How to enter a competitive market such as web hosting

Large web hosts spend in excess of £1.5m plus a year advertising their products and a lot of generalist web hosts come and go every year as the cost of acquiring a customer becomes just too high for all but the biggest of web hosts. A couple of key things to look out for when determining how competitive a market is are:

a) How many large players there are in the market (a mature market typically has two or three like cola or coffee)

b) How aggressive are they in trying to get competitor’s customers to transfer over (e.g. BT broadband directly comparing their speeds with Sky’s)?

Web hosting doesn’t have either of these on a large scale yet, but I can feel it moving that way with buy outs and more direct comparisons creeping in. So with this in mind, how can anyone with a tiny budget successfully compete against such well established players?

Target a niche in the market

A niche is a small segment of a market that is particularly suitable as a target audience for a specific product or service. Every market has a collection of niches for companies to target and profit from. Examples include wedding shoe specialists, eco light bulbs and herbal tea bags.

A niche by its very definition is much smaller than the mass market so revenue will naturally be smaller, but the profits could be much higher. By targeting a niche you avoid the costs involved in breaking in to a hugely competitive market. Focusing on a niche enables you to focus your marketing expenditure on a tightly defined set of channels.

By positioning yourself as being directly associated with a niche you are able to position yourself as an expert in that field in a way no mass market company ever could and this is incredibly appealing to customers within that niche. You are also able to focus your customer service on that niche’s needs, cutting support costs but increasing the quality at the same time. Web hosting examples include:

• SOHO/ micro businesses

• Travel

• Gaming/ specific game

• Forum hosting

• Photography

• Blog hosting

• Family web sites

• Music

• Web designers

• A popular CMS e.g. WordPress

• An age group e.g. over 50’s

• And so on…

Be excellent at one thing

The more complex a business becomes, the more difficult it is to define who you are and what you do well, both for you and your customers. Web hosts that offer a huge range of products and add-ons run the risk of losing focus on their core products and muddying their USP.

For example, if a customer is on the lookout for WordPress hosting and comes across website A listing 101 different hosting products, and a simple landing page advertising WordPress hosting on site B, site B has the best chance of converting that customer. You don’t have to just focus on the product, support levels, design, usability and pricing are other areas you can focus your efforts on becoming excellent.

Be unique and stand out

Capturing people’s attention and getting them talking about you because of your uniqueness is a great way to cut through the noise and stand out.  There are countless opportunities for a web hosting company to really stand out right now. It goes without saying you want to stand out for the right reasons though, not just for the sake of it. Here are some ideas:

• Be the brand: There aren’t any well-known faces in the industry, become one in the same way as Rand Fishkin has in the SEO industry at www.seomoz.org

• Be funny: Web hosting is typically a dry affair, why not bring some humour to the table?

• Be attractive: There aren’t many genuinely beautiful web hosting websites that you would visit simply from a design perspective. Become one.

• Be social: Crowd source product and feature ideas and then implement them e.g. run a poll on which one click install should be added next.