Between 2015 and 2019, web and application hosting's share of the overall hosting market will fall from 36.5% to 28.5%, while managed hosting's share is expected to increase to 71.5%, reaching $64.8 billion in revenue.
Last month, 451 Research, LLC released a comprehensive overview of key trends in web and application hosting. Among many of the central themes outlined was the idea that hosting providers should expand their portfolio of services to capture a greater stake in the overall IT market. Most notably, you should look for adjacent markets in the web space to wrap into your offering. While there were many rising trends discussed in 451 Research's report, we're highlighting three data-driven strategies you can implement to strengthen your business model and continue closing customers for years to come.
1. DIY Web Presence
More web hosts should consider targeting web professionals as customers. Research points to a viable market of website designers "who prefer to build and deploy customer websites, but do not want to provide the ongoing administration and support involved in providing them with hosting." As you may recall from my blog post, How DIY Website Builders Can Help You Build Your Client Base, software-based DIY web presence services are increasingly in demand. Coupled with the fact that their baseline pricing is approximately double that of shared web hosting's, DIY solutions are a competitive offering to add to your portfolio! Indeed, popular website building service, Wix, reported 75% year-over-year growth in 2014, outpacing the Web and application hosting market overall, where 451 Research predicts CAGR of roughly 11%!
Something else you may not have known is that other Web presence power players, like Weebly and Yola, have recognized the alignment between the respective markets and approached web hosts with partnerships and resale programs. Could this be something for you to explore further? To answer this, first you need to ask yourself what percentage of your customers or potential customers would benefit from your specialization into these new technologies.
2. Managed Services
We share strategies in managed services daily on the Continuum Managed Services MSPblog. In fact, 451 Research's finding that "an opportunity has emerged in recent years for businesses that can deliver managed services on top of public cloud infrastructure," couldn't come at a better time! Leveraging R1Soft's trusted backup technology, we just launched a backup and disaster recovery (BDR) platform that was born in IBM Softlayer's public cloud. Using Continuity247™, the only fully managed BDR offering in the channel, our managed services provider (MSP) partners can generate new business scalably.
This doesn't just present revenue potential for MSPs and IT solution providers. Hosting providers should also think about capitalizing on the market need and offer any combination of monitoring and patching services, system infrastructure design consulting, managed security, incident management and resolution, etc. In transforming yourself into a managed hosting provider, you'll become even stickier to customers, who'll come to rely on you for more of their IT demands because they'll more clearly understand your impact on their bottom line. 451 Research's report indicates that some of the most successful companies don't just sell their services, but sell the business outcomes their services will yield. How will you increase your customers' operational efficiency? What makes you a more cost-effective solution? This is ultimately what they care about, not the infrastructure itself. Aim to position yourself as their trusted business advisor, and you'll understand why managed services is such a burgeoning market! Looking to learn more about this approach and how to market it? Check out this short and entertaining video explaining the five selling points of managed services!
R1Soft's own clients have ridden the favorable market wave by selling server backup and recovery, driving new revenue and profitability for their hosting businesses. To learn more about adding backup as a service differentiator, download the webinar at the end of this post!
3. Managed WordPress and CMS
Once you've begun offering managed hosting services, take it one step further and look into selling managed WordPress hosting services! WordPress isn't the only content management system out there, but it is the platform with the largest market share, capturing 60% of the CMS market!
According to market research, more web hosts are seeing managed WordPress "as a core piece of the Web hosting software stack, along with the operating system, Web server, database and server-side programming language." But how can a free, open-source tool like WordPress help hosting providers generate additional revenue? By packaging management of the software into your hosting products, you can charge a premium. Like the similar trend in DIY website builders described above, this popular strategy builds upon taking advantage of the untapped market of Web professionals who stand to benefit from your technical support and management. Customers will pay extra to have you oversee and optimize their website's performance, user experience, support and security.
Don't gloss over this last criterion. Are any of your customers subject to rigid compliance regulations, such as HIPAA or PCI? The need for strict website and infrastructure security opens up a whole new revenue stream for hosting providers to explore and reinforces the argument that the industry is shifting toward managed hosting practices.
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