For a start up hosting company, starting with 0 clients, what is a realistic number of clients to get signed up in the first 12 months?

Enough to cover the start up costs? 5 a month? 10 a month? How many clients did you get to sign up in the first 6 months? 12 months? Did you get more clients or less clients in the first 12 months than you were expecting?

Of course i understand that the quality of your site, pricing, exposure etc has a huge part to play in the number of clients...

Depends what your advertising budget is, what types of hosting plans you offer, and your pricing.

If you're a small operation, then word of mouth is going to be your growth driver. Time honoured traditions like sigs in newsgroups and forums will also work. Never underestimate the power of that method. Heck, that method alone has been the driving force for so many hosts in the past.

If you hit 100 clients in your first year, you'd be going alright.

How many do you want to get?

And as Bob said this is really dependent on your budget. Are you working to pay costs while you go or in school or what? If you can bump all your money into ads you can see a big increase as you keep going.

If its 100 that means you need to get about 12 a month and figure you will loose about 10 to 20%... So how will you get those clients? Are you doing niche hosting or just general hosting and trying to compete with huge hosting companies?

If you are putting 0 money into advertising just consider each client a blessing.

If you are putting money into advertising you have to build it on the aspect to get you ROI in the time you intend to keep that client.

Basically if you expect a client to cost $50.00 to obtain then $1.00 a month to maintain and you get that client at $4.95 you would need to keep that client for 13 months to justify the costs of obtaining him.

You also have to figure in 10% loss of clients per month. Do not count these against yourself or for failures you made. You can do everything right and still lose clients, you just have to plan for it.

Basically you can't figure out how many clients you should get in the first year without figuring what you are going to spend in advertising, how much you expect a client to cost to obtain, then how long you have to keep that client to make a profit.

I might add that it depends somewhat upon what niche you are shooting for. If you are offering an expensive, high quality service you should expect to get fewer customers than a value host.

There are way too many variables, without a good sized essay, to estimate accurately the number of clients you can expect within the first 12 months. A lot of it depends on how you run the company.

If its 100 that means you need to get about 12 a month and figure you will loose about 10 to 20%...

Wow. That's a high churn rate.. if you're losing 20% of your clients you're probably not doing something right!

Wow. That's a high churn rate.. if you're losing 20% of your clients you're probably not doing something right!

Yea I was thinking that too. 0-5% is more what I'm seeing. I do everything in my power to keep them as a customer, though sometimes it's out of your control.

Yea I was thinking that too. 0-5% is more what I'm seeing. I do everything in my power to keep them as a customer, though sometimes it's out of your control.

You never figure low in a new company till you have figures to base it on. Always figure high, but 20% seems high to me also. I figured at 10%.

Wow. That's a high churn rate.. if you're losing 20% of your clients you're probably not doing something right!
Once you get into some serious numbers, 5 to 10% is pretty normal, and probably even under industry average.

Once you get into some serious numbers, 5 to 10% is pretty normal, and probably even under industry average.

I wasn't questioning 5 to 10% ... I was questioning 20%, which seems unrealistically high.

In summary to some of the questions:

Its going to be a budget host, UK based, hosting packages from £29.99 (and although that isnt the cheapest budget host around) the majority of features (other than number of allocated domains, bandwidth and webspace) are unlimited eg unlimited sub domains, unlimited email accounts, unlimited webmail accounts, unlimited mysql databases, unlimited email redirects etc.

Im looking to grow slowly and steadily and not looking to do paid advertising in the first instance. A seach on yahoo and msn for 'cheap uk hosting' or 'cheap hosting uk' finds me on the first couple of pages generally.

I suppose im looking to determine if i can achieve 20-50 clients in the first 12 months!

I think there is only Free Hosting which has 0% or <5% dropout rate since they just dump their account unattended. Fairly speaking, i would say with proper customer service, 5-10% is a fair rate. Note that % is relative. If you have 10 clients and you lose 1, you are losing 10%.

With regards to the number of clients, I think about 5 in a month (1 in a week) is kinda good starting target. So you get about 60 clients in the 1st year. I presume you should be able to start getting a dedicated server soon (provided you put in some capital) and keep things growing.

How will afilliate programs boost your sales?

Aussiebob how many clients do you have approx?

Hans

I think things are going slightly off topic, and im not looking towards afilliate programs to boost sales (well not at this time anyways).

The concensus appears to be a target of 40-50 clients in the first year as a general target!

Well, at 29.99 considering "Cheap UK Hosting" brings up prices at 2.99 I don't think you will get a lot of clients to be honest.

I think you need to rethink your target audience a bit.

The £29.99 is for a year, I presume the £2.99 is monthly making sabian1982's package cheaper

I suggest you find a niche, set a premium price and find as many clients as you need to live.

Back to your original question, I picked up only 7 clients in my first year (2002) and they were mainly business contacts looking for someone local to handle their hosting. Up until 2005 I really didn't do a lot of advertising and didn't push to get clients but as of now I am up to 48 hosting clients and have only lost 2 accounts during this time.

Providing quality service, good uptime, fast response to support questions and getting to know your customers will keep them coming back. Don't just sign them up and forget about them - I send Christmas Cards and do different things throughout the year just to let them know I am there for them. It has led to more customers through word of mouth.

And, I have only one hosting plan at $8.00 per month.

In my first year I had no idea what I was doing. I got about 10 real orders in 6 months, and 10 or 15 fake signups.... First year was probably 30-40 customers, with 4 or 5 that decided to move on.

This year (2005, my 2nd year of operation) I got around 100 new accounts, 20-30% of which were repeat customers. Word of mouth is extremely powerful, and is well over 80% of my new business.

Cheers,
Chris

I'm aiming for ~600 -- getting there slowly but surely!
Word of mouth is definitely the best method of advertising (and surely always will be). 100% of the signups I've been getting are from existing communities that I host.

The £29.99 is for a year, I presume the £2.99 is monthly making sabian1982's package cheaper

Thats correct £29.99 per year!!! Which is the cheapest and gives you 250mb of UK UNIX web space, 10GB bandwidth per month and allocation of up to 10 domain names.

So what about these so mentioned fake accounts? thats obviously something i need to take into account for when i offically start up... how do you define fake signups?

I'm aiming for ~600 -- getting there slowly but surely!
Word of mouth is definitely the best method of advertising (and surely always will be). 100% of the signups I've been getting are from existing communities that I host.
600 clients in your first year is good going, although it comes down to your plan/pricing/advertising etc. I think I achieved 600 clients with httpme in the 2nd year of business, back in 2003, when there were a LOT less hosts out there.

We did approximately 3300 acquired in the first year.

Acquisitions are the best way to grow these days. It’s cheaper per client and as long as you target hosts providing the same services you already do you don’t have to worry about migration to a different platform or software. You'll lose some at first but after the first three months its easy sailing with those recently acquired clients.

We did approximately 3300 acquired in the first year.
Was that part of the famous 5000 clients claim (http://www.webhostingtalk.com/showthread.php?s=&threadid=81882), or is this a different set of clients?

What I'm doing is aiming more for a revenue target than a number of clients target. You can have 10 small clients or 2 big clients that have the same amount of revenue.

What I did is calculate my costs and added on my margin to get me my target. The number of boxes was more of a market research and experience, but it gave me a number to shoot for.

Acquisitions are the best way to grow these days. It’s cheaper per client . . .
I don't know about that. I've seen hosts pay $500/client in acquisitions. That's a heafty customer acquisition price. It would come down to the purchase price obviously, but word of mouth is by far the most cost effective method of customer growth. It's just not as fast as other methods, but more stable and naturally organic. :)

Was that part of the famous 5000 clients claim (http://www.webhostingtalk.com/showthread.php?s=&threadid=81882), or is this a different set of clients?

It's pretty old Bob -- Go do some real research and come back. Thanks.

It's pretty old Bob -- Go do some real research and come back. Thanks.

Sorry but I am confused a little too by your numbers. After looking at your dates and your posts it leaves a lot of questions.

If you did a direct mailer that brought in 3000+ customers then it must have been the best ever in the world or you did it to all of Ontario.

600 clients in your first year is good going, although it comes down to your plan/pricing/advertising etc. I think I achieved 600 clients with httpme in the 2nd year of business, back in 2003, when there were a LOT less hosts out there.

I think we can do it -- if I miss by a few it's all good. I'm not reliant on the income from the operation however it's nice knowing it's covering itself near 2 fold within less than 3 months from starting. So far so good and yes, word of mouth is definitely the 'healthiest' way of growing.

It might be slower than going all out but in the end 100% of the incoming funds are being put towards infrastructure growth rather than going into googles pockets.

Sorry but I am confused a little too by your numbers. After looking at your dates and your posts it leaves a lot of questions.

If you did a direct mailer that brought in 3000+ customers then it must have been the best ever in the world or you did it to all of Ontario.

The fact is, we have acquired approximately 3000+ customers within one year. I have nothing further to say regarding this, the question was answered to the O.P.

Good day.

Let me get this straight, you started VistaPages.com on January 18, 2005 and have managed to get 3000 customers in only 15 months? I would say that is quite impossible or a miracle. I have never heard of your company and haven't seen you advertised in any of the web hosting forums or magazines I get. I did do a search on your company and found several negative items - so do you plan to KEEP 3000 customers?

And, finally why would a company located in Canada host their websites in Lebannon, Beruit? It seems much more practical to host 3000 customers in the same continent as the company is located.

Am I getting the whole story or are there multple companies involved to create the 3000 total? Things that make you go hmmmmm.....

It's pretty old Bob -- Go do some real research and come back. Thanks.
I was simply asking a question. No need to get all defensive.

You don't have any credibility here. Some things never change. Kind of surprised you show your face back on WHT, given your dramatic departure.

I think 300 to 400 customers is a good target with clever SEO work and small, targeted sponsorship. Aim high. work hard on it, and you should get at least somewhere (maybe 200?)

But it depends on so many factors... When I started out in 2002/2003, we targeted a segment of the market with high prices (windows hosting). By simply offering something more competitive, and by working out sponsorships and doing some targeting advertising (small value), things worked out very well for us in the 1st year. I think we've had an easier ride that the average host. But I'm sure any host can achieve good growth with smart marketing.

Also, a large part of your growth will come from your existing customers recommending new customers. So if you have achieved 100 customers in the first 8 months, don't be surprised if you signup another 200 in the next 4.

Hmm, Aussie Bob buries a bone and someone digs it back up. Never dig up another dogs bone, they will always want it back. ;)

. . . I think we've had an easier ride that the average host. But I'm sure any host can achieve good growth with smart marketing.
Probably because you chaps were smarter than the average host. :D
Also, a large part of your growth will come from your existing customers recommending new customers. So if you have achieved 100 customers in the first 8 months, don't be surprised if you signup another 200 in the next 4.
Yep, I'd agree with that totally. :)

Hmm, Aussie Bob buries a bone and someone digs it back up. Never dig up another dogs bone, they will always want it back. ;)
No bone digging here. Just honest question asking. :)

No bone digging here. Just honest question asking. :)

I didn't say you dug it up. ;) But by posting it again after that other thread (I did follow the link) he was simply asking for it to be chewed on again. ;)

I was just providing context to my question. What others do with such a link, is up to them. That other thread's closed anyways, so it's just a contextual reference point. :)

I don't know about that. I've seen hosts pay $500/client in acquisitions. That's a heafty customer acquisition price. It would come down to the purchase price obviously, but word of mouth is by far the most cost effective method of customer growth. It's just not as fast as other methods, but more stable and naturally organic. :)

I've paid much more then 500 for one client just to lose the client a year later when 9-11 happened. It's unfortunate but it happens. I still think an acquisition is the most profitable way to aquire new client other then word of mouth of course.

Aussiebob how many clients do you have approx?

I am not sure anyone will answer this question (nor should they). However, Bob has owned and sold httpme and now appears to be doing quite well with dotable.

When you run a premium service, your churn rates tend to be a little lower, however, there are always people that decide not to countinue with their sites/hosting, people whos life situation changes, etc....

I can only speak for our own business, but we gain clients who have "churned" from elsewhere as a result of satisfaction issues, however, I do not believe (maybe I am naive) that we lose too many customers because of this. However, I still agree with Bob's assessment - a typical churn rate, even under ideal situations, could easily be 5-10%. I could also see providers utilizing a large or stretched overselling formula realize a significantly higher churn rate. However, its all about business model. If your pricing brings in 40-50% increase in users month over month, and you are only losing 20%, then its still a viable business model (if you want to do business this way). Others aim for a 20-30% increase in business and accept a 5-10% churn rate. Again, it all depends on business model and target audience...

Is it worthwhile to go after customers with lower prices than you would expect to have once you have met your initial goals?

Is it worthwhile to go after customers with lower prices than you would expect to have once you have met your initial goals?

Depends. I'd much rather consider raising them instead though (leaving existing clients at the old rate and then charging more).

Once you go beyond a certain # of clients suddenly it's no longer viable to be the single billing, support and representative onboard. Things get pricier (and I'd say by almost double) so why cheapen things.

The blackberry and lots of coffee method suddenly ceases to exist.

I've paid much more then 500 for one client just to lose the client a year later when 9-11 happened. It's unfortunate but it happens. I still think an acquisition is the most profitable way to aquire new client other then word of mouth of course.


Aquisition is the most expensive route to aquire customers. Your ROI on an aquisition is much longer.
However, an aquisition is always the safest way to guarantee new revenue. And hence some companies consider it a good investment.

When you advertise, your COA for each customer is considerably lower, but there is more risk involved in such an investment and its up to clever marketing to reduce that risk.

So, I don't see how aquisition is the most profitable way... It is however the most risk-free way. Unfortunately some companies have been doing aquisitions completely wrong (i.e. firing old staff immediately on take over) and seeing all their money go down the drain

Keyword is "profitable". Churn rate is way to high on internet advertising and just a bit better on local advertising.

I spend about $65 per non purchased client and the monthly profit on those clients’ averages at about $5-6/monthly churn is near 5%. Purchased clients have considerably better margins over a three year timeframe.

Any large accounts I always get a contract or the purchase price drops considerably.

When purchasing clients I try to find companies charging higher amounts, this puts more value into each client, less clients to migrate and enables you to lower them if necessary to make any transition they experience smoother. In most cases the only transition they do notice is where they send the bill each month.

I spend about $65 per non purchased client and the monthly profit on those clients’ averages at about $5-6/monthly churn is near 5%. Purchased clients have considerably better margins over a three year timeframe.


Unless I am reading it wrong, your ROI is like 10-12 months before you start reaping in the profits from that particular client??? 5% churn - add that in and the ROI tome-frame expands a wee bit more.

Yes.

The profit on purchased clients is just much higher making the magins better.

Totally depends on the amount of advertising done and what type of clients you are looking for. I mean some times you can be lucky and get quite a few clients, other times you won't get a new client for a while.

cancel this post. sorry.