Importance of Customer Retention in the Web Hosting Industry

Customer retention is more important in web hosting industry than probably any other business, because a web hosting firm starts reaping profits from a customer who purchases a shared hosting package, only after 2 years (or probably more). Right from a small business owner like a small salon owner to the biggest of businesses that you can think of, retaining the existing customers is one of their top priorities. All businesses want their customer base to grow consistently. But, retaining customers can be a daunting task, and lot tougher than generating new ones.

Customer Retention is Directly Proportional to Profitability

While it may be a little easy for few businesses, web hosting industry is highly competitive one, and customers keep hopping from one web host to another all the time. Hence, getting newer customers on a consistent basis may not be too profitable for a web hosting provider if they don’t renew, and stay with them for several years. This is why retaining the existing customers becomes even more important for hosting service providers as that’s how they make sure that their business keep running and profitability doesn’t take a toll!

Poor Support Can Push the Customers Away

Despite understanding the dire need to retain customers, many web hosts spend all their time and money in attracting new ones. In the process, most of the times, they fail to understand what their existing customers want from them. Neither do they bother to assess the impact of bad web hosting support, nor do they worry that their customers may start looking at other options, when their annual contract is about to get over.

Low Retention Rate Can Potentially Screw Up Your Business

So, let’s imagine that you have 350 existing customers and you are on the lookout for more, which is perfectly fine. But, by not setting up a good customer support system, and not paying attention to the dip in the quality of services offered, if you start losing 15-20 customers every month then you would be in a big fix. On one side, your existing customer base may be depleting and on the other side you might be struggling to get new customers in the highly competitive markets. Even if you manage to get 20 new customers per month, you’d be bleeding money on business generation, and gaining no profits whatsoever.

Negative Reviews Can Make the Matters Worse

Another reason why it gets even more difficult to attract new web hosting customers is negative publicity. If you have even 5 of your existing members leaving your services every month, you can take it for granted that at least 1 out of those 5 will spread the news about your lack of competency as a host, and sub-standard customer service. Negative publicity at such a rate can be catastrophic and often irreparable.

There can be nothing worse than negative reputation, and losing your loyal customers, as you watch your business fall apart. This is why it becomes very important that you take care of you existing customers first and then look out for new ones.

How Do You Retain the Customers?

Most of the hosts don’t offer any discounts on the renewals, and hence there are high chances that a good chunk of customers may tend to fall for some flash sale being run by another host just before their hosting account is due for renewal.

So, it’s imperative that you make them feel special, and reward them for renewing hosting subscription in advance, and probably offer some freebies as well as exciting stuff. One of the best ways could be offering a loyalty bonus such as Amazon $25 gift card for renewing a month in advance, and referring one of their friends to your business. This way, you will not only manage to retain a valuable customer, but probably generate another hot lead too.

Running contests on social media, and offering a small 5-10% discount on all renewals may be other ways of attracting the mass.

Another great way of improving the retention rate is to offer freebies such as free dedicated IP, professional e-mail virus protection, or probably a small discount on domain renewal charges. Merely by spending $15-25 on retaining a customer, you can easily ensure high profitability. In most of the cases, you could be paying $100+ to an affiliate for generating a new customers, so paying just a small fraction of that price would certainly make sense.

Hence, you must try your level best to retain majority of your customers, in order to improve the bottom-line of your hosting business. And, even smallest of mistakes can turn out to be costly, and potentially cost you thousands, if not millions of dollars!