How can a small service provider compete against Google, Amazon, and the other giants entering the cloud/hosting market? The cloud is now a reality. However, your company can start your own affordable cloud offering and even compete against the big boys and win. It may seem like a no win situation to try and compete against the big boys. However, smaller providers can compete and win provided they do the things the big guys are not willing or capable of doing. Larger companies are slow to evolve, are generally worse at customer service, unwilling to help the customer resolve technical issues beyond the core basics, and have strict guidelines for what customers can and can not do.
KEYS TO COMPETING AGAINST LARGE COMPANIES
1. Improve your customers experience. Personalize.
A good example to showcase is Wal Mart. While Wal Mart tries to be everything to everyone, they are missing a few key components that are important to the customer experience. While Wal Mart does offer an exceptional product offering and good pricing, their customer service is horrible. Employees barely say hi to you in the check out lane. You can also expect to stand in a Soviet-Era bread line while you wait to pay for your savings on the products. Contrast to Target which charges a bit more, offers higher quality products, and you can expect to wait less in the check out lane. Both are still large companies and offer a breadth of products and offer a relatively dull customer experience.
SOLUTION(S): Let your customer get to know you better. Start a company blog that contains more than simple marketing messages. Let the customer know you are a hard working company full of energetic people willing to go the extra mile. Add additional bundled support options the larger companies simply can not compete with. Spend additional time early in the process to ensure your new customers are setup properly. Perhaps give them an email asking them if everything is fine and if they need anything. Generally in web hosting, if you can get the customer setup properly and familiar with your systems within 72 hours you will rarely hear from that customer. Yes, I know… you’re afraid of getting a lot of high maintenance customers. Fear not, your good customers will far exceed the high maintenance customers.
Showcase your companies personality and willingness to help the customer get up and running. Perhaps your site could use a re-design bringing these aspects in. Focus more on service and customer experience than pricing. Don’t copy the big providers boring and bland white paper looking web sites. Add twitter to your home page, maybe a link to a company FaceBook profile.
2. Offer niche products. Specialized plans.
There are many control panels, operating systems, programming languages, and other bells and whistles you have to choose from. I see a lot of the larger Web Hosts offering tons of OS’s control panels, custom languages and more. Generally, a large company has to set boundaries on support so their costs do not skyrocket. Offering a ton of control panels does come with a price for the larger company. A fully staffed technical team needs to be trained on new control panels, OS’s and the like. In fact, most of the larger companies are forced to hire experts that specialize in only one product. You can imagine the costs and headaches associated with offering everything under the sun.
SOLUTION: Search for unique offerings and master them. There are lots of web hosts trying to be everything to everyone, but very few are masters of any one product they offer. If you can find a niche that fills a need the larger companies do not fill, you should exploit this. Offering a niche product has benefits as well as it will reduce your overhead in training, support personnel, and licensing and tracking of those licenses. An example of a niche would by VMWare Hypervisors running *nix OS’s. Your team would not need to worry about Microsoft licensing costs or highly trained and expensive technicians. Even better, if your techs are comfortable at the command line in Linux they are going to be able to adapt easily to managing any control panel offerings you sell.
3. Do not reinvent the wheel. Automate your offerings. Reduce time and costs.
Large companies devote an immense amount of time and energy toward automating their piece mealed systems. I won’t mention any names, but I know of a company who has spent $1 million dollars or more to migrate and automate a totally new billing system. The company itself created a front end that interfaces with the new billing system. These costs are handed down to the customer or eventually drive the larger company to sell or go out of business. Makes you ask why did they create a system from scratch when there are proven systems already running today with a proven track record?
SOLUTION: Partner with a software vendor who can totally automate your web hosting business. The most overlooked item of any Web Host is total automation. Impossible you say? Not at all. There are a few software options around that allow you to sell, manage, and provision cloud products today. Probably a company you already know is Parallels. Parallels offers a wide array of Cloud Products that can help you Partner with innovators. Parallels Virtuozzo Containers (OS Based Virtualization), Parallels Plesk Panel, and a soon to be Hypervisor Server offering (I’m told will be released in late Q3 as it is undergoing testing now. You can even download the beta from Parallels web site).
4. Choose a software vendor who is not competing against you. Say no to Microsoft.
I find it confusing when I see Microsoft selling cloud software and also offering their own cloud hosting. Microsoft has built its core business around software and pushing that through trained sales reps and techies who service small to medium sized businesses. Does it make sense to compete against the software creator when you’re a small company? Who has more credibility in servicing the product? You or Microsoft. Dump the two headed monster for a company who won’t compete against you.
SOLUTION: Parallels does not compete against you. You are not a reseller. They are simply the software vendor. You can buy automation software in Parallels Business Automation – Standard and the actual products you can automatically provision in Parallels Virtuozzo Containers, Parallels Plesk Panel, and soon to be Hypervisor Virtuozzo enabled plans.
In a nutshell, you can compete against the larger companies. In some cases you can do it better and cheaper than they can. Find your niche, automate your operation, reduce custom programming, personalize your company, and beat the big boys.