Secrets of Running a Successful Hosting Company

[Matt]

The market is good for new web-hosting companies. According to Forrester Research, there is now “positive — if modest — growth for Web hosting and managed IT services, at both the enterprise and SMB levels.”

The hosting industry is one of the few profitable sectors of the Internet. As such, large corporations such Yahoo are offering Web hosting services. You, too, can join this highly profitable business and reap the financial awards -- but only if you do it right.
To build a successful Web hosting company, I offer the following two time-tested and proven rules: Focus on offering high-quality services in a tiered pricing schedule.

In addition, it is essential to use good infrastructure to create self-sufficient customers. For marketing, it is crucial to maximize intelligent marketing opportunities.

Leverage an automated infrastructure to create self-sufficient customers.
Automation will create a self-sufficient client-base and reduce your expenses down the road. In order to provide the best-possible service, you'll want the following automated: order forms (for new customer account set up or existing customer updates), billing system, administration system, end-user control panel, and tech support interface.

Order Forms
The front end of your order form should serve an minimum of these four key functions: 1) verify domain information for registration purposes, 2) validate entered results, 3) process the customer's credit card or create an invoice, 4) enter the customer's information into billing database for future use.

The backend of the order form must process the domain registration (if customer needs to register one) and generate the Web hosting account.

Administration System
The administration system is necessary to manage ordered accounts. You may wish to manually add or remove new domains, change passwords, etc.

End-User Control Panel
The end-user control panel is necessary for allowing your customers to manage their accounts. At the very least, customers should be able to set up e-mail accounts, view website statistics, and manage their files.


Billing System
An automated billing system is an absolute must! The billing system should e-mail invoices, charge credit cards, and suspend overdue accounts. The system should also allow you to issue credit or discounts as needed.

Technical Support Interface
By tech-support interface, I'm not referring to a system that merely generates trouble tickets. An effective tech-support interface automatically generates an FAQ-interface customers can search before submitting trouble tickets. These interfaces can reduce tech-support requests by a factor of 10!

In addition, be sure that the company you choose offers the option of doing the end-user technical support on your behalf but fully branded with your brand. You should focus your energy on your core competencies and growing your business.

Maximize intelligent marketing opportunities.
You know what platform you want to use, you've figured out what packages to offer, and set up a tiered pricing schedule and automated systems. So how do you get the word out about your new hosting service?

Pay per Click
Pay per Click can potentially allow you to reach large numbers of customers. Although you don't pay to list your site, you do pay when a user clicks on your listing and connects to your site. How, then, do you get your site high on the results lists? You must engage in a bidding war over how much you're willing to pay for each person who clicks through to your site. The stakes have recently grown pretty high, so be careful about bidding too high. Just because someone clicks through to your Web hosting site, doesn't mean they'll convert into a new account. Also be sure to select targeted keywords not competing with everyone else for the same keywords. Bidding for the same keywords as everyone else is a very difficult game to win. Find your niche.

Hosting Directory Sites
There are numerous Web sites known as hosting directories -- that attract web-hosting customers. These hosting directories are an excellent place to advertise, but be selective in your placement. Many offer banner placement, spotlights, search enhancements, and other forms of advertisement. As a general rule keep in mind that banner ads are better for creating brand recognition than generating new accounts, so advertise based on your budget, not on your expectation of new clientele.

Leverage Your Current Client Base
If you run an established web design firm, information portal, or domain registration service, you can immediately begin marketing to your current clients. A simple e-mail to your customer base can instantly generate a large number of accounts.

Offer New Products and Services
Keep in mind, once you acquire a solid customer base, you can consider developing new products and services to keep your customers happy and to generate additional revenue. But always remember: Quality is key!
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Backend Hosting - The better solution for web hosting resellers.

[MikeR]

Useful, thank you.

[Matt]

excellent! Thanks for the feedback.

[Jarrid]

Seems well written. Nice job. Interesting read for newbies.

[Matt]

Excellent. Glad you liked it. If you think of a follow-up article idea that would work work well, let me know. Thanks.

[Timmy00]

Do you guys know of any good billing systems out there that i can buy? Thanks

[aqua hosting]

i know a very good billing script you can buy and its very cheap i use is at www.aquahosting.co.uk as it is very good its called autohost (search it on google) and it costs £10.50 for life (some other ones cost that much per month)

[Carter15]

A top billing system is important. As a CSR, I've had experience with many billing systems, and "Ubersmith" is hands down the best out there.