ARPU And the life of a web hosting company…

Sometimes I wonder what the heck I am doing in the web hosting business. It is about the most competitive industry that I know of. Prices are being driven so low, and features sets are growing so quickly that many hosts can’t make ends meet. Many hosts cut costs so much to compete that in many instances even the customer loses out because support suffers in the name of profit or cheap pricing structures.

What is a web host to do in this situation? You really only have a couple of choices. First you can cut costs in an effort to better compete, which is the road that many hosts take. This ultimately hurts the company that does this because “costs” usually mean service and other necessary functions of your business that customers rely on. The second option and one that Bluehost subscribes to is to provide “premium” services that customers need and are willing to pay for to drive up revenues and ultimately profits. In the title of this blog I mention “ARPU” which stands for average revenue per user. All web hosting companies should have plans in place to drive further revenues from their loyal customer base.

Driving revenues can be a slippery slope for many hosts. Many hosting companies don’t have new or innovative products to offer their customers so they use hidden fees, and basic upgrades to charge customers for. An example of this might be charging a customer to “activate” their addon domains (Like many of our competitors do), or charging a cancellation fee if a customer decides to leave. Both of these will drive revenues up, but will also drive your customers away.

We have thought long and hard of additional features that we can add that would both allow us to increase are ARPU numbers and give value and services that our customers need and deserve from us. A good example of this is our web design group that should be up and ready in a couple of weeks. Many of our customers need design work and coding work for their sites and don’t have thousands to pay to get a site up and going. We have always been a hosting company only and don’t do any design work. This type of service is a great addition for Bluehost and will add revenue at the same time.

Learn to give value for your customers dollar. They work hard for their money and when they choose to spend it with you they are trusting your company. That trust is easily lost, but hard to earn. If you do right by your customers they will continue to spend with you and help your company to go right along with their own.

Thanks,

Matt Heaton / President Bluehost.com

9 Responses to “ARPU And the life of a web hosting company…”

  1. vaXzine says:

    Matt,

    Bluehost is the machine that stores and distributes other peoples value to their global ‘user’ base. Your leadership is what built this machine and your leadership is what will in effect boost bluehost’s ARPU. If I were neck deep in the middle of the 21st century hosting arena I would certainly be blogging daily and reaching as deeply as I could in to my current, “loyal” customer base. After all there is no bluehost without them (us).

    With storage and bandwidth prices continuing to fall, pressure is only going to increase on existing web hosts to either sell out of business or to courageously re-invent the hosting space.

    It appears that over the past 2 years that your industry is slowly being centralized. Like the way a frog in a pot gets gradually brought to boil the mom and pop webhost’s of yesterday are being silently slaughtered out of existence. Right now your personal blog is bluehost.com’s greatest value. True bluehost value starts right here at mattheaton.com, this channel is our direct portal into you. It is right here that we are able to see clearly into the mind and heart behind bluehost.

    Maybe you really got into the hosting business because you knew that behind every bit of data that you would evetually store, would lie a human-being trying to build a dream. Enabling hundred’s of thousands of people across the board to publish their selves and their businesses to the web is essentially what bluehost seems to be most proud of being involved in. Helping your customers by offering “out of the ordinary” services, will in effect lift bluehost and yourself into very revolutionary territory.

    Get closer to your clients, by teaching them how to get closer to their clients. This is in all reality the primary reason that you take the time every few days to sit down and write to us through your personal blog, right? So encourage these same qualities throughout bluehost, spread the wave and teach others to catch IT.

    In my opinion, by choosing to side step and simply hire a few web designers or convert a few existing employees into a traditional design department, isn’t really going to change much around campbluehost. These days XHTML, CSS, and graphic designer’s are a dime a dozen… And by no means should running a profitable, successful web design service be considered a simple task. It’s actually, if not more risky than being in the hosting business. I’m not saying don’t have a site design consultation service department, I’m saying don’t be another “LET US BUILD YOUR SITE!” webhost provider… how boring.

    Do yourself and us at bluehost a big favor before more damage is done. Dig deeper into what the word VALUE really entails to your end user base, to your employees, and to yourself. Don’t just add new services that may in turn yield very little value if any at all to your users, ask questions, some basic, down home questions. You may be surprised to find that the answers that you’re seeking are embedded right here in your very own network.

    Best regards,
    ShareNeedLes

  2. andrew wee says:

    Hi Matt,
    i think you miss out one point in yr consideration and that’s the personalities behind the company.

    I spent the better part of a month checking out various web hosting companies, signing up and then cancelling when the service or tech support was not up to par.

    I checked out Bluehost and to tell you the truth, reading your blog was what turned the tide for me. I appreciate your candor and honesty in addressing issues in the Internet marketplace, and it’s refreshing to know that there is a face behind the machine.

    I’ve been publicising your blog to my circle of Internet Marketers here in Singapore, so if you see a spike in Singapore sign ups, you know why..!

    ARPU, ROI, ROE is all nice acronyms to the finance guys, but as the little guy in the corner, I appreciate that there’s a human being at the other end, even halfway across the world.

    PS: along the way, when i’ve been asked for a host, i’ve been telling them. ‘use bluehost, you can’t go wrong’.

    Cheers and keep fighting the good fight!
    Andrew Wee
    Singapore
    http://www.WhoIsAndrewWee.com

  3. bill says:

    I think bluehost is doing a fine job. One of the best hosts that I’ve come across. I switched here from startlogic because they just didn’t cut it and they didn’t offer as much as you do.

  4. jo says:

    hi matt!
    i like the mo and a goatee, it gives you a rugged appeal! Matt my speciality is love profiles! may i offer you a COMPLIMENTARY LUV PROFILE? its easy! i just work from your blog photo and can post the results here for you! just email jo at luvblis@yahoo.com.au and i will gladly do your own personal luv profile!

  5. Johnster says:

    Hi I’m seriously considering using BlueHost to host my website, as it has the most afforable price and good reviews. The big problem is that I found out that it will not include Drupal in Fantastico. This is a huge problem because my site is on Drupal. Do you have any idea if and when Drupal will return to Fantastico?

    I hope it’s soon, as I would like to be a customer of yours!

  6. Robert says:

    Looking forward to virtual dedicated. As for the ARPU – I will (a bit) above market prices for service that is well cared for like BH. Long time customer & hope BH can offer virtual dedicated. Thanks for the good service and best wishes for the BH team! Rbbert.

  7. Hello, Matt.
    At age 70 got my 1st computer July 2006. No previous experience on a computer. NONE! Signed up with Blue Host about 6 weeks ago. Wish you could have seen the raw beginnings of my website & then follow the changes & developments of my website using Page Wizard as I learned from your 24/7 USA SUPPORT TEAM. As Howie Mandell says, “How great is that!” You should be proud of them & of yourself. Please, whatever you do, recognize that developing talent here in the USA is YOUR light at the end of the tunnel. They are the extension of your heart & soul. Your immortality, if you will. From my end, it means a lot to talk to someone who not only speaks my language, but understands it as only an American can. Having read your Blog, I know you’d hire an Italian support team in Italy & I’m not telling you anything new. Just figured it wouldn’t hurt to let you know how much I valued your TEAM.

    Look into usfreeads.com & buy it. All it needs is Support Team. Look at my Website:memphisbargainbicycles.com & you’ll see the fit for future growth.

    Best Wishes For Your Continued Success,

    Lew

  8. Chris says:

    Hi! :) This is the catch-22 situation, isn’t it? :) Well, if you cut costs and try to be competitive, there will be more low-grade competition for you, and it will be a point of no return ultimately. Don’t do it. Go for better advertisement of your services, and highlight how great the features and your customer care is. Aren’t these your plusses? People are fed up with all the undercutting going on at present in this field.

    What they went is the best quality for a reasonable price, so target that part of the market. Anyway, those who are undercutting the market at present will soon be lost forever as the economy grow further. People have realized that only the fly-by-night operators are using these tactics. Look at all those top leaders also. While these top people are also undercutting, they are helping you by actually throwing out the parasites in this great field. :) So, be positive!

  9. imodium says:

    Hi! This is the catch-22 situation, isn’t it? Well, if you cut costs and try to be competitive, there will be more low-grade competition for you, and it will be a point of no return ultimately. Don’t do it. Go for better advertisement of your services, and highlight how great the features and your customer care is. Aren’t these your plusses? People are fed up with all the undercutting going on at present in this field.

    What they went is the best quality for a reasonable price, so target that part of the market. Anyway, those who are undercutting the market at present will soon be lost forever as the economy grow further. People have realized that only the fly-by-night operators are using these tactics. Look at all those top leaders also. While these top people are also undercutting, they are helping you by actually throwing out the parasites in this great field. So, be positive!

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