Sound business practices win the race…

When I was 17 I started selling computer hardware to local businesses. When I was 23 I opened my first retail location. In the first 2 years we expanded into bigger retail space two times and opened two other locations. Business was good! There was only one reason we were doing well and it was price.

Our service was average at best, because we were completely cost sensitive the quality of our parts was average as well, and we hired the cheapest labor we could find. We succeeded largely because of my ability to speak Mandarin Chinese and obtain lower prices on virtually everything compared with my local competitors. We had an advantage that other local companies didn’t have and so it was easy to “win”. We could sell almost $10 million a year worth of computer hardware and not worry about the competition catching up. In Dec 2006 the last of the retail stores that I started called “Computer Warehouse” shut down. I had sold these stores off in 1997 or so, but it was still sad to see my baby that I had worked so hard on finally fade into the sunset.
Fast forward to December 2003 and Bluehost is just starting up. I have learned a lot since then. The first thing I learned is that a perceived advantage that you have in business will eventually go away or be negated in some fashion. Whether its price, a great search engine ranking, a low workforce cost, etc, it doesn’t matter. Your advantage will go away at some point either because competition catches up or the environment you are operating in changes.

Sound business practices and a REAL commitment to the customer is what will weather the storm when it comes to your small or large business, and it WILL come. Cost for labor, hardware, etc is enormously important, but if your business model relies on you being only the cheapest one out there then your days are numbered.

Thanks,
Matt Heaton / Bluehost

12 Responses to “Sound business practices win the race…”

  1. I have been having a issue with some of my email addresses for a domain name I am taking care of. I called your 800 number and Kyle answered and listened to my problem. He came up with a solution that will work very well for me and any other accounts that I have charge of with bluehost. I am commenting on your blog only because I did not find a contact to you on your home page. I am sure it is their I just get very impatient. I wanted to let you know just how helpful Kyle was to me. He made me feel like I was the most important subscriber you have. Thanks for the service.

  2. I started reading this and halfway through the first paragraph I wondered if you were referring to Computer Warehouse. I bought my first computer there and the tech support guy walked me through the WHOLE process of putting all the components together and making it run.

    It is true, though, the reason we stopped patronizing Computer Warehouse was because of the inferior brands they seemed to stock. I’m glad that you obviously learned a lesson from Computer Warehouse that’s translated over to BlueHost. I will continue to recommend friends and colleagues.

  3. ginger says:

    “Sound business practices and a REAL commitment to the customer is what will weather the storm when it comes to your small or large business, and it WILL come.”

    I agree with you, especially the part about “REAL commitment to the customer”. Over the years and over several hosts, that has been the single determining factor in my movements (hardly price, although that counted). I am comfortable with a host that tells you the truth, even when it’s hard. That, Bluehost has done well. Keep it up!

  4. Matt you are so right! When I called Bluehost customer support today with a rather puzzling issue that turned out to be an obscure missing file in a third party add on your wonderful customer service tech did an awesome job of investigating the problem, talking me through it and finding a back up to restore. I never got the dreaded “we don’t support third party software,” canned response before I even had a chance to ask my question like you do with so many other hosting companies.

    It’s definitely worth the extra few minutes you allow your reps to spend looking into issues even if it may be a borderline third party issue, because after yet another wonderful experience with a patient and knowledgeable customer service team that goes above and beyond to be helpful, I will keep on shouting from the rooftops to all of my clients and colleagues what a great company Bluehost is!

    Thanks so much!

  5. Wes says:

    I think a lot of people are now looking beyond the price and looking also at the service offered. In most cases I go for the service offered because for me in most cases that’s the most important. However, once in a while you do find people who offered both low cost and a great service and when that happens, well thats all good.

  6. Miriam says:

    I am about to leave Bluehost, and I wanted to hear if you have anything to say to convince me otherwise. My sites have been down way too much, and the final straw was when, without warning, everything went down for over 8 hours! That cost me dearly. I have referred a few clients to you, and I have a few more who are waiting to hear which hosting provider I recommend.

    So Matt, if customer service is so important to you, why did I not hear back from you when I emailed you about these problems? Is it perhaps because you didn’t get my email because my email hasn’t been working properly for way too long?!

    I’ve got to make a decision fast about the future hosting provider for myself and my clients, so please respond quickly…

  7. Neil says:

    You know, I never experienced such horrible service with Bluehost until right around when you made this post…

    I don’t know Matt…right now it sounds a like too much talk and too little walk.

    How about instead of your next blog post about how good you are, you instead spend your time squaring away some of your customer’s problems and maybe write a few apologies…?

  8. I don’t know, Matt. Wal-Mart has made a killing out of bottom feeding.

    Wow, what’s with the disgruntled customers? So far I have about a 99.5% uptime. So, I hope this reliability continues.

  9. Aaron says:

    Overselling to the point where it is simply not possible to offer all customers with the space/bandwidth you are selling sounds very much like the situation you described. You are going more towards marketing rather than customer support, and this is obvious by your offerings.

  10. eddacker says:

    Matt: it was great to hear this story because, except for the successes, it is the same as mine. My ‘mom and pop’ store ran fine in fresno, ca until the dot com bust combined with the market (read chain stores caught up to the white box market) sent me down that path. I considered going into service as I had many business customers, but the love of my ‘baby’ as you called it blinded me and I held on until it was too late. I am living in another country now and I am an IT consultant/engineer as a one man company serving small business, but I still miss that store.
    Thanks for the memories.

  11. Reading all these comments and having a company of our own is cool to see in the openess. Matt is right, Customer service is critical.

    In a comment that the lowest price is basically death to a company. Good solid Techs and quality Customer Service, and a reliable platform all cost money to manage day in and day out. The Hosting scene is starting to shift and people know that in order to have a solid service, they have to find a company that has a balance between price and service.

    A comment about, 99.5% uptime as we were just talking about that very statement. One does not see that reference as much anymore. If you do the math, it is 44 hrs of ok downtime. That is allot of hours. I do not think you can attract many with advertising “under 45 hours a year downtime”. How bout 250 days of uptime. Of course it is with Linux. A Windows server can be lucky to get 72 hours without a reboot. (yes, there are exceptions, but I am with Matt).

  12. Single Stock Future says:

    Hi, Very nice place you have here. You’ve done a good job & awesome blog on Sound business practices win the race…!

Leave a Reply