12 things to consider before starting a web hosting business

If you are planning to develop a startup web hosting company but you are still wondering how to grow your business there are some things you should consider first. You can enter the hosting industry on many levels. Buying a VPS with control panel and selling white label services, getting a cloud hosting and reselling from there, colocation your own hardware in data center and managing it yourself or building your data center with servers, network, connections and so on. Each level requires different investment and knowledge. That is why you should keep reading, in order to make up your mind and decide if you really want to enter in the hosting industry.

1.Make a good research

If you have decided to get involved in the hosting industry 10 years ago, it would be quite easy. Years ago, anybody who started with 1 server and invested a certain amount of money on advertising could attract hundreds of clients. But these days, there are thousands of web hosting providers. So, if you want to have a bigger chance for success, you should first make a very good research on the market.

As you can see from this google trends graph, the search for the terms is decreasing which means the market is getting even more competitive.

2.Finding customers

You have probably wondered how does a web hosting provider, whether he’s new or a well established one finds customers. Some companies focus on selling locally, while others search for clients nationwide or even globally. As the hosting services market is getting more saturated it is hard to find customers and what you will have to do is apply different tactics and steal customers from existing companies. You can do that by providing better price for better service. To find your feature customers you will have to identify the hubs where they hang out before making a decision or if they are not happy with their current provider. Places like tech forums, top review sites, how to make money online sites (yes, those guys will need hosting at some point)

3.Organizing your advertising

If you are a new company in this industry, you should consider the fact that Google Adwords charges up to 30£ per click, sometimes even more, on certain phrases and keywords in the search results. This will make you spend fortune bidding for clicks, but you won’t get any guarantee that you will get the converting visitors you are aiming for.

You should be really careful if you are using Google Adwords with placement ads, because their services can sometimes waste your budget by putting your ads on low quality websites and still charge you a few pounds. Of course, there are many other websites, whose owners will make the impossible to get clicks on their customer’s ads. But sometimes this is not a very good idea, because they “force” people to click, in order to start content delivery, which for you will be a waste of money.

Still Google is the best solution in terms of traffic that can convert for a starting business. You can try other search providers like Yahoo or Bing but they are not so big in the UK and getting a quality traffic from there can be hard and time / money consuming.

Another good idea could be to place ads on blogs that already appear in the search results for your phrases like top5hosting.co.uk or set up an affiliate program. This way you can share revenue with bloggers that write about your service and both drive targeted traffic to your site and increase your brand recognition. Plus you only pay if a visitors buys product from you, not on click, which is a ore budget way to do things.

Pro Tip

Set up your google and facebook retargeting pixel. This way you can target people who have already visited your site. Research says that a person has to see an offer 4-6 times before he buys, so you need to show your ads to people who have already visited your site since this is a very targeted audience.

4.Search for potential traffic sources

You definitely need to make a good research on the effective and ineffective traffic sources. Because some websites send a huge amount of traffic with very low conversion, while others sent quality targeted visitors, who are more likely to become clients. That is why, making a good research is crucial if you don’t want to miss opportunities, or lose money on advertising.

5.Marketing tricks

Web hosting providers use different methods to attract potential customers. The reason is that not every person who visits the website is planning to buy something. But does that mean that these people cannot be helpful too? Your web host management team should know that the least they can do is to use these people as referrals. For example, before anyone leaves your website, you can ask them a question or give them a discount, which will stimulate some of them to leave feedback or make a referral.

Pro Tip

  • Use exit popup to show relevant offer or discount or offer something free for an email sign up. This way you can increase your conversion rates and build a mail list.
  • There is a LOT of search and demand for free web hosting. You can try to offer something free with limited resources so you can get a customer base and then scale it for sites that have traffic and get profit from them.

6.Support operations

Your web hosting company has a few options when it comes to customers support. You can employ and train a support team or you can outsource it to a 3rd party because there are many companies out there which provide Customer Support for low prices. The downside of this is that you will have to give control over your operations to 3d party and you can not ensure a high quality of the provided support. If you decide to keep your support inhouse, this is much better in terms of security and service but it will cost you a lot of money.

7.Billing customers and prevention from frauds

Some web hosting companies bill their customers using an online merchant account from any bank. Most of them use PayPal but of course there are many other options. Operating a merchant account has its disadvantages. On the top of the list is the need of dealing with online frauds. Every online merchant has to order screening procedures to prevent fraudsters to become “clients” and apply an advanced technology for fraud prevention.

Another problem you may face is the dishonest people. Some of them may use your company’s services and after that decide to reverse the payment and ask for their money. Others get very abusive and they submit negative reviews in websites for consumer’s feedback. But you should not panic and become aggressive too, because you may ruin your company’s reputation. You just need to be ready to respond adequately and deal with the situation delicately.

When it comes to payment methods the rule is the more the better because different people use different services. PayPal, Skrill, Bitcoin payments, accepting major credit and debit cards etc.

8.Make a research on the other web hosting providers

If you are just starting with your web hosting business you will have to possess all the tools, which the other big hosting providers offer to their customers. In any industry there are people who like going with big names and big brands. The same goes to web hosting. If you want your company to be successful and make people prefer it over the other ones, you will have to differ from them with something. An advantage would be to offer the same applications and services and even try to get upon them.

9.Get to know your customers

A very effective way of keeping your customers is to review the websites, which they host with your company, to understand their business and to find a way to offer services which will be in their favor. This way you will get them to appreciate your company’s concern for their business which will lead to positive feedback and more customers. Of course this is not an easy job but it is what will make you more successful.

10.Upgrades and development of the service

You need to consider depending on the market niche, whether your customers need to upgrade or downgrade their services. It will be very helpful for your business if you create partnerships in different market niches with other web hosting providers. The reason why you should do this is because your company might not have capacity and infrastructure to cover all of the service levels.

11.Create your personal terms of service

Many online service providers follow the practice of copying other company’s conditions and terms, because they don’t know how to create a unique service framework. You must not make the same mistake. The terms of service of any company should represent a unique service model. This is what defines what you can and what you cannot do. What is possible and what is not for your company. If your service management doesn’t know how to create the conditions and terms of services, they should better consult with the people who provide the infrastructure to your company.

12. Providers of hosting infrastructure

It is a known fact that the places from where web hosts buy capacity from are other hosting companies. You should not let yourself get fooled by marketers. Every person who is involved with sales isn’t clean-fingered. Nobody will tell you their company’s disadvantages, because they will always represent it in its most favorable light. That is why you should always be on the alert and always ask for more information and details. Don’t be afraid to take your time to understand the offers you get. If you decide to take a risk and sign a contract make sure it is a short-term one or month to month contract. And also make sure that you won’t have to renew any obligations. In the negotiation process always try to come out with a compromise between both sides and don’t count on undocumented promises. Most of the sellers like talking a lot and promising things but until you have everything they said written in the Service Order don’t agree with anything.

And finally, make sure you get to know very well the terms of service of your provider. It will be a plus if you find someone in your infrastructure hosting provider to work with. When you are having a correspondence or open support tickets make sure you explain everything step by step and provide detailed instructions. And you have to be very polite, patient, friendly and respectful with your provider’s employees.

If you consider buying a reseller plan or white labeling a hosting service make sure you check our list of the best web hosting providers in the UK and get some good practices from them or even buy the service.

Last modified onWednesday, 30 March 2016 17:22
12 things to consider before starting a web hosting business - 4.6 out of 5 based on 10 votes

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