For web hosting providers the future has never been more exciting, nor more challenging. On the one hand, the demand for great infrastructure is growing faster than ever before. On the other, competition is fierce, and acquiring even a single customer can feel like pushing a boulder up a hill. Savvy hosting providers understand that success is a combination of offering quality web hosting services, excellent support, and strong business management.
Thriving hosting providers share some common traits regardless of where they are on their business journey. One of those traits is offering solutions that fit customer needs while also adapting to the customer’s own growth goals. Think of it this way: if infrastructure needs to grow relative to business growth, then it stands to reason that a business will have very different needs as it grows in size. What works for a solo-practitioner starting a law firm is unlikely to be sufficient when the practice has grown to a dozen partners, paralegals, and support staff.
As a result, your web hosting company should offer dedicated servers to customers. In this post, we will explore four key benefits of offering dedicated servers to both new and existing customers.
1. Dedicated servers widen your potential customer base
Offering dedicated servers to the market creates a great opportunity to expand your customer base. Even with the rise of the public cloud, dedicated servers and private clouds are still used by businesses the world over. Some applications cannot run in the cloud. Some industries have privacy and compliance requirements that make such servers the only option. And some organizations simply want to be in complete control of their infrastructure.
By offering dedicated servers, this entire segment of customers can start to consider your web hosting business as their infrastructure partner.
2. Dedicated servers provide an upsell opportunity and a path to customer growth
While shared hosting and VPS offerings are a great and relatively cost-effective way to start a web hosting business, you’re missing out on high-value upsells by not offering dedicated servers. As your customers grow their needs will change. Small shared accounts work for scores of users, but many of those same users will eventually grow to need more robust infrastructure and grow to a VPS. But what happens when those using VPS need to graduate to a dedicated server? If that isn’t something you offer then those customers will leave for a competitor that does.
What’s worse, some potential customers that anticipate future growth may not give you a chance to win their business in the first place if they see that you won’t be able to provide what they need in the future.
3. Dedicated servers increase customer retention
Did you know that customers choosing a VPS are likely to keep that VPS twice as long as a shared account customer keeps a shared account? If not, then surely you don’t realize that customers who choose dedicated servers are likely to remain customers THREE times as long as traditional shared hosting customers keep their shared accounts. When you factor in a higher price point, the life-time value (LTV) of customers purchasing dedicated servers is significantly higher than any other type of hosting customer.
The reasons for this customer stickiness are numerous, but one prominent theory is that businesses and mission-critical applications favor more robust infrastructure compared to a lightweight shared account. Whatever the reason, dedicated servers don’t just mean more revenue, they mean longer-term customers as well.
4. Dedicated servers increase company revenue
For many web hosting companies, the best reason to offer dedicated servers is for the revenue opportunity presented. A dedicated server typically starts at a price point in the hundreds of dollars. In many cases, dedicated servers cost customers ten, twenty, or even thirty times as much as shared hosting accounts!
True, the margin percentages aren’t exactly the same, but dedicated servers can be great sources of profit, especially if you’re grinding out only a few dollars per month from each shared account.
The benefits of offering dedicated servers should be quite clear. Both customers and your business benefit in a variety of ways. From doing a better job supporting customer needs and initiatives to opening new avenues of growth for your web hosting company, dedicated servers are the key to securing your future with your best clients. With the public cloud and other competitors offering robust infrastructure solutions, it is critical that your web hosting business keep up.
The good news is that managing dedicated servers has never been easier. From keeping an accurate inventory to simplifying provisioning to allowing customers to restart servers on their own (and many other features), EasyDCIM provides a full dedicated server management suite for web hosting companies like yours. If you’re curious how EasyDCIM can help you grow your web hosting business with dedicated servers, learn more about our mission. We would be excited to discuss how dedicated servers can help your web hosting company reach new heights.