Hi,
Anyone else giving away incentives away at a great loss?
We are currently giving away a free 16GB Sandisk USB for people who use our << removed >> voucher, that allows them to get lifetime for $5/month a month.

The USB costs us $40 each. So we are paying about $40 per client. Do you think this is cheaper than plain old advertising using Google Adwords.

We are hoping are clients do not just leave after the first month. Has anyone had major sucess with this tactic.

Thanks

Nish

I think that you may wish to re-evaluate what you are giving away, or perhaps only give it away if the client pre-pays the entire year. The client needs to stick with you for 8 months just to break-even, seems a bit much to me

I also agree with XeHSean, I believe you should reconsider your marketing strategy. In the long-run it may be cheaper to just google advertise or only offer that if the individual pays for a year in advance and remains a client for more then your refund period but anyway basic economics you are going to have a hard time staying afloat by offering high priced freebies for low cost hosting plans. If a client stays with you for a year your making less then $20 your first year. There are only so many accounts you can place on one server or one reseller account. Keep it in mind.

You could receive 100 clients who are a client with you for 2 months they each send you $5.00 for each month so you will make 1000 before PayPal or any transaction fees so that means you must go out and buy 100 of these flash drives at $40 each = $4000 and then the client will leave, now you are minus more then $3000.

If your doing business at a loss you represent at least 25%+ of the companies that advertise on here. Undercut undercut undercut until you or your competition goes out of business.

However GoDaddy operated at a loss for years, for all I know they still do; been trying to find out more information on the subject.

So you have to roll the dice as to what you want to have. If you can afford to wait out the storm and drive out competition then you can run things at a loss.

Hi!
Also..please..you're brand new and trying to get people to pay for a whole year? It's not going to happen. Too many people have been burned horribly..I would never pay for a entire year.

Hi!
Also..please..you're brand new and trying to get people to pay for a whole year? It's not going to happen. Too many people have been burned horribly..I would never pay for a entire year.

Who said I was trying to get people to pay for a whole year?

You could spend $40 on Google Adwords, and not get a single customer.

I do think the USBs are a bit much.
Maybe strike up an affiliate program?

The offer seems wide open for abuse. I have no need for hosting, but why shouldn't I buy a $40 item for $5? :)

Wouldn't it be better to just offer the first months hosting for free?

Hi!
I immediately read this in your ad:

This promotional code will give you a free Ironkey usb drive worth $130, when paying annually for any plan.

and that was the end of that. Sorry.

You have to be careful that people don't sign up for your offer - receive the free gift and then file a chargeback of some kind. As a new company with limited funds, you can burn through a lot of cash on free gifts and incentives.

The average cost per acquisition of a customer through pay per click advertising for a hosting company seems to be $100 or more these days, so it's not cheap to acquire customers in the normal sense through that way either - it's just such a competitive marketplace that you either need a big startup fund to advertise and get the word out there, or you're in danger of working your ass off but just treading water in a business sense whilst companies like HostGator et al grow at phenomenal rates.

You could spend $40 on Google Adwords, and not get a single customer.



Im spending money on google adwords and I never recall getting any customer yet referred by google adwords :(

emsjs1 , Do you have analytics set up to accurately track which customers are from which sources? without knowing which traffic sources generate sales, it's impossible to say if things like a $40 USB are good or bad for business..

Like Daz said, many of the big companies offer over $100 for new clients, however, does that mean new clients cost YOU $100 ? maybe, maybe not. That all depends on how you market yourself, both online and off.

Without having this kind of data, it's really hard to get any marketing effort off the ground.

Hello

yes we have set up a script that analyzes the sources of traffic and most are from google search and not google adwords

right, but do you know which of those people buy? the whole idea here is to figure out how much a new customer costs you for each form of advertising that you use.