In today’s digital age, so many people are trying to make the transition from a corporate job that they hate to start a digital business so they can work from anywhere. According to Statista, there are over 13,000 digital agencies in the United States. There are even more digital service-related businesses.
A very popular business model at the moment is starting a drop servicing business. Whether it is content marketing, social media marketing, web development, logo designs, book cover art, or anything in between, it can be tough to get started from the start.
But do not worry. Just because it is tough it does not mean that it is not doable. You just need the proper guidance. Below are some of the biggest reasons why drop servicing business owners fail. Hopefully, you can learn from these mistakes, so you do not make them!
The general list of why people fail is:
- Lack of leads in the pipeline.
- Trying to do it yourself.
- Not focusing on customer satisfaction.
- Not getting referrals.
- Not valuing employees.
- Overpromising results.
- Not specializing and being too broad.
- Not defining a clear problem to solve.
Now let’s dive in and get into some of the details for each of the 8 reasons below.
Lack of Leads in the Pipeline
If you look into general statistics, most small businesses do end up failing. The odds are certainly not in your favor. Actually, Investopedia posted a statistic that only 25% of companies last 15 years or more.
One of the biggest reasons why small businesses do fail at the start is because there is a lack of new business coming in.
A lack of revenue coming in means that you are going to be burning through cash too fast and eventually have to shut down because the company is not profitable. A way to ensure that you will have new sales coming in is to build up a pipeline.
As an owner, they must define their marketing efforts and really focus on one or two channels. Whether it is cold calling, online advertising, or other methods. Just always make sure that new leads for the business are coming in so that you always have a steady amount of clients.
Trying to Do it Yourself
A major problem with drop servicing business owners, in general, is that they try to be a jack of all trades. Some might call this a “solopreneur” because they have to do everything by themselves.
Look at any successful business in the world, and I can guarantee that it is not a one-man or woman show. You need to hire a good team around you because one person focusing on marketing, finances, payroll, strategy, and other aspects is not going to be effective.
The first step in my opinion to building a great team is to find out what you are not good at or want to do. Then, find people to delegate those tasks to because your energy is not worth that task. Also, delegate tasks that are not going to be the most effective thing for your time, like posting to social media or tracking orders. All successful CEO’s say that you should begin to “fire yourself” from the business so you can set up systems for the future.
By setting up systems, you are going to make your business a machine that does not even need you to be grinding all day. You can hire a virtual assistant first, a sales rep next, and then add more people to your team as your business grows.
Not Focusing on Customer Satisfaction
Customer satisfaction is what is going to be one of the most fundamental aspects of your brand. If you make a lot of people upset and do not learn from your mistakes, then how could you expect your business to grow? This is why you have to make sure you have great reliable freelancers on your team from Fiverr or Upwork.
You need to aim for great customer reviews because those can carry a heavyweight in landing your jobs in the future. Social proof is one of the most basic, yet underused aspects of marketing. If you could include 4 testimonials in your advertising for more clients, then you are on a fast track to exploding your business and the revenue.
Even though the first tip was to focus on new business, you can’t forget about your current business. Having a high satisfaction rate is going to lead right into the next section. Make sure to ask if you can use the freelancer’s case studies or portfolio when starting off to help get your business off the ground.
Not Getting Referrals
Going hand in hand with customer satisfaction is using referrals. Referrals are easily the cheapest way to grow your company after you have a few successful relationships with clients. Business owners in a niche probably go out to eat and network with other business owners.
A good relationship with just one client that you get results for could bring your agency business for years to come if you play your cards right. It all comes down to overdelivering with results and then asking for the sale.
Sometimes referrals are not going to come until you ask for them. After you have built a good relationship with them, then you can ask if any of their friends or other businesses that they know could benefit from your services. Once you reach out to a referral and mention your client, you will likely get the deal.
Not Valuing Team Members
The next reason why drop servicing agency owners fail is that they do not value people on their team. A good rule of thumb is to never hire someone that you do not see as a long-term partnership with. After you have that rule in place, then you have to value them if you want them for the long haul.
You have to give them work and training that is going to both benefit them in their skills and then in your company. Giving your team members growth is a huge win-win situation for everyone. Valuing your team also means that you have growth opportunities for them to grow in your business and accept more responsibilities.
More responsibilities are also going to mean that you will usually need to pay them more or give up some of the equity in your company to them if they are vital to the future of your digital service-based business.
Since the new trendy thing to do is to start a drop servicing business instead of a dropshipping business, there are a lot of phonies out there. Bad agencies or sellers have left a sour taste in some client’s mouths because they did not deliver on results.
The worst thing to do is to say concrete numbers and figures that you can improve on and then not hit the mark. The first thing to do is to not overestimate the results that you can get a client. You are setting yourself up to fail.
One of the biggest things in business is trust, and once that is gone then so is the relationship! Be sure to promise exactly what you are going to deliver, and then try to overdeliver on your normal results using freelancers to do the digital tasks.
Companies that focus on exceeding expectations will have no problem retaining clients and getting new leads because they are the talk of the town in that industry.
Not Specializing and Being Too Broad
Going back to outreach, marketing, and building your pipeline is focusing on a niche or problem that you solve. Being a general website for all business owners or professionals is not going to get you as far as focusing on one niche at first.
To expand in one niche and take market share, you need to put your focus on it. That means only reaching out and advertising to a certain niche of businesses like realtors or e-commerce stores, for example. Position yourself as the best in one industry.
Focus on a niche that could use your services and has the money to pay you. For instance, charging a dog grooming business $20,000 a month for advertising is probably not a successful niche to go towards. Define your niche and dominate, then you can branch out once you are successful!
Not Defining a Clear Problem to Solve
The last major point on why people fail at the drop servicing method is because they do not define a problem for their clients that they are going to solve. Just saying that you will run someone’s social media is not an effective pitch or way to bring value to a business.
Instead of “running social media”, why not say “we will increase engagement by 10% in the first 6 months and are looking to gain 8,000 followers?” The second pitch gives tangible numbers that you can get results for and they will see the value in that.
Remember that whatever you say, make sure to deliver it and then some to build that relationship. Delivering those results will then lead to customer satisfaction and then referrals. Hopefully, you see that all of these points are related and are vital for drop servicers to survive in this climate.
Drop servicing is a legit business method. Be sure to learn from these points and focus on not doing them. It could be a difference between staying in business or having to let it go.
If you have any questions about any of the points listed below, be sure to reach out or comment below! Also, please share the post if you know anyone that could benefit from this.
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By Darius Gaynor
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