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SoftwareMedia Blog | July 30, 2014

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Can Small Hosting Companies Compete With Global Brands?

Can Small Hosting Companies Compete With Global Brands?

Starting and managing a small business in any industry is challenging on many levels.  That challenge multiplies considerably when you move into competitive industries, particularly those that are highly competitive and fast evolving.

Web hosting is definitely an industry that falls into this category.  With industry giants such as GoDaddy and Hostgator dominating the landscape, how can a small business compete?

Small Company Concerns

The problems that someone looking to launch a web hosting startup faces are similar to those that occur in any industry.  What issues might a web hosting startup encounter?

  1. A large web hosting company has name recognition that extends far beyond their industry.  Companies like GoDaddy and Jaguar PC do not just have reputations within web hosting; they transcend the industry, and people around the world have heard of them.
  2. The bigger names have the ability simply to pull the rug out from under most of the competition, should they wish to do so.  For example, if one of the above companies decided to run a huge promotion with world-leading web hosting deals, they could afford to do so owing to their reach, reputation, and ability to absorb a loss, if necessary, in order to increase their market share, and brand recognition.  The small web host who relies on healthy margins will be unable to respond and compete.

While small businesses are often encouraged to ‘think like big businesses’ in order to be successful, the reality is that they will usually need to be much more resourceful and employ a wide range of business strategies, rather than just saying, “This is what the market leader does, let’s do the same thing.”

Stand Out Service

Excellent Customer Service

Competing with larger hosting companies in terms of price is often out of the question.  This is unless a smaller company is offering cheap hosting, but putting hundreds of sites on one server.  This then causes difficulties in terms of service delivery, so is something of a false economy.

One way that smaller companies can stand out is by offering exceptional levels of service.  People and businesses actively looking for small web hosting companies with a reputation for great service delivery bolster the stand out service opportunity.

Why Service Matters

The web hosting industry is like many online business sectors: it has a reputation for being a little ‘cloak and dagger’ and not being a particularly great place.  Rest assured, this is an unfair reflection on most hosting companies, a consequence of bad news being shared, while good news is swept under the carpet somewhat.

Service matters because things will inevitably go wrong at some point.  Accepting that there will be problems is not an issue.  The key is finding a company that is able to deal with any issues promptly, reducing the impact on your website and on your customers’ ability to buy products or services.

Small Business Service Benefits

Smaller businesses have fewer clients than larger ones.  Consequently, they can usually deliver a much more personal level of service, and might even assign dedicated account managers to work with clients, for example.  Small hosting companies are also committed to solving problems quicker.  While we’re not suggesting larger ones don’t care, the reality of one unhappy client is bigger for smaller companies than larger hosts, who might have thousands, even millions, of accounts.

Automation, Ticketing, Resources

These tools are all widely used by larger hosting companies to reduce the workload of their service agents, but they can also be brilliant resources for smaller businesses.  Larger businesses use them to primarily to boost their service performance and prioritize which accounts need attention.  Smaller hosting companies can use them to free up time to focus on selling and promoting their services, which in the longer term will help them to realize their growth strategies and be much more competitive with bigger firms.

The primary consideration is that smaller web hosts will have perhaps only a handful of employees working in the company; if all they are doing is dealing with service requirements, how can the business move forward?

Although personal service is a great thing to offer, often customers want to discover solutions to web hosting problems themselves, rather than having to send an email or make a phone call.  Small businesses would probably benefit more from simple helpdesk software, such as Desk, rather than a full-service CRM platform like Sugar CRM, although they could graduate to this solution as their business grows.

Customized Solutions and Niches

Often, the best way to stand out as a small business is to find a niche that larger companies aren’t focusing on.  A small web host might offer their services for a particular type of website, to a particular industry, or offer a certain type of hosting.

Target Your Market

A common strategy, albeit one larger hosting companies are now starting to offer, is to promote custom hosting packages and bespoke solutions.  One criticism of larger companies is that they can often push clients into buying into the latest trends, and sell them what they want them to have rather than what they need, whether that be hybrid dedicated hosting or cloud hosting packages, for example.

Putting the needs of the client first personifies top quality service, and shows anyone landing on a hosting company’s website that helping them to realize their objectives is their first priority.

Local Area Targeting

Having a local focus is one thing that can really help a small web host to open doors and take on larger competitors.

As an extension of the idea of personal service, local businesses have a great opportunity to thrive as clients increasingly to know the face behind the brand name.  Yes, we have all seen the friendly faces on the GoDaddy adverts.  However, does anyone ever really know the person whom they are talking to on a face-to-face level when they call up support?

A local SEO strategy, developed in house or with the help of an SEO agency, can help a hosting startup to achieve success in their area.

Maximizing Existing Contacts

If we’re talking startups, then having a wealth of contacts available is critical to anyone.  Whether a web-hosting entrepreneur takes contacts with them from their previous role, or capitalizes on connections they have made through sites such as LinkedIn, reaching out to the people they already know is the easiest way to get started and build a client portfolio.

Local or general SEO strategies can take months to see results, so a startup cannot realistically expect to find their name alongside the industry leaders until at least such a time has passed.  Capitalizing on existing contacts can help a small business to begin establishing a client portfolio from day one, and assist with building brand recognition.

Social Media

Several analysts, including BlackBerry makers Research in Motion, have carried out research suggesting that social media is the key tool for small businesses looking to compete.  In general, social media levels the playing field, although the larger brands can obviously afford to advertise to raise awareness and are likely to receive more pins, likes, and retweets.

However, small hosting companies can still use Twitter and Facebook, in particular, to reach out to potential clients and raise awareness of what they do.  Sometimes, all it takes is a hashtag!  As soon as a site is active on social media, people looking for hosting companies through these channels will quickly start to notice a new arrival, and want to check them out.

Service as the Common Strand

It doesn’t matter what specific strategies a small hosting company employs to compete with larger businesses, the common strand is the quality of service.  Clients will happily pay a little more each month, or sacrifice a particular add-on, for example, if they know their service is reliable and efficient.  However, it is unrealistic to expect a new hosting business could startup tomorrow and be competing with GoDaddy and Jaguar PC by this time next week.

Focusing on the above areas, with service levels as the central motivation and objective, can help small businesses stand shoulder to shoulder, and compete with, in time, successful global brands.

Robert is a business technology consultant who looks after a large client portfolio, assisting small and medium sized businesses in making intelligent decisions around their use of technology in order to compete with larger, global brands.

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