Who is Trey Gardner
& Kaumil Patel?
Trey: I have been in the web hosting business
since 1999. I have worked for or have helped to build 8 web hosting companies
including; iPowerweb, iPage, StartLogic, Dot5Hosting, Globat, Lunarpages,
Hostpapa and GreenGeeks. My primary role in most of these companies has been in
the sales and marketing of the hosting services we have provided, which
includes the reseller program manager for several of these companies. I have
also held executive positions in Quality Assurance and Operations.
I would like to talk with you about marketing
and sales acquisition strategies for those of you looking to start a web
hosting company. I have been around the block a few times and I have helped
grow a company from 1,000 customers to over 250,000 customers in just a few
years. I have also seen how poor decision making at the senior level has
stymied growth in some of the other companies I have worked for. Before I
continue I'd like to introduce my business partner and COO of GreenGeeks,
Kaumil Patel. He's the one that makes sure that everything works right for our
customers once they get here.
Kaumil: Originally starting out as a web
developer and running several successful web projects, I decided to get
involved in the web hosting industry in 2001 at the young age of 16. It's safe
to say that I have grown up with the web hosting industry. I have held
positions in sales, billing, technical support, abuse, system administrator,
network administrator and even data center technician. I've also been involved
in acquisitions, mergers and have extensive experience with account migrations.
With over 12 years of experience, I will
provide some insight on the operational foundation that your web hosting
business will need to ensure its long-term success.
Company Goales &
Market Share
Trey: So the first thing I would ask anyone
who is looking to start a web hosting business would be; what is the goal of
starting this company? Are you a web developer who wants to make some extra
money and retain your clients by offering them hosting with your web design
service? Are you looking to have thousands of clients and have this be your
sole source of income, or something in between. Knowing the answer to this
question will help you study the next important question: Is there a share of
the market you believe you can acquire?
Knowing if there is market share and how you
will develop customers is vital to how you grow your web hosting business. You
may already have many potential clients lined up, say for instance if you are a
web developer, and the clients you've built sites for come to you for updates.
You bill them for the updates, why not bundle that service with web hosting
that you provide, make more money from your existing clients and keep the
business closer to you. This would be my example of a smaller hosting company.
Kaumil: And for smaller hosting company goals
our reseller hosting is a great option. It's easy to use and easy to setup and
if you need help migrating hosting clients over we can help you do so for free.
You will get access to web host manager (WHM) which is a very popular control
panel where you'll be able to create and manage your clients web hosting
accounts. Your web hosting clients will have their own cPanel control panel,
which is the most widely used and most stable control panel in the hosting
industry.
You'll be able to set packages and limit
features and sell your own unique web hosting packages. The best thing about
our reseller hosting is that you do not have to worry about the technical stuff
such as how to setup and manage a server, or dealing with system administrative
responsibilities. GreenGeeks takes care of that for you. You will get 50GB of
disk space and 500GB of transfer to use to offer your clients and grow from
there with our scalable, easy to upgrade reseller hosting plans.
When you have time you can see our reseller plans.
Trey: Now if you're not a web developer and
say you want to own a particular part of the market, what part of the market
will you go after? After all, there are many types of ways to go to market to
acquire new customers. So, let's take customers that use WordPress as a type of
market to go after and let's take a geographic location like Dayton OH. (for
the sake of argument Dayton is where you live and work and you are also a
WordPress aficionado).
Say you know a lot about WordPress and you
want to build a web hosting company catered just to those customers. You'll be
competing with a ton of competitors, including GreenGeeks as we offer WordPress
as one of our scripts, as well as many hosting companies which are solely
geared toward WordPress sites. You are going to run into some headwinds in
terms of growth due to competition. Going after strictly WordPress sites is not
an impossible goal for gaining success but you'll need to be strategic in how
you go after these clients.
Now say you want to build a web hosting
service that offers all the main features as other shared web hosting
companies, not just WordPress, and you want to keep your focus on Dayton
because you know the local market and you believe you can drive local
businesses to your service. The population of Dayton is around 140,000 people
and if we say conservatively 5% of businesses and individuals have websites there
are 7,000 potential customers. You may have local competition and you most
certainly will have global competitors but you could carve out a good piece of
the market for yourself by promoting your hosting company in the local market.
Now, let's think outside the box, you live in
Dayton but you're also a WordPress expert and you think you can offer
exceptional WordPress Hosting to people and businesses in Dayton. WordPress is
a widely used content management system, so we'll say 20% of customers need WordPress
hosting and in Dayton that means there are potentially 1,400 customers. You've
reduced the potential customer base from 7,000 to 1,400, BUT, if you are the
expert in the area you could grab a larger percentage of the 1,400 customers
than you would of the 7,000 all around web hosting customers.
By focusing on not just the WordPress or
Dayton market, but by combining the two you have a higher potential to acquire
customers from an albeit smaller but more focused market share. This allows you
to concentrate on the features which your potential customers will be looking
for and it allows you to focus your marketing budget towards acquiring those
customers saving you money and increasing your ROI.
If you acquire say half of the 1,400 WordPress
customers in Dayton you'll have 700 clients which if you bill them at $10 a
month, you'll have $7,000 a month coming in. To make more money you can have a
higher monthly cost (I've seen $30+/mo in some cases) or you can expand. Let's
say the WordPress + Dayton offer worked, what about WordPress + Ohio. You are
still local because you are in Dayton but with Ohio's 11 million plus residents
and using the same metrics of 5% have websites and 20% of those use and need
WordPress hosting then you could have upwards of 110,000 potential clients.
Quick Note: The web hosting business is seasonal.
After you read the rest of this page I would encourage you to go to my KB
article on how the seasons affect new customer acquisition in the web hosting
marketplace.
Learning about the market you want to go after
is essential, but you dont have to know from head to toe every marketing niche
you want to go after from the start. I have found success and hard work breeds
potential including things you had never thought of before. When I started
GreenGeeks we offered shared and reseller hosting. We found out early that some
clients outgrew their CPU usage, their sites were just too strong to be hosted
with other shared clients because they ate up the resources that all our shared
clients use. We needed a higher level plan to accommodate these stronger
websites and decided upon VPS hosting services.
I was nervous about VPS hosting services
because I had marketed for a couple companies who didn't know what they were
doing with VPS. Kaumil convinced me that not only could we do it properly but
also that there was a strong market for those services and it would allow our
customers with high usage sites to stay with us. We started offering it, worked
through the kinks everyone experiences at the start of a new venture/offering
and today it is one of our strongest service lines.
What Server Types You
May Need
Kaumil: As Trey mentioned in his example of
Dayton, the growth potential is high, but is not going to happen overnight, so
how do you set up your infrastructure to support growth without breaking the
bank? You have several options:
·
Reseller Hosting: This would be your starting point and would support you up
to approximately 250 customers through a very seamless upgrade process. While
you would be in control with what kind of resources and features to offer your
customers, you would be ultimately be limited by what comes standard on most
shared or reseller hosting services. For example, we do not offer Ruby on Rails
on our reseller hosting platform and therefore you would not be able to offer
this as it is not available. Reseller hosting with GreenGeeks starts from
$19.95 per month allowing you to host up to approximately 10 customers and goes
up to $99.95 allowing you to host up to approximately 250 customers. While we
offer you the ability to create unlimited cPanel accounts with our reseller
plans, the numbers used in this example are an estimate based on real-life user
accounts we see here at GreenGeeks. Depending on your customer type, the total
number of accounts on a reseller account can be more or less.
·
VPS Hosting or Dedicated Servers: After surpassing 250 customers, you will
need to upgrade to a virtual private server or dedicated server which will be
your first real step into the wonderful world of web hosting. You will be able
to have full control over your environment and so if you wished to offer Ruby
on Rails, you could. You also would not be limited to the number of accounts
that you could create as you would have dedicated resources available to your
customers. GreenGeeks virtual private servers start from $39.95 and can go up
to several hundred dollars for our high end dedicated servers. We could also
build custom configurations to meet your requirements.
A common question after upgrading from our
standard reseller platform to VPS/dedicated is how many customers per plan can
I host. Our reseller hosting gives you a limit of accounts that you can create,
so that's a no brainer but when you.ve outgrown the reseller platform, it's no
longer that clean cut, but i still easy to manage. The truth is, there is no
set number. It doesn't work like that. It depends on the type of customers that
you acquire, what kind of websites they are running, etc. You have to manage
your computing resources, I.m talking about CPU, memory, disk space and bandwidth.
When you reach a certain threshold, let's say 70-80% utilization of your
resources, you simply purchase another VPS or dedicated server and begin to
provision new accounts on that server, you keep repeating this as you grow. So
when you have 1000 customers, you may end up looking like this:
server1.yourhost.com -
250 accounts
server2.yourhost.com -
200 accounts
server3.yourhost.com -
300 accounts
server4.yourhost.com -
125 accounts
server5.yourhost.com - 125 accounts
Placing more or less customers per server
depends on the computing resources that you have and the utilization threshold
that you set. After a few servers, you will have a better understanding of your
averages which can be used to optimize your servers even further. Setting up
your customers split across many different servers versus on one large server
also ensures that your customers are spread across different hardware. If there
is ever a server interruption or peak period, not all your customers are
affected. With this being said, the best way to get started is to start with a
reseller hosting plan, focus on growing your customer base and then start to
branch out with a virtual private server or dedicated server. The beauty of our
system is that we allow seamless upgrades, so as you grow your business we will
be able to assist you with migrations and upgrades to ensure that you have the
capacity to keep growing.
End Client
Communications
Trey: Ok, you have found your ideal customer
base and let's say that is WordPress + Dayton, you'll want to build your web
hosting business presence around that so you buy a domain name related like:
DaytonWordPressHosting.com or something to that effect which tells people right
away what your business does. You start to market your services and you begin
to acquire customers.
The essential part now is making sure that the
clients remain with you for many years to come and that means you need to have
comprehensive messaging to the client about how they get started, where they go
to login to their accounts and how they build new sites using WordPress or
upload their existing sites to you. Without a strong, comprehensive,
instructional welcome email these new clients can get lost, frustrated and
leave. Kaumil and our support team have drafted and redrafted our welcome and
client information emails to make sure that they cover everything these new
clients will need.
Kaumil: You've got to realize that not every
customer is going to be technically inclined and that this is going to be their
first time even attempting to have a website so clear and easy to follow
welcome instructions are integral to the long-term success of your web hosting
business. When constructing our welcome emails at GreenGeeks, we have 4 main
sections that we focus on which make it easy for customers to get done what
they need without the intervention of support.
·
Introduction -
This is where you'll thank them for their business and re-introduce your
company and the product that they have purchased.
·
Account Information & How to Login - This is where you'll list the login
credentials and how they are able to log into their account and begin using it.
·
Supplemental Information - This is where you'll provide any service specific
information. It can be anything, such as how to setup e-mails, how to take advantage
of the special offer that you included or in the case of our WordPress + Dayton
example, you could include specific information relating to WordPress.
·
Support / How to Get Help - Customers will get frustrated and lost. Don't make it
frustrating for them to find out how to get help. Let them know how they can
contact you, where their can obtain self-help articles, etc.
This e-mail is never set in stone. It is an
evolving piece of literature based on the feedback that we see from our
customers. We are always on the look out for issues that can be addressed in
the welcome e-mail.
Client Feedback &
Customer Retention
Trey: I think it should be a no brainer to
anyone when I say; gaining clients is far more fun than losing clients. You
might think, "well ya duh Trey" but I have got to tell you losing
clients can be catastrophic to a web hosting business.
I remember back in 2002 I was transferred a
call from someone looking to sell his web hosting business. This was not a
small business that he wanted to sell, they had over 30,000 clients and they
were losing those clients in droves, the person on the other line was completely
distraught.
He was having major server issues (which
happened more frequently in the early 2000's) and could not stop the flow of
customers leaving him, primarily I found out later from some of those same
clients, because none of them knew what was happening. Their sites were down,
there was no update on the hosting company website, the phones were jammed so
no one could get through, no one was giving them a straight answer by email and
no time of resolution and so they left. To them this was a nameless and
faceless company that did not care about them when those clients. were having
issues.
So we learn from this, at least I did. One of
the first things I did at GreenGeeks was to make sure that my personal business
email was on our site so that if someone needed to go beyond customer support
to vent or praise they could do so directly to me. Over the years I have found
this extremely useful to know my clients. mindset and to have a more
personalized company. My clients appreciate it and it helps to make sure that
they know that we care about our clients.
I would recommend this approach to anyone
starting out your web hosting business to either have the top person or the top
manager in the company offer the ability for your clients to get to you if they
need to. In addition to this we take periodic surveys of our clients, asking
how we.re doing and if there is anything that we can do better, which again
helps keep our finger on the pulse of those clients and what their needs are.
Kaumil: A good way to keep in touch with
customers is via Social Media. Having a Social Media presence such as a
Facebook page or a Twitter account will allow you to interact with your
customers directly where you'll receive both positive and negative feedback.
While we as a company and practically every
other business in existence strives to ensure that every customer is satisfied,
it is not always possible. Negative feedback can be devastating to your
business especially via social media, but only if you allow it to. Negative
feedback can be actually be positive. How you ask? Simple, you are gaining
insight into potential issues that exist in your company that you will now know
about and can fix. You'll also be able to communicate to the customer and
resolve the issue publicly which shows potential customers that you actually
care about your customers and business.
Social Media can also be used to announce new
features, upcoming maintenance and service announcements. It keeps your
customers in the loop. Everyone knows word of mouth is the most powerful
advertising method around, well social media is word of mouth on steroids.
Closing Thoughts
Trey: I love the web hosting business. It is a
growth industry, tens of thousands of business and personal websites go online
each week and if you can gain part of the market share you are going after you
should have a profitable business. Remember to have good communication with
your clients and good messaging on your website about what services you offer.
If you work hard at starting your web hosting service and follow these
guidelines you should do well. Good Luck!
Kaumil: For me, web hosting has been a great
business to be in and it will continue to be. Like Trey, I love it and am very
passionate about helping developers, individuals and small businesses realize
their dreams online. Provided that you take the time to properly implement a
strong foundation that is built for growth like we have mentioned, it can be a
great business for you as well. We work with thousands of resellers every day
to help them achieve success with their web hosting businesses and we can help
you do the same. GreenGeeks can be your partner to success in the web hosting
business.
Article Source: https://www.greengeeks.com/
