Losing Customers?

[Tazd9t9]

Just wondering if anyone has any recognised patterns in losing customers. I.E. do you notice a lot more cancelling at domain name renewal times, every year / 2 years?
Are they mainly businesses or personal sites?

We have noticed quite a few customers leaving lately for no other reason than that they do not want their site anymore, nearly all personal sites. It is 2 years since we started developing a customer base and so a lot of domain name renewals seem to be up and this seems to be causing a lot of cancellations.

Do businesses have a higher retention rate than personal customers? How do you entice more business customers?

We are planning on expanding into the reseller and managed server market also to expand our potential customer base.

[dynamicnet]

Greetings:

We are primarily a business to business managed hosting and managed service / security provider.

We typically lose between 1% and 2% per year since 1996 (in business since 1995; hosting since 1996).

We typically find business customers are more interested in solving problems they face as a primary concern, and the cost factor lower on their list of concerns (lower can be 3rd place on the list).

Furthermore, we’ve found business customers are quicker at reviewing the total cost of ownership over what appears to be the outright cost of doing business.

For example, there is a local company that was with their 2nd hosting provider. They were paying less than $25 per month for their hosting; and yet, the cost of using that provider was around $100 per day due to the constant problems.

They came on board with us paying $100 per month for their hosting, and their daily problems went away.

Personal users might not take the time to do the real math of $25 per month plus $100 per day times the days in the month compared to $100 per month. Which was cheaper?

Thank you.

[shost]

We host many personal and business sites. I do see that with business sites, we have almost no loss of them, as long as there are no problems. As long as your servers are stable, and you have good support, you should retain your business customers.

Personal sites on the other hand, can leave at the drop of the hat, for no other reason then their friend said they found a good cheap host.... well,, if your lucky, they will come back when they find the cheapest isn't the best solution. For the younger site owners though (15/18 year olds), it may be their best solution.

As for loosing people at renewal time. Yes, on personal sites, if they have no real reason to have it on line other then amusement, then many times when faced with the renewal fee, they decide they really don't need it. For businesses though, I havn't seen this as a trend. More so for the personal sites.

Tim L

[nsusa]

A good way to find out why people leave is to send them a survey via email/website. Eventually offer a $5.00 gift certificate for Amazon or Blockbuster to motivate responses. Knowing why clients leave will help you to sort out certain problems if there are some.

Christoph

[bobcares]

Customer leaving in the hosting industry is very common. I do not know why. Because it is a real pain to transfer a site but many do it regularly.
Prime reasons being
1) Price - The costs keeps reducing everyday and many like to take the cheaper option.
2) Uptime and reliability- Many hosts forget the need to have reliable servers and start loosing customers after some time.

The best solution is to work backwards.
Try to take your total costs on a server i.e.
server cost + control panel host + helpdesk cost + billing software cost + CC processing cost + support cost + other administrative costs + marketing costs.

With this figures, get the best prices you can offer to customer such that the servers are never overloaded and remain reliable.

I hope this helps.

Regards
Amar

[hb-sam]

Try to entice them to stay on by giving them special offers such as a free month of hosting or something along that line.

[Dacsoft]

Originally posted by nsusa:

A good way to find out why people leave is to send them a survey via email/website. Eventually offer a $5.00 gift certificate for Amazon or Blockbuster to motivate responses. Knowing why clients leave will help you to sort out certain problems if there are some.

Christoph I don't mind offering free hosting or something to stay, but I am not going to start sending money to exiting customers. I can't see the rentention rate being significantly increased by offering departing customers money to tell me why they left.

[nsusa]

Well, you do not have to do it with every customer. You could also enter them into a drawing/lottery to attract responses. It really depends on how much you like to find out why they leave. Spending $50 or $100 on this might help you to retain more income in the long run. See it as advertising cost.

Christoph

[tcgwebs]

To original poster, if you think it has everything to do with domain renewals, and if you have the funds to do so, why not offer a free renewal on their domain?

[nickn]

Originally posted by tcgwebs:

To original poster, if you think it has everything to do with domain renewals, and if you have the funds to do so, why not offer a free renewal on their domain?

Agreed...you don't just let a customer leave, you find out why they want to leave, resolve the situation, and then attempt to keep them as a customer. It may cost you a month or two's revenue from them, but it'll be well worth it in the long run, and for them to know you care, is priceless.

[Dacsoft]

I agree with keeping customers whenever possible. Based on my knowledge of the customer, I will try to figure out a solution and work with the individual. I always try to find out why a customer has decided to leave. If there is something I can do to convince him to stay, I will. I don't mind offering something special or some free/reduced price hosting. In a couple cases, I have provided free hosting or domain name to customers with financial problems. I gave away a lot of free hosting when BurstNet had the major outage in February. Didn't make much money, but didn't lose a single customer.

But I really don't see a great benefit to pay a customer to tell me why they are leaving if they have already made up their mind. Most will tell you why for free. Then you can offer incentives to stay.

[Cyberland]

We have always made it a point to ask customers why they were leaving. Everyone (except one), over the last two years, stated they just lost interest in their web sites. These were all personal sites. The only customer who left and went to another Hosting company said he got a better deal. The hosting company he went to offered the sun and the moon for next to nothing.

I wished him luck :cool:

[Karen]

Originally posted by Cyberland:
The hosting company he went to offered the sun and the moon for next to nothing.

This happened to me.

I had a customer inform me that he will not be continuing once his paid month was up. I asked him why he was leaving and he said that he found a cheaper host.

Over the next week, I was asked several questions by this customer regarding moving his site. It turns out that the 'new' host didn't have the answers so he was asking me.

When his 'new' host couldn't figure out how to transfer over his web site, he changed his mind and stayed with me.

:banana:

Karen

[Cyberland]

It is funny that you mention that Karen, as the customer I mentioned did not know how to change his name servers, so he called us and asked. We changed his name servers for him. However, he never mention that he wanted us to renew his domain name for him, which expires on September 3rd. I wonder if he will be back…

[sonixi]

I have noticed that personal sites will fall off and not renew. Business sites, however, tend to abide by the motto "If it ain't broke, don't fix it". Keep these customers happy and turnover will be low.

I think a lot of people were caught up in the hype a few years ago, thinking they could open a business on the web and it would be instantly successful. If you target these types of people, or if you just happen to host them, then they will have a higher turn over rate when they hit that brick wall called reality.

[GordonH]

One mathematical anomaly is that if you sell annual plans then you will lose no customers for 12 months, then suddenly you start getting non renewals and panic can set in.

However, people not renewing is not always a bad thing. You can then sell the space to a new customer.

We improved our renewal rates by having a link on the renewal form which says "is this too expensive". When you click on it it tales you to two options:

1. Renew as a smaller sized plan.
2. Switch to our budget brand.

This has reduced our customer churn siginificantly, because "price" is often given as the reason for not renewing.
having said that, a year later not many of these customers renew again even at the cheaper price, but we are keeping them on board longer.

Where smaller hosting companies can win is by being able to react more quickly than the big boys.
We can do things which are more creative and take more risks because we are owner managed businesses.
I bet that most of the host hanging out on this board make more profit percentage wise than companies like Hostway and Oneandone.

[IntraHost]

This is a little off topic... but I wanted to say bravo to GordonH.

That was a very helpful post. Gave me a couple ideas to modify how we handle cancellations. But thanks for sharing how you guys do it.

My problem seems to be that my customers fall off the face of the earth. So even if I could offer them a cheaper plan, or whatever, they just go bye bye, and thier credit card is expired, and phone number is out of date. *sigh*

[GordonH]

We have the same problem too.

Actually this will give you a laugh.
I got an email last week from a customer asking why his web site was not working.

His domain name had expired in June 2003!!!!!!!!

He had not replied to any of our emails or even noticed the site was not working.
He is (of course) now threatening to sue us for deleting his files some time last year as it was a mission critical business site.

[IntraHost]

Ahhh, i do love when the customers threaten to sue you. It makes you feel so American. ;-)

[GordonH]

I hate silly, empty threats.
Utterly pointless andy just make the person making them look like a fool.

[drmike]

Have two of my freebie clients threatening to sue me as we just did a server move. Already offered them a total and complete refund. :)

-drmike

[IntraHost]

HAHA! That's great. What the heck can they sue you for? haha!

[earthstar]

Agree with sonixi's point. Many , many businesses / sites are started with grand intentions and fall flat. How many customers build nice sites, upload them them and then wonder why they are not getting any visits?

[Brian S]

Originally posted by GordonH:
He is (of course) now threatening to sue us for deleting his files some time last year as it was a mission critical business site. Please tell me that last part was actually a statement he made in his threat. It would make it so much more enjoyable to laugh at. :)

Thanks,

Brian

[GordonH]

Unfortunately it was.

[nameslave]

Originally posted by GordonH:

Actually this will give you a laugh.
I got an email last week from a customer asking why his web site was not working.

His domain name had expired in June 2003!!!!!!!!

He had not replied to any of our emails or even noticed the site was not working.
He is (of course) now threatening to sue us for deleting his files some time last year as it was a mission critical business site.
I guess the keyword here is last year when you actually got his email only last week. What a "mission critical" business site! LOL!

[GordonH]

I have a funnier one:

Customer pays with stolen card number, we refuse to process the order and email the customer.

he emails back saying

"what do you mean STOLEN, I did not steal this credit card number, I traded it for 4 paypal logins, FAIR AND SQUARE."

[Chicken]

Ohhhh bother. You're not dealing with the brightest stars in the sky there.

[GordonH]

Its the great divide.
On the one hand I have programmers and developers who never contact us about anything, at the other end I have people who really have no clue.
Very little in between.

[linux-tech]

Re: losing customers
I haven't found too much of a trend. Generally, if you provide a reasonably decent service (doesn't have to be perfect), and decent customer support, I think you'll find that the retention rate will be decent enough.

Personally, I'm fortunate enough to know all of my customers by name, to be able to work one on one with all of them, which is where things really matter. I mean, when they call me regarding something, or message me regarding something, I can generally anticipate their needs and have the problem resolved instantly. Maybe that's why my retention has been higher than average.

Of course, knowledge and support is everything. I have gotten quite a few customers over the past few months from competitors, NOT because my prices are cheaper, but because I could actually solve their problems and do so in a timely fashion.