I'm in Santa Clara at ISPCON. After a 9-hour trip from DC yesterday morning, I made it here just in time for Candice Rodriguez's "Hot Shots in Hosting" session. Joining her on the podium were Christian Dawson from ServInt, Will Charnock from The Planet/EV1, Christopher Faulkner from CI Host and Ted Smith from Peer 1 Networks.
After building a national backbone, a CDN and a DSL division, Christian said ServInt discovered the key to web hosting success: organic growth fueled by focus on the business you excel at, and good old fashioned customer service. Will said The Planet, too, has grown mostly from word of mouth. Ted said 50% of Peer 1's sales are to existing customers. And Chris said 40%+ of CI Host's new signups come from referrals.
Half of Peer 1's or CI Host's sales represent huge amounts of business. Which they didn't have to spend any marketing dollars on.
Pessimistic view: There's no way smaller hosting providers can compete by bidding for Adwords or offering $100+ Commission Junction payouts.
Optimistic view: New customers are well worth the high acquisition cost, because over time they'll order additional services and/or refer others. Organic growth will kick in once you build up some critical mass.
Which side are you on?
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