Shared hosting growth has slowed in the last months, but the sector continues to be resilient and re-invent itself. Perhaps the most interesting recent development in the shared hosting space over the last quarter was the move from Verio to start packaging multiple ancillary services into bundles. The goal is obviously to drive ARPU through purchases of more services. But the thinking behind this strategy is equally important to consider.
Packaging add-on services is a way to ensure the hoster gets as much additional ARPU as they can in one shift. This is important since because the window of opportunity for the upsell is generally early in the relationship between provider and end user. In other words, new customers sign up and in that initial period are much more likely to buy add-on services. Over time they are less likely to engage the provider and hence, buy more services.
Whether its one service or five services they are simply less likely to purchase. Packaging add-on services also enhances the overall value proposition. Left to make their own choices customers might not know what services to buy and are inclined to just not buy anything at all.
Verio’s add-on service packaging is a relatively subtle twist but is something that shared hosters have not done enough of. It is one of the reasons shared hosting has always had a lot of difficulty driving ARPU. The window for making the sale is small and customers don’t often know what services to buy. Shared hosters need to figure this out.
To learn more about hosters´ growth strategies, join Open-Xchange CEO Rafael Laguna and me in our free webinar on October 17.