ISPCON: Hotshots in Hosting

As a Tucows newbie, I'm at ISPCON to soak up insights about the industry, meet our partners and pick up on trends.

The Hotshows in Hosting session was an interactive round-table featuring perspective from:
- Christian Dawson, director, corporate development, ServInt Internet Services
- Will Charnock, vice president, technology, EV1 Servers/The Planet
- Christopher Faulkner, founder, president & CEO, C I Host
- Ted Smith, vice president, dedicated hosting, Peer 1 Networks

Moderated the by Candice Rodriguez from Web Host Industry Review, the panel focused largely on how these companies became leaders in web hosting.

Tell us how you became " hotshots" in hosting?

Dawson: For ServInt, our success is completely shaped by earlier failures. We started with core dedicated server business and then built a backbone network. Next we built a content distribution network. Then we built a DSL arm. Eventually, we realized we were getting fairly big and disparate and it was difficult to keep the beast together. We found we were slipping away from what gave us early success in the business. After the bubble burst, we realized we had many arms that didn’t relate to our core business. We ended up chopping off the arms and scaling down. We returned to the roots of how a small company gets business: by exciting people about the product you have and the service you offer. We talk about what makes our service different and customers tell their friends. Our central focus is organic growth. We're doing it the old school way.

Charnock: The success we've enjoyed has been viral in nature. We set out to build a solid, affordable service. Our customers ask: "How can you do it so cheaply?" We don't spend thousands of dollars advertising. Our growth has been organic in nature. Organic growth is the engine for sales. Our primary sales experience is the in-bound sales call. We rely on our customers to relay the message about what a great product/service they’re getting. We look at incentives and referral programs, but there's nothing more powerful in this industry right now than word-of-mouth. The community is very clique-ish. Focus on pleasing your customers, the word will get out and you’ll experience some growth.

Faulkner: Forty per cent of our sign-ups last month were via word-of-mouth. We do of outbound marketing via telemarketing - to small business lists, new corporation sign-ups, sales tax permits. Everyone needs a web site these days. We also market using our network of resellers. Our resellers's customers call in and speak of one of our agents as if they were speaking to the reseller. We manage back-end support/technical support for our customers. This allows customers to focus on sales. Slow and steady, managed growth pays off in the long run.

Smith: We've been successful when we try and work the customer's desired solution into a more supportable environment for our support team. Where we can partner and if the customer is willing to talk, we can garner commitment.

What specific tactics and marketing have you used?

Dawson: We don’t spent a lot of money on marketing – no print, radio. We run a few banners. The number one thing you can do is get executives into popular formus, like Lots of people who hang out there are looking for what it is you’re offering. Become part of the community - answer questions, ask questions. You don’t need to give everyone your secret sauce, but there are ways to ingratiate yourself to the community. It is all about trust these days in the industry.

Charnock: Let your product speak for itself. Stay engaged with the customers you have, so you can build trust. Most customers don’t want to deal with a nameless, faceless entity. Make your customer feel like they are the most important customer you have. As you grow, it is a challenge to give that personal touch and scale the business. It is important to make sure that you’re out there involved in the community. From the marketing side, I’m don't think there’s a magic bullet. It varies from company to company and a lot of times you have to explore what you want to do with your product.

Faulkner: I'm a true believer in specific targeted marketing as web hosting is crowded and competitive. Take a look at very specialized markets - build packages and services around a specific niche (i.e. lawyers, doctors). You can use public relations to position yourself as an expert in topics and industries. There's also that fear factor, especially the small business owner who doesn’t understand [web hosting] and wants to align with someone who knows what they are doing. For the last 10 years we’ve tried every kind of advertising (tv, print, radio). It doesn’t work. If you’re big enough to build the brand, great. Put the money where the clients are – brand isn’t worth anything if you don’t have any customers.

Faulkner on publicity stunts [background: CI Host got buzz a few years back when they sponsored Jim Nelson to tattoo the company logo on the back of his head.]: It [the stunt] was money well spent in terms of our name. Lots of people forget what is was all about, but it did brand our name in people's brains. Stunts work when coupled with other things. Although, you should be careful not to associate yourself with a weird negative event, i.e. the risk of sponsoring the birth of child. We sponsored Evander Holyfield having our logo on the back of boxing trunks. We could have got a lot of negative buzz from that, fortunately he went the distance. You have to be creative. Don’t do anything twice. The cool things about stunts is that they create longevity. Reporters and people still talk about it, five years later. Grass roots and publicity stunts can be affordable and effective.

Smith: For us, about half of our monthly sales come from existing customers. Don’t forget about your home-grown market. Big spends don’t equate to new accounts.

Charnock: Focus on existing customers; they grow and you want to grow with them.

Dawson: Give customers an avenue to grow. Allow them to buy more services at the click of a button.

Faulkner: Most customers have multiple vendors. They don’t know about your other services. We have a life-cycle program where we contact customers about their growth and success. It is very important to have some sort of life-cycle program, where you ask: "Hey how do you like services?" and you can ensure you fit their needs. Making them feel like you’re a partner in their success is very important. The customer thinks: “I can stay here and grow here. They care about me, and not just the fact I give them 100 bucks a month on the credit card."

Dawson: We use internal forums open only to customers. They talk about their experiences, ask questions and tell us if we drop the ball. We communicate with customers there, but more importantly they communicate with each other. For example, a customer might need a system admin to fill in for a weekend, or they have PHP script that's giving them tough time. All of a sudden your hosting company is also a killer resource for these individuals. They feel like they’re part of a community. We're also building a wiki with FAQs to teach customers to use services we provide. It allows customers to collobarorate, contribute. Use your web tools.

Charnock: Our active forum community is open. Customers appreciate they aren’t censored and their complaints are addressed. The idea of participating in online community is very valid. It may morph into a social network. We don’t know how it’ll transform. It is one of the ideas we are kicking around. We do have active users on forums who are not our customers. Our forums help build engagement with customer base. We’re putting it out there. We’re participating. We reply to customers who may have concerns. We get good ideas. It is a great place to mine customers for information. It goes to building a stronger bond with customers. Customers like to know you’re listening and if they see results from the input it builds the bond.

What works best for the call to action in marketing?

Charnock: Don’t do anything that devalues your product (i.e. give it away for free). Coupling with promos is a good idea.

Faulkner: It is a crowded space. The issue when you give away too much is a lot of people have a get-what-you-pay-for syndrome. "I want bang for the buck, but I don’t want K-mart hosting." I like free value-adds – something small, where the value is increased but the price stays the same. You have to realize the type of customer you’re going to attract with discounting. They’ll cost you a lot of support, and are price conscious shoppers who won't stay. It means wasted time, money and effort. It is best to show value to the business owner – free seminar, free book, file corporation papers for free. You want a hook – be careful, who you’re trying to attract.

Dawson: My favourite promo is to "pay moving costs" and offer 10 days free.

Charnock: The offer should be complimentary - free domain with a server. It should be complimentary to the product you’re trying to sell the customer.

Dawson: We've done fun give-aways like disposable cameras with the message: go on vacation, we’ve got you covered.

Smith: It is important to drive traffic to your site. Give-aways work, i.e. iPod. They can be done well. Do a variety things, not everything will get customers.

Charnock: Run a zero set-up special. It is an effective away to get customers to go ahead and push the buy button and not be dinged 200 bucks to try the service.

What about competition and the rise of alternate business models from competitors outside the space?

Smith: Amazon's S3 new storage offering is a big deal. It is the ability to load content and securely distribute based on storage and transfer.

Charnock: With services like Amazon's EC2, the proof will be determined over next few quarters. It is a potentially disruptive technology to some of us up here. Ultimately Amazon has a big trust bridge to build with customers. How comfortable will they be? Can they ensure data being backed up? What’s the infrastructure looking like? Will change how we look at future products? We don’t want to get caught off guard, so we'll keep a close eye on it. It may change some things.

Faulkner – A lot of companies think hosting has the connotation of a cash cow. On the flip-side it is a resource cow and not as easy as a lot of folks think. These new services create an additional pipeline for customers coming in who need a web host. They create catapulting effect. Amazon’s technology and all their different revenue streams means their competency is not in web hosting. Unless they have extremely disruptive technology, a lot of times these companies create market awareness and additional revenue streams for us.

Charnock: A lot of companies might work starting out but may not scale. Time will tell if this is something that’s got legs.

Dawson: Even if it is great, we can adapt and move. The importance is not tech innovations but service innovations.
Post a comment
No comments found.
Post comment:
Format Type: 
  Convert newlines
  Receive comment notifications for this article
insert bold tagsinsert italic tagsinsert underline tagsinsert strikethough tagsinsert linkinsert blockquote tags
Comment verification:

Please enter the text you see inside the graphic to post your comment:
You are not currently logged in. If you would like your user information to be displayed with your comment, please enter your login information below.
Login information:
If you would like to post contact information on your comment, please enter your information into the optional fields below:
Contact information:
URL:  example:
Please note: email will not be displayed on the site, only for the blog owner. If logged in, URL will only be used.