Using Direct Marketing in Web Hosting

By Tarik Qahawish, Netvention

From Web Hosting Monthly, August 2003 Edition

September 8, 2003 -- (WEB HOST INDUSTRY REVIEW) -- Most Web hosting companies rely on conventional online marketing techniques to reach their prospects and gain more clients. Advertising mediums like banners, hosting directory listings and pay-per-click search (PPC) engine placements are flooded with hosting marketing messages. Although this has proven to be an effective traffic builder tool for a lot of hosts, it has not provided them with a high enough growth rate. This form of online advertising is considered the creation of the dot com boom/bust era and only reaches potential customers that are currently online.

There are other mediums that the Web hosting industry needs to also consider as effective sales and marketing channels. They include the conventional methods of promoting businesses like print advertising and direct marketing. Now that hosts are operating their business the old fashioned way to please Wall Street and their shareholders, they also need to have a broader marketing strategy in order to increase their market share. This is where direct marketing, using tools offered by companies like Nevention and Harte-Hanks, can become a useful business channel. Most marketers will tell you that the success of a direct mail or an outbound telemarketing campaign is dependent on two things: how targeted your potential customer list is, and how attractive your offer is to recipients. The latter depends solely on how well Web hosts understand why their current clients stay loyal to them and keep referring new business.

Should you decide to conduct a direct marketing campaign, finding a suitable list of potential customers can be tricky. There are over 10,000 business-to-business lists that reach every type of company and decision maker in North America. Most of them offer targeting methods like industry type and company size. The problem with demographics like these, however, is that they do not provide Web hosting firms with enough information, as they do not take into account what those businesses are actually doing on the Internet. In other words, these lists lack the most important demographics that Web hosts need - the technical characteristics of a potential customer's Web site.

Fortunately, recent technology can extract and develop e-business profiles from Web sites and provide hosts with important information that allows them to better promote targeted packages to the right customer base. Other online features can also identify the size and popularity of the site, what technologies and scripting languages are being used in order to measure the complexity of the site, as well as getting a sense of how well maintained the site is. All of this and more provide Web hosts with ways to build a customized business list that corresponds to their technical target market criteria.

Take a hosting company that wants to target businesses for its high-end hosting package as an example. In the past, it had to rely on demographics such as the size of the company to try and determine if it might be a suitable sales lead to approach. However, companies with over 100 employees do not necessarily spend $100,000 a year on critical online applications. On the other hand, sometimes smaller companies with fewer than 10 employees can have 10 racks at a data center somewhere. In each case, identifying the companies that are currently using dedicated or managed hosting saves Web hosts time and money.

Other ways of targeting include identifying companies that have stretched the limits of their shared hosting packages, and have therefore become solid prospects for dedicated services. Also, identifying those e-commerce site that use specific software like Miva also saves hosts money by pinpointing sites that can be easily transferred to their licensed e-commerce software.

When establishing a direct marketing campaign, Web hosts should also carefully consider the source of their data. A lot of hosting firms still rely on WHOIS data as an information source. Not only is it illegal to use this data for mass marketing purposes, but it can also be inaccurate. Research conducted earlier this year by Netvention found that 35% of the data provided in WHOIS data was out of date, as companies tend to update their information only when it is time to renew their domain.

Luckily, advances in data extraction technology have solved this problem. Netvention's technology, for example, crawls and extracts key business information (such as company name, address, phone, fax and contact names) directly from corporate Web sites. Because the information found on these sites is public, the data is typically accurate.

Once you have obtained the information required to conduct a direct marketing campaign, the next step is to determine what medium should be used to convey your offers. The simple rule of thumb is: if the total revenue that could be generated from one client on an annual basis is between $100 to $250 (typically shared or e-commerce hosting), traditional "snail mail" is recommended. You can also take advantage of email, but I highly recommend keeping to opt-in email addresses from reputable vendors such as NetCreations and not be seduced by the cheap and opt-out kind that is easily attainable.

Direct phone solicitation has proven to be more effective for sales that will result in more than $250 of revenue a year. We are not talking about using a simple method of telemarketing, but a more sophisticated approach: one that will further qualify the prospect by identifying the right decision maker, who is their current hosting or colocation provider (although this intelligence too can be obtained from the e-business profile directly) when their contract expires, etc.

Following initial contact, a relationship between the account manager of the hosting firm and the prospect can be developed - even if they don't immediately purchase services. This method can take months to materialize, but when the right opportunity presents itself, such as in the case of Cable & Wireless or Sprint closures, a hosting company that has proactively developed the right relationship has a much higher chance of winning the account. Those that simply react to industry events face an uphill battle, because even when they get there, they often realize that the window of opportunity has already been lost.

Web hosting companies should seriously consider incorporating the old but proven methods of direct marketing to accelerate the growth of their business. Helpful data is available to hosting companies at a reasonable cost, and Web hosts should use this to their advantage.

About the author

Tarik Qahawish is the Sales and Marketing Director at Netvention Inc., a Web data extraction and database solutions company.