How to Increase Earnings with Web Hosting

Web hosting is a competitive but extremely profitable business. With all of the established brands and large hosting companies in business, most people don’t think about getting involved in the hosting industry. However it can be an extremely lucrative opportunity to increase your earnings, particularly if you consider focusing on niche markets.

The Opportunity
If you are planning to get into mainstream hosting and take on the large brand hosting companies in the market, then you will need to be prepared for the challenge. In order to participate, it may be necessary to have a large marketing budget, investment in large infrastructure and the willingness to confront the heavy competition in the industry.
As an alternative, if you are willing to focus on local and niche markets, it may be a little easier to reap the rewards of a successful business. While many people are more comfortable dealing with large companies, there are some who would rather deal with local companies or those whom they are familiar with.

People typically tend to be more comfortable when they are able to talk to someone face to face or on a phone rather than deal with a large, faceless corporation where they have to contact a call center to get support. This is also the reason why most of us would rather buy hosting from someone that we know personally.

Another opportunity could arise from the fact that the mainstream hosting companies tend to automate a lot of processes in order to reduce costs. This intimidates a lot of people who are not as comfortable with technology and may be fearful of breaking something due to unfamiliarity when trying to doing it themselves.
While the niche and local markets may not be as large in size, it requires a lot less of an investment to get started, and typically less management.

If you are willing to make yourself easily available, add personal touches to your services , and help people accomplish more technical tasks, then you can actually charge more than mainstream hosting companies by competing with them in local markets. It is particularly easy to get started in offering web hosting services locally if you have an established web design business or if you have a reputation as a local IT expert. For web designers in particular, offering web hosting as part of a web design package that can translate to a regular income stream.

Infrastructure Needed
The basic infrastructure required to provide a hosting service is to have a web server on which you can host your client’s websites. A web server is the only thing required to run a hosting business, but there are some additional items that can increase your profits and make it much easier for you to run your web hosting business. While they are not necessary, some of the additional things you may want to invest in are: billing software, customer support software and a domain reseller account. Let’s talk about the above mentioned infrastructure in detail and what should be kept in mind when purchasing it:

a. Web Server. When running a business, the core objective is to minimize the expenses and maximize the profits. If you are just getting started and don’t have a large enough number of clients to justify having your own dedicated server, then it is best to begin as a reseller of another hosting company.

A large number of hosting companies offer reseller hosting packages for a fairly low price by sharing dedicated server resources among various resellers. With these plans, you can have the ability to resell hosting space without the high costs associated with the day to day management of a dedicated server.

b. Domain Reseller Account. Most hosts also offer the ability for their clients to register domains with them if the client doesn’t already have a domain name to use on their new website. By offering to register domains for your clients , you gain further potential revenue and upsell opportunities as these domains need to be renewed, usually every year.
To be able to register domains for your clients, you will need a domain reseller account with a company such as eNom or Wild West Domains. These companies allow your clients to register, manage and renew their domains automatically without you having to do anything.

If you want to make the whole process even more transparent, most companies which offer domain registration solutions also offer an “application programming interface” (API) access which allows you to integrate the registration right into your reseller website. Most automated billing software also has built-in support for popular domain reseller accounts.

c. Billing Software. When you have multiple clients with hosting accounts who are billed at different times of the month, it can get hectic trying to manage the finances. For this reason, it is a good idea to get specialized hosting billing software. Not only can billing software make it easier for you to manage the finances, but it can also automate the process of account creation while up-selling additional services like domains and customer service.
Some companies which offer reseller hosting include a license of billing software such as clientexec or WHMCS in their monthly price. If you don’t want to use a package that your hosting company offers, or if you resell space on your own dedicated server, then you can get a license either through a monthly lease or you can purchase a copy outright.

d. Customer Support Software. While email and phone may be viable for providing customer support initially, as the number of clients grows, it is best to have a ticket based customer service software and a knowledge base of frequently asked customer support questions available.

By having a ticket based system for providing customer support, you will not only make it easier for you and your staff to manage interactions with customers, but you will also be able to increase customer satisfaction by providing a way to track the progress of support queries. Also, having a knowledge base of frequently asked customer support questions will reduce the number of inquiries that customers may ask you and save a lot of time in the long run.
Most customer support software also includes a Customer Relation Management (CRM) module, which makes it easier for you to build and manage a relationship with your customers and increase profits by having an accurate profile of your customers.

Customer Support
Customer Support is one of the most critical aspects of success for any web hosting company and it is also the most time consuming and resource intensive of tasks. However, it is important to put systems in place to avoid the chance that customer support takes up more time than necessary. Here are some tips for customer support management:

a. Public Knowledge Base. It is always a good idea to have as many topics as possible available in your public knowledge base. Customers want quick answers to their problems, and if they are able to find a solution in a public knowledge base, then they will have less reason to contact your support department.

b. Avoid Using Technical Jargon. If you already have expertise with the subject, there is sometimes a tendency to use technical jargon in the solutions. However, you have to realize that your customers may not be as technically able as you are. Try to keep the technical jargon to a minimum as this will help reduce the number of questions that customers need to ask you.

c. Use Ticketing Software. A ticketing system allows you to assign a unique identification ID to every support request that your customers post. Not only will this make your company look more professional, it will also make it easier for you to keep track of support requests. There are many “off the shelf” software solutions like Kayako and Cerebrus that you can use.

d. Develop a Community. A lot of hosting companies have had success using public forum software and chat rooms to manage customer support. This lets your loyal customers help other customers and reduces the work load on your support staff. In addition, it can help build your social network, which also helps build your business. Software like vBulletin, PHPbb and SimpleMachines can make it easier to start building such a community.

Marketing Techniques
When it comes to marketing, mainstream hosting companies focus on volume strategy and acquiring as many customers as possible. For them, it is possible to offer extremely low prices since they are able to make up for low profits with high volumes.

For a hosting company focusing on local and niche markets, it will not make tactical sense to compete with these mainstream companies in price and still be profitable. The focus and main selling point of such companies should be on providing quality service and charging slightly higher prices to be profitable.

Here are some marketing ideas that you, as a local hosting company, can use:

a. Local Networking. Joining various business and social groups can always be helpful for generating hosting leads. Even online social networking at sites like linkedin.com and facebook.com can help develop contacts that might buy your services at some time.

b. Speaking at Events. Speaking at local events can give a huge boost to your credibility as an expert and that can lead to a number of those attending the event to use your services. This also gives some customers a sense of pride and a feeling of trust when working with a local expert rather than a faceless corporation.

c. Writing in Publications. Getting published in local newspapers and publications is comparatively easier than national publications and can give more tangible business results . Let local journalists know that you are available for quotes and even be willing to write original articles for the publications.

d. Speaking on Radio. It is easier to get on radio talk shows than most people imagine. If you have the ability to face interviewers and talk persuasively, then you should approach local radio stations and let them know that you are available for speaking on topics of local concern related to your business or expertise. This can not only be a huge credibility boost but can also result in direct business generation.

e. Local Classifieds. Advertising in local classifieds is an extremely cost effective and inexpensive way of generating new business. However, rather than trying to directly sell in small classified ads, encourage readers to send in their contact information to receive some sort of free gift or information booklet and then work on up-selling your services to them.

f. Current Customers. One of the best sources of generating new business is to ask your current customers to help spread the word about your services and recommend it to those they know. It is always a good idea to reward your customers in one way or another as it keeps encouraging them to promote your business. Even a hand-written thank you note can mean a lot to them.

Conclusion
While it is true that the mainstream hosting business can be very competitive, there is still a great deal of opportunity in local and niche hosting markets. The easiest way to succeed in this and any other business is to remember to keep your costs low and take action to maximize profits. By diversifying and taking part in the business building activities listed above, there is a very good chance that your web hosting business income will increase dramatically, possibly even faster than you may imagine.