Value Strategies

SenseiSteve

SenseiSteve

HD Moderator
Staff member
In the hosting industry, it’s very difficult to differentiate yourself from thousands of your online competitors, or so some would lead you to believe. Actually, while some providers post relevant content, most simply offer packages – a certain amount of space, bandwidth, RAM, CPU for a specific price. Of course, price sells but you generally get what you pay for. Lower prices generally relate closely to overselling, leading to reduced server performance, slower downloads, and increased customer churn via suspensions or terminations for excessive use of the provider’s resourses.

Value Sells

If a provider offers excessively low pricing, they have to oversell their servers to turn the same profit as providers that don’t. So math aside, why select provider A over provider B. It’s all about perceived value to the prospect. Value sells – it always has and always will. Every organization I’ve ever been in tells the same story, “We’re not the cheapest place in town, but we offer value and solutions.” In the hosting industry, I read of providers going belly up almost weekly. Hosting forums are flooded with threads from members asking which provider to trust. The providers that survive are invariably the one’s that provide value. So how does a prospect perceive value online? The answer is lots of content – relevant content that’s focused to specific needs, matching your core products and services to your online marketing and SEO strategies.
 
Perfect summary Steve! Customers always want to know that what they are paying is worth it's weight. Similar to food, it's quality over quantity. Provide QUALITY content that the user can relate to, and the battle is half over.

Personally I hate the word "cheap" - and I lothe using it to describe services that we offer or any other hostng company. Inexpensive is a better word, cheap just "cheapens" the product! :) Yet, due to search patterns of users, we're forced to use the word on various pages in order to drive the content and the sale.
 
That was very insightful, Steve! Patience is also necessary if you decide to go with the quality value route as you can't expect a lot of credibility for the first couple of month's as you haven't yet gained your customer's trust but with time, you could end up being the next HostGator minus the overselling...
 
Steve-Hostirian said:
In the hosting industry, it’s very difficult to differentiate yourself from thousands of your online competitors, or so some would lead you to believe. Actually, while some providers post relevant content, most simply offer packages – a certain amount of space, bandwidth, RAM, CPU for a specific price. Of course, price sells but you generally get what you pay for. Lower prices generally relate closely to overselling, leading to reduced server performance, slower downloads, and increased customer churn via suspensions or terminations for excessive use of the provider’s resourses.

Value Sells

If a provider offers excessively low pricing, they have to oversell their servers to turn the same profit as providers that don’t. So math aside, why select provider A over provider B. It’s all about perceived value to the prospect. Value sells – it always has and always will. Every organization I’ve ever been in tells the same story, “We’re not the cheapest place in town, but we offer value and solutions.” In the hosting industry, I read of providers going belly up almost weekly. Hosting forums are flooded with threads from members asking which provider to trust. The providers that survive are invariably the one’s that provide value. So how does a prospect perceive value online? The answer is lots of content – relevant content that’s focused to specific needs, matching your core products and services to your online marketing and SEO strategies.
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Steve as always great job. The one thing that providers do not understand is, while they may have lots of cheap customers rushing to the door, they aren't always the best customers. From my experience, the budget or cheap customers are more likely to act in an unprofessionla mannger, they typically flip easier, and they they tend not to tell you they are leaving either.

The stress that overselling and cheapo's brings really isn't worth it at the end of the day.
 
Couldn't agree with you more. If you attempt to compete solely on price, you're always going to get penny pinching clients which you don't want - they will leave you once a cheaper offer comes along.

Another thing that a lot of providers attempt to do is provide a lot of features, but not concentrate on the core values that the target customer would want. This also hurts since your cost to serve is a lot higher than it needs to be and sometimes you will lose the perfect customer because they believe you are offering them a lot more than they need (giving them the perception that they will be paying more here than they need to).

The bottom line is, price your products/services according to the value you are putting out there as well as according to the price target your end user would go for.

I hope that helps out.
 
There's a perceived value to every contact you have with a prospect or client, online or face-to-face. To prospects, very often that perception happens within seconds. To clients, this may improve or worsen over time depending on your support. Both are important, but my primary focus is to keep existing clients.
 
Yes client retention should be a priority, it helps you to enhance your client's perception towards delivered value.
 
Zachary McClung said:
Steve as always great job. The one thing that providers do not understand is, while they may have lots of cheap customers rushing to the door, they aren't always the best customers. From my experience, the budget or cheap customers are more likely to act in an unprofessionla mannger, they typically flip easier, and they they tend not to tell you they are leaving either.

The stress that overselling and cheapo's brings really isn't worth it at the end of the day.
Click to expand...

You're right, many hosts do not understand the importance of quality customers as well. We had a cancellation this week within 12 hours of signing up. The order included cPanel($9). While we do have a money back policy, our TOS states that license fees cannot be refunded(for obvious reasons), but because of the manner in which the customer requested the refund, explained the situation, and conducted themselves we gave a full refund. Did we loose $9? Yeah, but while it's a large part of business, money isn't everything.

On the other hand, a "cheap customer" would've likely just filed a Paypal dispute as their way to request a cancellation :(

But back on topic: Value is huge! It's something we all strive to provide more of every day. It's crucial to understand what your target/potential customers actually perceive as value, and IMO that's the hard part. One mite see a free domain as value, while another wouldn't care.

Marketing.. It can be easy, or complicated, it's actually up to you. Either way it has to be thorough and planned out meticulously IMO.
 
This is True Steve on so many levels. I've had many folks come straight to me on price, and I have to tell them... lets talk about price (obviously we want to offer them something competitive), but first lets talk about what makes us different, of more value.


I'm right with you on this.
 
I'm not sure if you've ever heard of a guy named Brian Tracy, but I've studied his material from time to time, and he had a series that talked about the value proposition, and not selling on price.

If you sell on price, you are just one of many others, and its not a long term model at all. His point was not that price wasn't a major factor in why someone should buy from you, but that value played in a huge role.

He gave an example... (I paraphrase :) )

A lady walks into a fine clothing boutique, and has her eye on a handbag. She walks towards it and examines it, and notices the price tag... "$800 dollars?!?!@*!" she says, "Thats alot of money!"

The sales gentleman says, that is correct madam, but let me tell you why. That bag was hand-stitched in Italy. There are only XXX number of them made. This Actress (I can't remember the name) has one, and this bag was one of a few, flown in here to our store. The fabric is made of ..."

Then the salesmen wen't down the line of why the bag was priced the way it was. It wasn't your typical handbag, and the lady finally understood what made his product standout. Not only did she take note of that, she also realized that this person knew his stuff. He had every detail of his product laid out.

He also, didn't insult her intelligence by making something up. They were facts and he simply shared them.

I think that if more people in this industry took this approach, there wouldn't be so much focus "Just" on price.

Just my 2 cents ... :)
 
Actually, I've read a lot of Brian's stuff. Even saw him on stage at Victory 2000 in St. Louis, along with Tony Robbins, Joan Lunden, Donald Trump & General Schwarzkopf ... good stuff ... left very motivated. Successful businesses are built first on the perception of value, and then actual value.
 
Unfortunately, most expert businessmen weren't born that way. And there are tons of business men and women who aren't experts, yet somehow thrive and growth. For the most part, every entrepreneur faces a learning curve, whether it be financing, marketing, accounting, human resources or customer support. Some are steeper than others.
 
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