by, Adam bogobowicz, Sr. Director of Product Marketing, Service Providers, Parallels
Why is getting a website from a hoster so complicated? Why do we ask our customers to jump through so many hoops to get a simple site up and running?
For example: Select from one of the three (great) plans, buy a domain, buy hosting, buy a site builder, we will give you 150GB of space with it (why do I care?) And what about security (is your business not secure?), backup (thought you would do that for me), and would you want fries with that?
Why does it need to be so byzantine? All I wanted was a website. I certainly do not need to jump through any of these hoops when I go to Facebook or LinkedIn to setup a site. This really hit home for me when my six grade son came home from school to show me the new website his student government body created. I looked at the URL and it said Site.weebly.com. It was free, and easy enough for a bunch of 12 year olds to build. We have lost them and lost them forever. Who do you think they will use when they want to build another site? Do you think it will be a hoster?
But why is this service available from the likes of Yola and Weebly and not from any of the established hosters? I believe there are two factors holding back the hosting industry from moving forward.
First there is historical attachment to the business model that got us here. We were (and still are) geeks selling to geeks on the cheap. We created a commodity business and now see decreasing margins. As a result it is difficult for us to accept upfront costs of the freemium model and unsure of the revenue impact if upsell cannot be secured at the purchase.
Second there is a glaring gap in off-the-shelf software that would enable freemium and hybrid freemium models. Software supporting this business model was either developed outside of our industry, is proprietary, or delivered in a form that makes it not usable for hosters.
The good news is that with the release of Parallels Web Presence Builder Business Sites we are addressing the second problem. For the first time hosters on any automation platform – a Parallels platform or not – will be able to setup freemium and hybrid freemium web creation businesses. Web Presence Builder Business Sites will eliminate any initial complex setup processes and will allow customers to create sites with just few clicks, publish a site for free, and will give the hoster an opportunity to upsell customers to domains, mobile functions, professional hosting, and vanilla milkshakes.
But even the right software is not going to make hosters comfortable with the freemium business model. We are very rational people and do not want to give away services for free and then hope to make it up in volume. And here is where we can learn from the Wixs, Yolas, and Weeblees. Take what is the best and leave the rest. What clearly works is the ability these businesses have to hook a customer first. Most people initially approach web presence with the need for a site. If we want them as customers we cannot hit them with a complex plan first. We need to make it easy to get them signed up and accelerate steps that lead to a functioning website with templates and relevant images and content. We also need to help them connect their new sites with social media and sync their presence with Facebook.
Now what about money? I see three strategies that a hoster can use to turn this new simple website creation experience into profit.
- Differentiate your offering and secure premium pricing
- Use Site creation as a loss leader to drive customer acquisition and upsell business
- Or incorporate it as a component of a value added bundle that will help you attract business
With the differentiation strategy you lead with the value of web creation service. You do not give away sites for free. You ask for a premium prices because you can provision and deliver the value of easy- to- set-up sites. This approach limits your financial risks as you are not hosting sites for free and will help you drive improved revenues per user as well as drive down churn because your users are now less likely to drop off frustrated with the initial site creation process.
The loss leader strategy requires stronger nerves and more upfront investment. This is the way Yolas and the like approach this problem. The big difference, however, is the fact that hosters are in a much better position to drive upsell process with strong portfolio of web related services and upsell know-how. We already know how to recognize if a site needs a dedicated URL, SSL certificate, support, design services, and can upsell users with shopping carts and business applications and many hosters can drive upsell to virtual servers. Web Presence Builder Business Sites will make easier to automatically identify and upsell to growing sites with page count throttling.
The third strategy is the most reactive but also the easiest to implement. What it suggests is accepting easy site creation as just the cost of doing business, a must-have for a user. In this case easy web creation is simply part of the core bundle of services delivered in some or all of the webhosting plans.
I do not see these three strategies as something our industry needs to consider. I see these as “do them” or “go out of business” options. Our customers are already voting with their clicks for the service they prefer, and we already see a fundamental shift in new site creation from traditional web hosting to the new breed of “web creation” providers. I hope to see all of Parallels partners on the other side of this great divide executing on one of our of the three web creation strategies in 2013.