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  1. #1

    Designing hosting business for best customer experience

    This thread is for customers who are willing to sacrifice percentage of profit for pleasing their customers.
    If you are willing to make 5x profit instead of 10x for the sake of your customers experience then you might find this thread handy, hopefully.


    I have been in hosting business for sometime now, mainly providing shared and reseller hosting. What I like about being a web host provider, is that I like providing a service. I like the idea that I wake up all night to keep a customer pleased. I do my best to keep my customers' sites online and safe. It makes me feel happy when I feel that lots of clients trust me with their data and they rely on me with their business.

    And yesterday I came by a post which made me feel angry up until now, the post is by Zac of WiredTree, a great company by the way, which he was expressing in it his concerns regarding new VPS startups overselling their VPSes. And he said in it <<It's not long before it could be as bad as the shared market>> Ouch! Do you have the same feeling I am having right now? That hurts. And since that's the only place I could discuss in such things, I though I could create a thread in which we could discuss business models or plans to better service the clients.

    I was thinking if we could discuss how to improve the clients experience, which eventually will help you too grow your business and build a reputation.

    First, I wanted to discuss overselling and you are welcomed to add. At first I was against overselling and still I didn't make up my decision yet. First I was against overselling because it's usually associated with overloaded slow servers. But then I started to thing couldn't overselling be something good? Couldn't be it in the sake of the customer at the end?
    I have been working locally in the hosting market for quite some time now, for about 8 years now. And the most difficult time most of my clients used to pass through is deciding the appropriate plan with enough disk space. Most of the clients feel they will need at least 50GB while at the end they use only 3GB or so. I remember I had a client subscribing with me for a site for his school and he was low in budget so I offered him a 1GB plan, he was so worried that the space isn't enough and when I checked his site data I told him to have no worries and he didn't believe me until I swore to him that if he exceeds the quote I will upgrade him instantly for free and while checking his account yesterday I found that he use exactly 34 MB

    So, I was thinking why not create unlimited disk space & bandwidth plans to keep this hassle away from my customers and since I provide 100% of my clients now with the hosting space they needs which has an average of 3GB. I would like your opinions on that please.

    Also, I was thinking it's my job to keep the service reliable, fast and secure. It's my job to choose fast server with reliable configuration and in a reliable network. And it's my job to administrate and manage the server. So if I could oversell while doing my job in maintaining the server speed for the sake of the customer wouldn't it be a good thing? If I have cloudlinux installed and I limit the share of resources for each client and I host mostly low load clients why not oversell? On the other hand I shouldn't exceed the load average and slow my server?

    I am now torn between two sides. Sometimes I wake feeling that overselling could actually be good and for the sake of the customer and in the same time without overselling I will have no customers in the future since most customers now are aware and the first thing they do is to compare you to something like GoDaddy or 1&1 and sometimes I am totally against it and I feel that my justifications are like the justification of someone whose trying to prove to himself that steeling from rich people is OK since they are rich

    I would really love and appreciate your feedback.

  2. #2
    Join Date
    Nov 2011
    Location
    Harrisburg, PA
    Posts
    2,073
    Quote Originally Posted by mzaza View Post
    I am now torn between two sides. Sometimes I wake feeling that overselling could actually be good and for the sake of the customer and in the same time without overselling I will have no customers
    I disagree. You can definitely build and sell VPSes without overselling, and be very profitable at doing so.

    most customers now are aware and the first thing they do is to compare you to something like GoDaddy or 1&1 and sometimes
    Are you talking in terms of price? Because that's exactly where customer service becomes a big deal. I can't tell you how many customers come to us with stories of poor treatment from their previous host. Those customers learned, sometimes the hard way, that a good, supportive company is worth paying a few bucks more for. This has happened at our shared, VPS, and dedicated levels.

    Some customers will eternally chase that $1 "unlimited everything" VPS. Some will never learn that the reason their site keeps going down is because they keep buying from "the cheapest host on the web".

    But those customers who have been through the wringer understand that you usually get what you pay for. I can think of examples in the shared, VPS, and server management arena where some very cheap companies provide very good service, so there are some exceptions. But for the most part, customers looking for a $5 4 GB VPS with 1 TB of RAID 10 storage and unmetered bandwidth on a 10 GB port are going to learn a very hard lesson.
    Fresh Roasted Hosting :: High-performance Harrisburg web hosting since 2012!
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  3. #3
    Join Date
    Oct 2007
    Location
    Milwaukee, WI
    Posts
    142
    At the end of the day the customer will always think they need unlimited and should pay the lowest dollar amount until they have been burned. Trying to understand how a small business makes decisions on their hosting provider when they think all providers are equal and saving $10 per month is important... You then have to let them go and wait for them to come back once they have been burned or just hope they are smart enough to remember the conversation you had with them about the differences.

    I feel without targeting a niche market or having something 'special' (forums, reseller program, large affiliate payouts, etc) the shared hosting market is difficult to explain to the common small business. Some customers get it and others do not.

    With it being so simple for a hosting company to start up, look professional and offer unlimited everything for a low per month cost because they are only using a small VPS to get started its only a matter of time before the customer gets frustrated and moves. This is where the stable but slightly more expensive hosting providers have the opportunity.

    All we can do is try to educate customers so they don't have to burned for first but getting burned ensures they stay around longer.
    Adam Hobach - CyberLynk Network, Inc. ahobach @ cyberlynk.net
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  4. #4
    I agree with you by offering customers the best experience possible. I'm not worried about making the most profit. I offer free hosting, premium hosting, and reseller hosting at a heavily discounted price. I manage my clients and set inventory to 0 if needed to make sure I offer a great experience. My site is small, but I get customers who thank me here and there via live chat and my ticket system. I enjoy providing my hosting services :-) It satisfies me!

  5. #5
    Join Date
    Oct 2011
    Location
    Australia
    Posts
    132
    While some of the points you made about unlimited disk space were completely valid and made good sense. I still have to disagree with you. I strongly believe that hosts advertising unlimited diskspace while saying in their Terms Of Service that there is actually restrictions is false advertising. Even if it is for the "best interests" of the end users in simplifying or streamlining the whole process.

    I believe that instead of just grouping everyone into one package the best way to do it would be to instead, give users a flexiable way for them to upgrade and downgrade as they need. This is already pretty much covered in most billing systems. Along with this there could be an email sent out to users at a given point in time later where the billing system notices that the users is using more/less than what they should be for that plan and suggest an upgrade/downgrade. This should achieve exactly what you are talking about but still being completely honest and up front to the user.
    Last edited by bear; 10-20-2013 at 08:18 AM.
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  6. #6
    Quote Originally Posted by mzaza View Post
    So, I was thinking why not create unlimited disk space & bandwidth plans to keep this hassle away from my customers and since I provide 100% of my clients now with the hosting space they needs which has an average of 3GB. I would like your opinions on that please.
    The debate on whether unlimited hosting is even possible or whether you should or shouldn't has been done to death. Essentially, it's up to you. If you feel you can handle the occasional customer who actually tries to use "unlimited" disk space, then go for it. At some point, you will be put into the position where you must confront that customer to curtail their disk usage, or you will need to buy an unlimited disk drive to allow them to use what you promised.

    Quote Originally Posted by mzaza View Post
    If I have cloudlinux installed and I limit the share of resources for each client and I host mostly low load clients why not oversell? On the other hand I shouldn't exceed the load average and slow my server?
    You've already answered your own questions, by even asking them. You know there is no "right" or "wrong" answer. The only thing you can do is proceed with whatever decision *you* feel is correct for *your* business strategy.

    Every industry faces the same problems and questions. For example, if I bring my car to a mechanic and ask him to change the oil... is he obligated to replace the drainage bolt if I did not specifically ask for it and he didn't specifically include it? What if he discovers the existing/old bolt is in bad condition? Should he not replace it as a courtesy to me? Should he replace it and then charge me extra for the work I did not specifically ask for? Should he just ignore the bad bolt, and then risk me having a major problem later due to the fault?

    Web hosting is no different. There are times when you might need to go "above and beyond" your specific terms of service and what you offer. There are also times when you must adhere to the exact rules of what the customer is paying you for.

    Generally speaking, your job is to provide a service your customer gives you money to perform. If you aren't providing the service the customer feels is worthy, then they will take their business somewhere else. So it's very easy to know if you are doing your job well.

    Personally, I think that when you're starting out, unless you have a lot of capital investment behind you, it is necessary to go above and beyond what customer's expect. This way, they will refer you to their friends, and you will grow your business. The downside is that eventually you will grow to a point where you can no longer operate in such a way without costing your business "too much" in operating expenses... and that is when you must decide if increased profit is worth the "expense".
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