Security Issues Paramount to Hosting Clients

BY Ken Leonard

From Web Hosting Monthly, June 2003 Edition

June 23, 2003 -- (WEB HOST INDUSTRY REVIEW) -- One of the most important components of any successful business is the value of understanding your customers' needs and concerns. Consumer security issues like hackers, credit card thefts and identity theft are some of your retail ecommerce customers' most pressing challenges. Addressing these concerns is one of the biggest growth opportunities facing the hosting industry.

Security concerns are critical issues to ecommerce retailers because the mass media love writing about the exploits of shadowy hackers. As consumers read these tales, they become more reluctant to click the 'buy' button, reducing your clients' revenues and decreasing the likelihood they will remain in business.

In the past six months, several surveys have reinforced the wariness of consumers to buy online. A study conducted in late 2002 by MasterCard emphasized that enhanced security features are key factors influencing future online purchasing. Two key findings were:

- 73 percent of study participants agreed that enhanced security features would influence their decision to make an online purchase in the next three months, and
- 70 percent of respondents are concerned with security and fraud issues.

One of MasterCard's primary suggestions was that online retailers could do more to ease consumer fears." MasterCard's results were not unique; researchers at Yankelovich Partners, Gartner Group, and UCLA Internet Report all recorded similar results recently while investigating the same issue.

So why should you care about a recommendation from one of the largest credit card issuers in the world? Because security is one of the ways both your business and clients can differentiate yourselves from the competition.

Your business and customers face similar pressures. Just as in the hosting industry, legions of sites offer identical product offerings in a veritable price war. Until recently pricing, availability, brand, trust, and shipping were the primary issues that made one retail site different from another. But as concerns persist about the safety of personal information, data security provides a great opportunity for your customers to differentiate themselves, and for you to distinguish your hosting packages.

In the last five years, the hosting industry has hurt itself considerably by following a "more for less" strategy. This is particularly fatal in an industry where competitive packages are increasingly viewed as commodities, with little appreciable difference. To differentiate your Web hosting company and heed your customers' concerns about security, recognize that your customers are very interested in value added security services-and will pay for them.

A case in point: ScanAlert is a security auditor with direct sales and an indirect channel via hosting companies. Our certification means that sites are certified to have no known vulnerabilities. Empirical behavioral analyses we recently completed with 300,020 unique visitors to a variety of sites recorded an average 20.4 percent increase in sales attributable to third-party certification.

Our data unambiguously confirmed that by marketing the security of their sites, ecommerce retailers can assuage fears of hackers and boost sales. Yet, as most of the sites we certify are on dedicated or shared servers, hosting companies are ultimately responsible for patching the security holes our scanning technology reveals. Strangely however, we have found a surprising number of Web hosts continue to run systems knowing they have severe vulnerabilities. While some Web hosts are very serious about maintaining site security, there are others that categorically refuse to make the effort.

If Web hosts fail to patch their systems, some of our clients lose their certification. When that happens, their sales drop. When sales drop, the chances they will remain in business (and your customer) begin to diminish. The result? You're probably going to lose a customer.

As competitive as the hosting market is, you would think that a smart Web host would want to use security as a tool to grow and gain market share. You might be surprised to learn that many hosting providers turn their backs on the opportunity to actively upsell their customers. They are so busy trying to squeeze out a profit in their extremely competitive market that they completely overlook the opportunities to sell value added security services.

Getting serious about security benefits everyone. According to statistics published from a variety of sources, well over 99 percent of hacking and malicious code attacks exploit known vulnerabilities. Stay on top of closing those holes and, overnight, almost all hacking will end. That development would clearly increase the confidence of consumers in online shopping. Sales of all retail ecommerce sites would then rise. Your customers would remain in business longer and you would be able to sell security as a value added service to differentiate yourself from a host of nearly identical competitors.

About the Author

Ken Leonard is Vice President of Marketing at ScanAlert, a provider of Web site security certification.