The web hosting industry has made significant changes in the past decade, and customer expectations have moved far beyond storage to a services-driven market. In 2020 there are about 2 billion websites online, and a new domain is registered every 2 seconds. The growth of the internet continues to reach new highs and new markets. In the hosting sector, growth can come in many forms.
How does a hosting company increase revenue and continue to scale services?
Hosting companies typically focus on customer acquisition, which is a good target because, by the time you finish reading this, thousands of new websites will be hosted on the web. But the hosting industry is a competitive business, and customer attrition has always been tricky with constant drop rates caused by downtime, support quality, and other growing pains. For years, hosting companies’ growth has relied on Customer Acquisition Rate (CAR). Still, with the fierce competition in the industry, focusing your growth on Customer Lifetime Value (CLV) and the Average Revenue Per User (ARPU) is a proven strategy.
Increasing your APRU is nothing new in the hosting business; from webmail options to SSL certificates, and other checkout add-ons, most hosting providers have used upsells in their sales funnel for years. These bundled service packages increase your ARPU, but are you missing opportunities after initial acquisition?
Bundled service packages work at the start of a customer journey, but offering custom upsells based on CLV and personas can jumpstart your ARPU. Understanding your customer’s personas and needs should be part of your current growth strategy. Personas can range from a customer’s industry, content, skill level, and more. Once you breakdown your customers into personas, you will know your customer needs based on data and ARPU increases.
Creating custom package tiers based on personas and usage can give you insight into the customer’s needs from day one. For instance, understanding what type of website platform your customer uses, such as WordPress, can help you shape the customer journey. By offering your customers upgrades and add-on solutions based on this data, you can start to make custom upsell strategies that perform. Setting yearly goals for each persona is another excellent growth strategy.
What are the top-performing web hosting upsells and add-ons?
The current offerings have become industry standards, with most hosting plans offering at least one or all of the following included:
- Domain registration: Domains are at the start of any online journey. Offering domain registration helps to bring in annual revenue and increases CLV. Domains hold intrinsic value; customers keep them registered long after they close business or cancel a hosting plan.
- Webmail: Webmail has become a standard with most hosting plans, but most webmail services included with a hosting package become a simple mail forwarding system to Gmail or another mail client. A better Webmail experience with more robust tools and features is what current users desire.
- SSL: Secure Sockets Layer (SSL) has been around for the better part of twenty-five years and was a mandatory security standard for large and e-commerce based sites. Today, a basic SSL is required even to rank on google. Offering basic and premium SSL certificate options can help raise your ARPU.
- Website security: In the past decade, the number of password hacks and malware has been front-page news. Offering advanced Website security, such as Malware scanning and removal services, is an excellent choice.
- Auto-backups: Anyone who has had a website should know the value of backups. Showcasing the importance of backups should be a highlight of your offering. Using terms like ‘Hacked Site Restore’ can help a new customer understand what they are paying for.
Reduce customer attrition with value-added services:
Essential add-ons and extensions have been increasing as we move into more of a DIY Software as a Solution (SaaS) market place. In the past decade, the hosting business has new competition in the DIY Website Builder market. These SaaS companies have taken a good share of the Small to Medium Business Market (SMB) by offering feature-packed Website builders with proprietary hosting.
The SMB market accounts for a large part of the hosting industry and continues to grow. There are around 215 million small to midsized businesses worldwide, including 89 million in developing markets. This is one reason the most well known hosting companies have double-downed on the SMB market. Understanding the needs and desires of these customers is essential for the future of web hosting, these solutions include:
- Website / Page builders: Drag and drop page builders have been a necessary add-on for the DIY customer. There are many white-label page builders available for license. In addition to custom site builders, products like BoldGrid can add value to the primary WordPress user.
- SEO & Marketing: The DIY SEO & Marketing sector has been growing with SaaS providers offering automated Adwords and step by step SEO solutions.
- Simple E-Commerce solutions: E-Commerce generated 3.46 trillion dollars in 2019, and around 16 billion E-commerce websites are currently online. Adding easy integration with products like Shopify can help customers start selling with ease.
- Team Integration Tools: Adding unified team communication tools adds more value than standard webmail and can give a company a fully branded communication experience.
- Web Apps and Third-party API Integrations: Web apps can help SMB customers with big data, automation, and workflows. Using third party APIs give users quick access to services such a stock photo assets and more.
- WordPress Dashboards and Tool Kits: WordPress currently powers 35% of the internet, with 455,000,000 websites running on WordPress. Adding tools to manage WordPress installations and tools has been a growing market for the past decade.
- Video Training: Customers have become accustomed to video training from YouTube and paid websites. In 2020 due to the work from home scenario, we have seen every training, meeting, and conference talk in video format. Partnering with a video training provider can add value to your customers and help manage the number of support tickets your team receives.
The cPanel application directory has hundreds of partner add-ons and extensions ready to add features and value to your customers.
Acquiring a complementary product for growth:
Acquisitions can also play a significant role in new offers and solutions and generate massive profits, exclusive offers, to skyrocket your ARPU. A brief example is the case of Perfect Dashboard. Perfect Dashboard was an auto-updater service for CMS with a heavy focus on WordPress. In 2019 WP Engine, a premier WordPress hosting company acquired Perfect Dashboard’s Auto Updater and now can offer a proven, exclusive service to its customers. The most significant player in the acquisition game is GoDaddy, with ten significant acquisitions over the past four years. GoDaddy has been able to roll out new offers and upsells each year via the acquisition strategy.
When should I offer upsells and add-ons to my hosting customers?
Timing can be everything. As previously discussed, some upsells, and add-ons make perfect sense at the initial checkout, while others are better served through custom offerings developed by data. There are many factors to consider when someone buys a hosting plan, from intended use, budget, knowledge, and more. Simplifying the checkout process with fewer options can give you a better opportunity to showcase the value of premium add-ons once your customer has launched their site.
The reality of growing a hosting business today is data. It’s now easier than ever to gather customer data and use it for your growth strategy by adding customer value that scales up your hosting business by serving your customers. Outside of collecting customer data on your property, inviting customers to share data through incentivized surveys, social media contests, and webinars are just a few more ways to know your customer.