This is a question for experienced hosting providers, specifically resellers.

Currently my company is just starting out, and is almost online and I have a couple of questions for the experts.

We're trying to find out the average growth of a hosting company. Unfortunately, with the hundreds of different things that can go wrong and right. Here's some info on the company:

We don't plan to offer 24 hour support, at this point office hours are 8:00 - 8:00 PST (note: this will change once we have a few more customers, hopefully to 24 hour support).

Our advertising budget isn't huge, but we feel that our prices and support will help bring in more word-of-mouth then advertising would (doesn't everyone hope for that :) ).

Anyways if you need more details thanks. At this point we don't want to hugely underestimate or overestimate how many customers we may bring in.

IMO you're in a classic Catch-22 situation.

OOH, you don't want to spend money on advertising and support until you get some customers.

OTOH, if you don't spend the money on support and advertising you many not get any customers!

That's the reality and risks of business, all businesses not just hosting.

I should have been a little more clear. I do plan on spending money on advertising but my budget is limited, I plan on advertising about $200-$300 per month.

Sadly, I just can't afford the 24 hour support yet :). I suppose it is Catch 22. I figure at least 15000 to 30000 people will see my ad per month. However, if I take the average advertising (note: these may not be *exact*).

If 15000 people see my ad, 750 (5%) will click through. About 38 people (5%) will sign up, per month. Hehe, IF I get those numbers and IF I get an average ticket of $8.00 profit I should be making a small profit the first month.

But as I said this business has too many factors... What if my ad sucks... what if 36 of those people are in Zaire and they email me at 3:45 my time, and I don't respond for 5 hours... I guess at this point I'm wondering if these numbers seem reasonable enough.

I would love to offer 24 hour support, but at this point I have a support team of 3 people, of which all are PST. I don't really want to ask anybody to work for virtually nothing at this point from 8:00pm - 5:00am... anyone looking for a position like this I would gladly hear from (yes I'm joking).

If you are running banner ads then you will be lucky to 5% CTR especially in such a competative industry as hosting.

The pay-per-click search engines are probably your best bet along with word of mouth.

Definately, 5% is a HUGE number to have. You will be lucky at 1%, while most get between .5% and 1%.

Pa-per-click is good advertising, but you can run out of money pretty quickly if you are not careful. Believe it or not, there are a lot of companies out there that click on those links all the time to deplete your account. They can cost you a lot of money in advertising, so you have to shell out more to keep your listing. Just be careful and do not overspend here.

I have said it before, and I will say it again for all the newcomers. The best and cheapest way you can market your product is by doing the legwork yourself. Go out in your community and take the time to go door to door. You would be surprised at how many people like the idea of having a face to go with the name of a company. Spend your money that you have allocated for advertising and join the local chamber of commerce. You will have an automatic tie in with the community.

Once you get yourself established locally, branch out onto the Internet. You will now have more resources (cash) to advertise so you can reel in the customers you are looking for.

Too many people go Internet only to develop their business and if they don't have any working capital, you will become a small fish (a guppy) in an ocean that is called the Net.

Hope this helps,

Originally posted by comphosting
I would love to offer 24 hour support, but at this point I have a support team of 3 people, of which all are PST. I don't really want to ask anybody to work for virtually nothing at this point from 8:00pm - 5:00am...

Easy enough to fix. You really don't need 3 people working from 8 a.m. to 8 p.m. Realistically you should only need one support person (each shift) per each 500 or so customers.

So - have one person work 5 a.m. to 1 p.m., the next person work 1 p.m. to 9 p.m., and *you* can work 9 p.m. to 5 a.m. (if you don't want to have to make your staff work the graveyard shift, then you should do it yourself).

If you don't like staying up all those hours - don't. Set up a cot next to your computer (or better yet move your computer into your bedroom), set up an e-mail program that allows you to set different sounds for different folders (The Bat from http://www.ritlabs.com works great for this), and filter all tech support requests into one folder, with that folder having a really loud and annoying sound associated with it.

That way, when a support request comes in, your computer will make enough noise to wake you up, you then can roll out of bed, deal with the request, and then go back to bed. It sucks, but it's what it takes to succeed in this business. I did this for over a year before I could afford to hire someone to work over-nights. You'll survive. And you'll get used to it.

One thing - do not advertise 24/7 support unless you can really really offer it. I have found that a large number (obviously not all though) of companies that claim 24/7 support don't really offer it. And it's not absolutely essential that you advertise 24/7 support, either - we don't. But it is very important that support calls are answered as quickly as possible, and that any server issue is resolved within minutes. Even if you choose not to advertise 24/7 support, make sure there's someone monitoring those servers (even if it's just you with a pager clipped to your belt 24/7 and a cell phone in your pocket at all times so you can call the NOC for a reboot) to make sure that they are online.

The biggest piece of advice I can give you is to treat your customers right. Word of mouth is the most powerful form of advertising you could possibly get - and one person telling a friend that your tech support is superior is far more powerful than a hundred people viewing a banner ad that makes the same claim.

Good luck,

Jason

I really appreciate your help and pointers. Though, I would like to note that I will be using text ads, mostly on search engines. And I put 5% because google said they get 3-5% higher click-thrus then "other places". Not to mention the average text link has a lot better CTR then a banner.
Oh yeah, it's not pay-per click, it's pay-per impression, at this point google, and a couple of others (dogpile) offer impressions at $10-$15 CPM. I don't know if google or dogpile will work, but I guess I can start out slow to see how well they do.

But anyways, thanks again!

My company uses google to advertise. We used to get around 1.5% click thru rate - until they added about 5 more ads per page :( - now its around .9%.

I am less happy with google than a month ago but still plan on using them for a bit longer. I would suggest not going all out on advertising in the beginning and just start slowly. Hope this helps

We use Google tooo and we were getting above 5% CTR on text ads until they changed the number of ads per page.

Hi,
I've personally found that advertising on the web can be effective whilst not paying a penny. We advertise in most major UK and international directories for free and get alot of business that way. (People use you for what you offer, not how much you pay for promotion).
If you put some time and effort into search engine submission this can get better results then putting banner ads on the searcher. We are listed twice in dmoz.org (used by giants like Yahoo!) and recieve clients this way without paying a thing.
We spend 100% of our advertising budget on magazine submission. We've found in the UK that people will buy a magazine to read up on a product or service and if your name appears in their guide, you're in with a chance!

Hello
We are getting 7 - 10% ctr on Google ads by using specific phrase matching.
This means we get less exposures but a higher CTR and the costs are lower.

We sign up anything between 3 and 12 new accounts per day (including those sold by resellers) excluding hositing we give away with domain names.
This is from a standing start on 1st September last year.

Most of it is word of mouth and paid upgrades from our free hosting service.

Gordon