clients in our home country, or whatever country we choose, just because of the fact that we have total communication ability, we can communicate with anyone around the world and offer them anything from around the world.
It allows us to create these styles of businesses and leverage the fact that you can get a much better price at the same level of quality in a different country for a given service. So we can get in contact with a CEO in the United States who may need a website, and we connect them with a web designer in the Philippines. And then we make a profit based on their transaction. So the value that we’re generating is connecting the two — a high-quality web designer with a client in the States in this case, right?
That is a pretty high-value skill because it’s quite difficult to go out there and find the right person when you’re a company. You have to go out there and look at all these freelancing sites or look at all these job boards and find the right person. It’s a lot of time, energy, and money that goes into their hiring process. So, what we do is we actually come to them, we say, “Hey, we have these examples, testimonials, this is the level of quality, this is the price…” We’re very transparent with everything, which allows them to make a decision right then and there.
Most people, most companies know they need something, but they just don’t have the time and money to go out there and look for it right now because it’s not urgent and important enough. However, if you come to them with the right offer, a really great deal, they’re going to want to take it right away and move forward with the service that they know that they need.
So, being a completely digital drop servicing business, we have a competitive advantage over local companies because they have higher costs as they need to pay for these fancy offices and have a full-time staff. Whereas as a drop servicing business, you only pay your team when you have a project for them. So, you’re able to hire the team as soon as you have a project for them. It means that you don’t have the costs associated with running a business.
That allows you to be extremely flexible and fragile when it comes to finding new clients. Now, the local established brick-and-mortar company would say that you’re lower quality because you’re using freelancers or teams from around the world where, as a matter of fact, what you’re actually doing is finding the highest quality teams, vetting them, making sure they’re the best based on examples, testimonials, giving them test tasks, et cetera.
When you’re done establishing that they’re a high-quality worker and have a great price, then that’s when they become a part of your team. That’s the entire value proposition around these drop servicing businesses. This way, we can beat our competitors on price very easily, just by our access to a global labor pool of workers who are higher quality or as high quality as the competitors.
It also allows us to automate everything so that we have the freedom of time and place, freedom to do what we want, when we want, and with who we want. We can automate everything with people and software. However, before you get to that point, of course, you need to have gone through the process of vetting the team, making sure they’re high-quality, and creating an irresistible offer that makes your potential clients buy. There has to be urgency and importance around what they’re going to buy in order for them to move forward with you.
So, we can define drop servicing as selling high-ticket services from one country to another and making a massive profit from the difference in cost and price. Drop servicing is really made possible by three things: freedom of communication, freedom of location, and freedom of time.
Freedom of communication is just the fact that with the communication technologies we have access to today, with social media and all these messaging apps, we’re able to get in contact with anyone around the world. There may be some barriers, but, eventually, you can get in contact with someone one way or another, whether it be over social media, emails, calling, ads. We have complete access to a global economy. We’re able to leverage that to create a massive value for our clients.
And because of freedom of location, we’re completely virtual teams. We can literally serve any client around the world and we can get in contact with any team or freelancers. We have access to a global labor pool, and a global market, which means that we’re going to be able to find the best price and the best quality and connect them with the best clients by leveraging different marketing channels.
But why does it work? Well, at any given time, these companies around the world are spending billions of dollars on services. Companies need a lot of things done, but they don’t necessarily have the money or the time and the people in that business in order to actually carry out the things that they need. For that reason, they look externally for service providers. Most companies even have a dedicated marketing budget they need to spend every quarter in order to get their marketing budget renewed.
So, yes, companies need external help, right? But why would they work with you? Why wouldn’t they just go with the local company or another competitor? Well, that’s where the competitive advantage comes into play. First of all, because we’re able to come into the market and offer a much better price, create an offer around it that seems irresistible, that’s using different marketing and copywriting tactics to position ourselves as the best option in terms of importance, urgency, costs and quality.
This is what enables us to close deals faster in a typical sales cycle. Usually, with a drop servicing business, it takes around two weeks, on average, to close a larger deal. But beyond the ability to create a competitive advantage, we’re also able to go out there. And because we’re in a global market that’s so large, we’re really only a drop in the water. We’re not really competing with the big boys in the local market, we’re competing with a global market, which means that we’re really in a blue ocean.
You know, there may be a lot of competitors, but there are so many more clients and companies around the world looking to buy the services. And any company can’t handle all of the clients and all of the demand out there. The reason for that is they’re bounded by the resources, they only have so many people that can deliver these services, right? They don’t have all of the service providers in the world. And because these services are delivered by people with skills, they can’t hire everyone in the world, in order to deliver these skills. We don’t have an Amazon of Business Services yet, maybe we should build one.
What I’m saying is, essentially, there are so many drop servicing businesses out there, they can only handle so many clients. At a certain point, they feel big enough, they don’t need to get more clients, and they don’t want to go out there and search for more. And that’s where you go in. At a certain point, these companies become big enough, and they no longer need to grow. Often they’ll just look for bigger and bigger clients wanting to spend more and more money, which leaves the smaller companies to go after the smaller clients. Then, eventually, once they grow big enough, they go after the bigger clients too.
In reality, we’re all bounded by the number of resources we have at play, we can only grow these drop servicing businesses to a certain extent as well. So, this isn’t some kind of billion-dollar business model. It’s just good for getting in there with low barriers to entry and building a business relatively quickly, around six figures in size. Most of the drop servicing businesses I’ve seen only pay six figures at the most. There’s not many that get into seven figures, but there definitely are some that get to that level, just the majority don’t.
I mean, there’s 1000s of these sales companies out there, and most are just a one-person companies. They don’t even need to get that big, they don’t feel the need, and they are bounded by the resources they have. That’s why it’s an opportunity. This market is always going to have demand and businesses always need services that they can’t deliver themselves because they don’t have the knowledge and the skills in the company to do it.
Then, on top of that, the companies that actually deliver these services can only handle so many clients. That means it’s always an opportunity for new companies to come into the market and deliver a service (if they can promise high-quality and a good enough price). It’s very easy to find a team, build a team of web designers, for example, set up an offer and put the offer out into the market and get clients. That’s low barriers to entry, Porter’s Five Forces, right?
So, low barriers to entry means it’s very easy to start a company. Porter’s Five Forces really dictates the levels of profitability that you can attain in a given industry. But, in this business model of drop servicing, it’s not really that great in terms of the amount of profit that you can generate. You can’t become a massive company, but you can certainly create a large enough company to live a life of freedom and build that kind of a freedom-style business that enables you to go into those larger businesses if you come up with some great idea later.
Because we really do have low barriers to entry in this market, then the potential of new entrants in the industry is very high. It’s so easy and very popular to start one of these drop servicing businesses and the power of suppliers and customers is relatively high because customers have access to so many different options. Suppliers have access to the different options as well. So, it doesn’t create massive profit margins, but you can build a decent-sized business very easily because of the low barriers to entry and high demand in the market. But because of Porter’s Five Forces, it really just means that you can’t grow a massive company, or it’s very rare to grow a massive company in this business model.
Quite simply, these companies will go with you because they don’t have the knowledge and skills to do it themselves. They don’t have the resources and time to go out and find another service provider, they want to get the results faster, they want the proven system. They’ll go with you because you’re the first person to offer it to them. A study found that 50% of sales come to the first person that reaches out to the company. And that really just proves the point that these companies don’t want to go out there and put all of the time and money into searching for all of the different options, and figuring out what the best company to go with is. The only time they do this is when it’s a company policy.
Humans always want to minimize time and energy. For that reason, we typically just go with the first thing that presents itself. So how big is it? Well, the US business services sector consists of about 410,000 establishments with combined annual sales of about $770 billion. Now, an alternative methodology using economic data puts the size of the global market at about $5 trillion. This is a massive business model. It’s a massive market. But because there are so many companies going in, and it’s very easy to start one of these businesses, it’s difficult to scale them. You can only grow them to a certain size. That’s great for us because we can build a business that’s large enough to sustain our freedom and create that freedom lifestyle if that’s what we want.
However, if you’re looking to become some kind of mogul, it’s probably not the best business model to get into right away. You can use these small lifestyle businesses to fund those larger business ventures though. It’s really kind of a starting business. And I would say the best business model to get started with if it’s your very first business because it’s so easy to start and get those first clients. We don’t even need 1% of the market in order to build a good enough business. You only need a certain amount to live that freedom lifestyle around six figures. And it’s pretty easy to build a business of that size in this market if you follow the right steps.
These three reasons that it is really the best business model right now, in my opinion. First of all, there may be a lot of competitors in drop servicing, but because the drop servicing market is so huge, it’s not that difficult to get enough clients in order to build your business big enough. So, because we’re a drop servicing style service based business, it’s much easier for us to get success thanks to our low costs. We only need to plug in and get a small chunk, a small piece of the pie, in order to drive enough results and revenue for us to get to our freedom income number.
So, once we learn how to build one of these drop servicing businesses, we can do it again and again, all you’re doing is copy and pasting the system that you build from one service into another. You might build a marketing video-style drop servicing business and then build a Facebook ads agency drop servicing business. That’s something that I’ve done. The point is, the market is so huge, and there’s so many different marketing channels that we can use to reach such a large global market, that it’s very easy to start these businesses and get your first results with them, which is why drop servicing is the best business to start if it’s your first venture.
Online businesses are really the best place to start if you want to build any kind of business because the costs are lower compared to a brick-and-mortar style business. So, what’s the future of drop servicing? Well, as businesses become more digital and virtual, they become more efficient. So, the costs become lower, which means there is a great opportunity for businesses to go more virtual. The goal of any business is to maximize profits, which is why they’re going to want to go online, become more virtual. They get greater efficiencies from it.
What we’re finding based on the recession statistics that I’ve seen is that, first of all, your employees are a lot happier, they’re more productive, and the company sees reductions in costs by not having your employees having to come into work and that sort of stuff. The IDC estimates that the worldwide market opportunity created by digitization is worth a staggering $20 trillion, over 20% of global GDP. That’s pretty crazy.
So, what exactly is the model? And how does it work? Well, a pure drop servicing business means that you’re the intermediary or the marketer, setting up the team with the client by different marketing channels. So, the first step is you’re going to find competitors. In terms of finding an idea, just look for anything that is a service that businesses need. It could be a certain type of business, a niche that needs a certain type of service, etc. And then you can find what companies have in terms of their offer when it comes to those services. Next, look at different freelancing teams and jobs and what other people have to offer. This way you can see, for example, that a team in the Philippines has a much lower cost, but the same level of quality as a competitor in the United States. And there is a massive opportunity. If we connect that team in the Philippines who has a much lower cost, but the same level of quality, with the clients in the States, they’re going to get a massive amount of value from that difference in cost without them having to go out there and search for this team themselves, which they’re unlikely to do.
Once you find the service and you find competitors in the market offering that service and then you find freelancing teams, you can create your offer. So what your offer does is really just highlight the fact that you’ve got a much lower cost than your competitors. So, you can base your offer around that price. It could be a discount, it could be waiving a fee. Whatever it may be, you need to structure that offer using copywriting tactics, which are easily found online. If you do some research on copyrighting, you’ll figure it out.
Then, you put your offer out into the market via marketing channels like Facebook or email, whatever it may be. And then you look whether you’re getting a good reaction to that offer. You see whether your offer is converting. You tweak it, you work on it until it does work. And then from there, you can scale up into different marketing channels or even different services. Once you figure out the right offer. From there, you automate everything with people and software, so you no longer have to do everything yourself. And that’s how you create a freedom-style business via drop servicing.
I hope you understand a little bit more about what drop servicing is and how to start drop servicing business. Let me know what you thought.
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