Threats and Opportunities for Web Hosting Companies

Many web hosts work under the assumption that they are selling something that people need, a website or web hosting. In my opinion, this is not 100% true. Here’s why.

With the prevalence of social media spaces like Myspace.com, Facebook.com, Linkedin.com, Flickr.com etc, people have begun to realize that they can obtain a web presence and a “sharing space’ online without the need for web hosting.

Case in point, check the Google trends:

http://google.com/trends?q=web+hosting&ctab=0&geo=all&date=all&sort=0

http://google.com/trends?q=facebook&ctab=0&geo=all&date=all&sort=0

http://google.com/trends?q=blogger.com&ctab=0&geo=all&date=all&sort=0

You can see from these trends that what the consumer really needs is NOT web hosting in the traditional sense. Rather, they need a place on the internet to share their ideas, photos, business and personal interests. THAT is what they really need.  Users of a service like Facebook may, or may not, even think of their Facebook page as a website! All they know, is they are on the web and can be found on the web. They know they have a way to build this presence easily and to can connect with others.

If you are a consumer who has zero intention of making money with a web page or website, actually paying for a website or webhosting does not make as much sense as it used to. Web hosts would be smart to realize this. On the other hand, those who do have a business or commercial intent are more likely to be motivated to use a web hosting service. Why? Because of the perceived value: the ability to control look/feel/functionality of your site, increased technical features and importantly, the expectation of better support.

A lot of hosts are up against the wall when it comes to attracting non-commercial web hosting clients. Their response to the “social space” trend is to offer cheaper service (with the hope that someday a commercial intent will develop and upgrading will be needed) and more “add-ons” or value added, fee-based services.  These are mostly geared towards the non-techy, non-commercial site owner.  Such “widgetizing” of the web hosting industry will help hosts obtain new clients, but expectations in the consumer’s mind are still being set by their exposure to and experience with other social media services, as well as their experiences with other previous web hosts they have done business with.

So as a reminder to all web hosts…remember no one really NEEDS web hosting these days, and even less so if they do not have a commercial intent. What they DO need, is a way to build a presence and a way connect to the world. What they do need, is a partner, to help them expand their use of the web and to grow their imagination and realization about what is possible when you have a website. They need results. Everthing else is just a means to and end.

Some tips for hosting companies:

First, don’t try to re-invent the wheel! You may think you are the first host to present a feature/product to the world, but chances are you are just playing catch-up. People will know this and see through sugar-coated marketing. That is not to say you you should not offer new features and services. Just be careful how you sell these.

Secondly, look at an integrative approach to offering non-commercial consumers what they would get from free social space services. Let them have their social space (free) experience, but offer them a way to have that, plus more, with your hosting service. If possible faciliate their connections to your other clients. Customers meeting and helping each others will help foster a sence of networking/community that is present in the free social spaces mentioned before. For those consumers who do have a commercial intent or who choose to pay for web hosting, help them to grow their  imaginations/expectation about what is possible when choosing your service. And then strive to exceeed this expectation. Simply beating them over the head with price or feature-overkill marketing will not do as much for you as marketing the BENEFITS of choosing your service.  You want tem to know that you will grow with them, not because of them. Though the latter is certainly true, no one wants to feel like they are just a customer number. Your success as a hosting company is directly related to the success of your hosting customer.

Lastly, sell consumers on your relationship with them and listen to what they tell you they want.  Let them know you really do identify with them and can help them meet their true needs (which again, is not always just a website or web host). Your web hosting clients will tolerate minor inconveniences, which are always possible when technology is involved, much better if they view your company as a their “partner” and if you have built in them a sense of loyalty. The most important thing your customer can give you is not their money, it is their TRUST. If the consumer truly trusts you, the money will come as a natural by-product. You won’t have to beg them for it, or beat them over the head for it, they will gladly give it to you. Web hosts may think they are selling a product or service, but what they would do well to remember is they are really selling a relationship. The better the actual relationship with the consumer, the more a host will grow their revenues and customer base.

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