Guys,

We've been in the web hosting business roughly 7 months now and we've always experienced steady growth month after month.

However, this is not the case for the month of May. Business has been very slow, traffic to our site slowed down, and the few that visits just browse around and leave. This makes us wonder what the problem could be. Is the industry slowing down? Are consumers not buying any more?

Ofcourse the problem may be attribute to hosting packages we offer which are mainly designed for java hosting, however, this cannot necessarily be just the case.

Does any one have the similar experience? How do you react to such occurrence? Initially, we decided to cut prices down and competitors were doing the same but stayed put to see what happens 2, 3 months down the line.

Your thoughts will be appreciated.

Regards,


Anthony Obioha

The fact that its summer may possibly be a factor, students getting out of school ect, internet traffic slowing down. When spring and summer hits poeple get out of the house in many areas alot more. They spend alot less time online then when they were couped up in the house during winter...

Just a thought, and it could be a factor. it happens to most websites too...

From analysis of the past two years, this is the slow time of the year which could be attributed to some of the factors above. Hang on in there though because it all picks up again in June/July. :)

Originally posted by tensiond
Guys,

We've been in the web hosting business roughly 7 months now and we've always experienced steady growth month after month.

However, this is not the case for the month of May. Business has been very slow, traffic to our site slowed down, and the few that visits just browse around and leave. This makes us wonder what the problem could be. Is the industry slowing down? Are consumers not buying any more?

Ofcourse the problem may be attribute to hosting packages we offer which are mainly designed for java hosting, however, this cannot necessarily be just the case.

Does any one have the similar experience? How do you react to such occurrence? Initially, we decided to cut prices down and competitors were doing the same but stayed put to see what happens 2, 3 months down the line.

Your thoughts will be appreciated.

Regards,


Anthony Obioha
Co-Founder
SuppleHost
http://www.supplehost.com

Hello, yes experience similar.

If it's a growth shortage you're looking at you may want to consider the following:


Lots of web-saavy students getting into the market this time of year as hosts and developers, many of whom opt for local providers or friends instead of price-shopping :)
Package popularity has its ups and downs which you've likely noticed by now. Could be for some strange reason the flavour of the month isn't JSP? If this is the case it'll obviously be popular again soon, Java's a great easy-to-learn environment.
Could very well be less new clients out there right now. A portion of recent additions to RackNine have been clients who'd left their former hosts. Assuming those who do this are on yearly contracts maybe - much like popular months to conceive a child - the major hosting months are skewed :)


Wouldn't be too concerned, with a steady 7 months growth you're obviously set for a prosperous future if you stick to your guns :)

Sincerely,

-Matt

Offcourse you could always step up your marketing if you really are concerned about the slowdown of growth. If the traffic to your site has slowed down then you could look at driving more leads to it through online and offline advertising.

Did you check your log files over the past few months, compared to May, to see if your traffic has dropped off at any particular source?

We've browsed through our web logs and noticed that most customers normally exist the site after browsing through some of our hosting plans.

So this must mean that its either we're charging too much or we're not offering much with our hosting packages. However, our current client base if very content with our packages so far and have expressed so.

Personally, I feel that our hosting packages needs to be beefed up a little bit - so to speak. By this I mean, we should increase our disk space size, # of pop3 mailboxes, # of bandwidth, etc. However, my partner is very opposed to this, his reasoning being that it doesn't make sense since if a customer needs more disk space, they can simply do an addon $5 for another 100Mb.

However, from a marketing point of view, I think that instead of offering 250Mb, we can offer 350Mb (just to beef up the package) and still charge the same fee. As you all know, companies are offering unlimited bandwidth, 500Mb diskspace, etc. so to compete in this type of environment is not an easy task at all. So do you guys think that offering more disk space, bandwidth, mail boxes, etc. will actually entice potential customers to sign up? Does it have any effect on their decision to buy?

Also, another problem width our slow growth this month might be the fact that we don't do tech support over the phone. Infact, if we started off doing tech support over the phone, we would have been 50% larger than we are now since alot of potential customers expressed that they want to speak to someone when they need to.

We've marketed the service so far through Overture, GoClicks, Google, Yahoo, MSN, some partner sites and offline. We increased advertising this month and still not getting the expected conversion rate. We're working on our reseller and affiliate programs and intend to launch them by August - hopefully it will help us to keep growing.

By the way, is there any way to programmatically determine where a visitor who leaves your site goes to? This might help us know where our visitors are actually going to when they leave.


Regards,


Anthony Obioha

I can't check your prices/features because you don't have a link in your www icon.

As you said, there a lot of host offering everything for nothing, but I suggest to wait, they wont be longer in the market, after 1 year, I saw at least 10 companies only in WHT that started up, and then closed down, has been sold, or started to get a bad reputation for bad support.
There are a LOT of host based in RS servers (to say a company)that don't have any idea of how to manage a server, don't even how to manage apache, I don't expect to see them too much time around, specially charging those prices, without the possibility of hire a sys admin to help them.

In a general point of view, I'm not a fan of cheap host, as a customer, before been a host, I never used cheap hosts.

Originally posted by tensiond
We've browsed through our web logs and noticed that most customers normally exist the site after browsing through some of our hosting plans.

So this must mean that its either we're charging too much or we're not offering much with our hosting packages. However, our current client base if very content with our packages so far and have expressed so

....

Don't be so hard on yourself. :-)

Most customers don't buy on the first visit. They shop around, get info and prices and move on to the next guy to check them out.

Hopefully, if you've done a lot of things right, they will remember you, come back and make the purchase.

Sometimes it takes many, many visits for a customer to come back and buy. The tracking and admin system I custom built for us tells us that most of our sales happen this way. I'd guess that we're not the only ones who experience this type of trend.

Take care,

Brian

well 7 months ago was just after 9-11. There was a drop around then, but then a bit of a spike, then a continued upswing in sales (at least in our experience). I tend to agree May's been a bit slow, but it seems to be across the board for a lot of people. The second half of the years always been good for us, so I wouldn't worry too much about it.

The recent few months has seen the bottom fall out on pricing with some ridiculous pricing lately, so I personally expect a nice return above the usual figures in a few months as the latest round of bottom feeders go to the wall. Cogent's possible demise may also add to that, but time will tell.

Oddly design and development enquiries usually are higher this time of year (this years a case in point) so in our case it balances out nicely. My theory on it is, people have signed up for accounts already and are looking at consolidating with new websites - again possibly due to a percieved drop in income around this time of year, and trying to stand out against their competitors.

Regarding price dropping, and feature adding, I'd be careful of it. It's tempting to get into a downward slide regarding that till you end up not making a profit. In two years we've dropped prices once, and updated features once, but have no plans to do any more. It was due to what we could afford to offer rather than outside pressure to do so. (more accounts, less running costs per account)

I think a large part of running a successful business is not so much what you do, but what you don't do as well. Knee-jerk reactions are often a good way to get yourself shot. If you've been running to a business plan, and it's worked so far, then changing it may not be the best of ideas. Contrary to the hype, making a buck online is often a slow tedious business, just like in real life :) We've lost business to cheap hosts before. I've checked on a couple a few months later to find they'd moved on again, and the host they moved to is nowhere to be seen. We've also had some come back to us. We were there, are here, and will continue to be so into the future.

If you're still growing, you're doing the right thing. Just stick to your guns and you'll do fine.

Greg Moore

The recent few months has seen the bottom fall out on pricing with some ridiculous pricing lately

We had an extreme number of cancellations over a 2 week period.
All of them moving to cheaper hosts.

However, we run a cheap brand and its not that popular.
So how/where do these people find their alternative hosts?

I thought about slashing prices but it has picked up since and no harm has been done.
We wanted to improve our support system and we can only do that on our current pricing so the prices will just have to stay as they are.

Gordon

school ending
memorial day holiday
planning-going on vacation
mothers day

all add up to other concerns that many potential clients have

june gets better, expect similar stuff near the end of aug
school starting
last minute vacations
returning from vacation

and the miami dolphins rise to the top of the mediocrity pile begins too!

Originally posted by GordonH


We had an extreme number of cancellations over a 2 week period.
All of them moving to cheaper hosts.
<snip>
We wanted to improve our support system and we can only do that on our current pricing so the prices will just have to stay as they are.

Gordon

Let's face it $6 a year hosting isn't really viable.

When you've gotta support 6000 web sites just to pring in 36K per year gross sales it just ain't worth it. We support (3 of us now) around 1800 customers and it simply wouldn't be worth the meager income to do them at $6 or even $16 per year.

Yes (on topic again) our growth slowed this month too, paradoxically, the first half of May was our largest ever half a month for 2checkout credit card sales. Go figure that one :) (lotta yearly signups)

Oh and I've seen a few defectors to the ultra cheap guys, I don't envy having to support customers and that many servers/web sites just to make a living, hell you'd have less stress, less anxiety and a LOT less hours (and more pay) delivering pizza.

If I wasn't making but 15-20K per year doing this web hosting stuff I'd just deliver pizza, screw the long hours and stress for that kinda payola :D

Traditionally speaking all internet related services (except maybe the adult industry) slow down around this time of year. If you are like me, you are probably getting fewer support requests as well as fewer signups.

It's just the nature of the beast. If you have made money thus far, continue to keep doing what you have been and most importantly, be patient. If you "stick to your guns" and continue to provide a quality product along with support, you will continue to thrive.

Kind Regards

Now that you mention it, support tickets are much slower this week. No complaints there, I'm taking 3 days off for Memorial Day (which also happens to be my anniversary).

If I wasn't making but 15-20K per year doing this web hosting stuff I'd just deliver pizza


Is that how much you are making?

Haha nope :D

I was saying if that's all I was gonna make for supporting around 6000 web sites why bother?

Difficult to swap salaries because it will depend how your taxes are organised.
i.e. most of the popel on this board will be taking an ex tax salary and the equivalent for someone in the UK on PAYE would need to be much higher to have the same take home pay.

I earn a good salary out of the business now but it was not always like that.

Gordon

I was going to say that was awfully low lol

I would look at several things:
-Summer is here.
-Do you have a local competitor taking business?
-Are customers leaving or just not adding new ones? If they are leaving, where are they going?
-Economy has been a little slow. Newer users have price as a high factor on their list.