There’s a dillema in the world of E-Commerce hosting and that’s how to deal with the clients.
On the one hand an ecommerce hosting customer who actually is selling goods via his website probably has an ARPU of roughly $1,000 a year and will stay with your company 5 years or longer. Creating a client who’s worth $5,000 to a webhost over his life versus $150 or so for the life of a “traditional” web host client are like mana from heavan for a webhost (if you can get them).
So if these clients are so valuable why does anyone focus on the low end $5 per month client?
The answer is simple, because there’s more of them and more importantly they’re easier to get. It would be easy to say the pool of clients in the traditional bucket is so much larger it would be foolish to focus on e-commerce customers.
That would be a very shortsighted viewpoint, right now there’s somewhere between 500,000 and 1,000,000 “legitimate” e-commerce sites online in the USA. I define legitimate as offering a product that’s readily for sale and have a secure form of payment that can be accepted online without having to call the merchant. I believe there’s 25 million small businesses in the USA and eventually most of them will have an e-commerce site that fits my defiintion above. So each e-commerce web hosting client is worth 33 times the lifetime value of an average e-commerce hosting client and there’s potential growth of 24 million e-commerce hosting sites ahead of us. Roughly the equivalent of selling 792 million $5 per month hosting clients.
So now that I’ve harped on why e-commerce hosting is where it’s at, how do you unlock the key to these clients?
1. Good service delivered on good hardware, consistently.
2. Spend a lot of time via your advertising, your website and through your salesforce in managing client expectations on the front end. Not everyone should be in business and just because it’s possible to run a business from a web browser doesn’t mean the underlying rules of business have changed. Spend your time finding people who are capable of running a business, then focus on point #1 above.
I’ll write future blog posts dedicated to just the ideas of #1 and #2 but for now I ask you to notice the opportunity that is banging on the door of most webhosts and treat it right.
