Business theory suggests that 20% of your clients are responsible for 80% of your business.

Is it true for your company?

By this, do you mean that 20% of clients bring in 80% of profits? It applies to us.

Yes, exactly that John.

Thinking and reviewing this I notice that it has applied to us for as far back as our startup date - roughly 2 years ago.

That was true in the business I managed too. But ... in our industry ... when the economy went in the crapper ... it was all those little guys that helped keep the company going & growing. Not sure if the same applies to web hosting though.

JMHO
Peter

Hmm... a very interesting and surprising observation Peter. So the 20/80 ratio actually changed during that period of time?

Oh yeah ... did it ever. But like I said ... the industry I was in was totally different than the web hosting ... and has, basically nothing in common with it.
We were in manufacturing & industrial wholesale ... and our customers were in the manufacturing and industrial retail businesses. All industries that usually get impacted first in an economic slow down or a recession.

But in web hosting ... I imagine the costs involved & revenues earned from their 20% of customers would not be impacted in the same way by down turns in the economy. After all ... in web hosting we are probably talking about (and I am guessing) hundreds or maybe thousands of dollars per year. Whereas in the business I was in ... the smaller customers were spending in the upper 10's of thousands of dollars. And the larger customers spent in the upper 100's of thousands and millions of dollars a year.

Really ... no comparison or similarity at all. I should just learn to keep my mouth shut at times hehehehe

Peter

The hosting industry is not that small. A datacenter is a hosting company. A reseller is a hosting company too. The difference is huge though.

BTW, judging by those numbers, I really like your industry.

I would say that you could stretch it to that ratio, yes.

Things that would contribute to that ratio:

1: Direct recommendation(s)
2: Silence
3: Expansion

1: Very obvious what this option is. A recommendation could be direct, or via a review, passing comment, or even via brand recognition (which current clients of course contribute to)

2: Silence. Current clients silence would chalk up the largest part of that ratio. By a customer not saying anything (positive, or negative) your company stands a larger chance of expanding clienht base. No news, is good news in most cases.

3: Expansion.Current clients of course contribute to your growth. Be it idea's they give you, feedback they give you, or just being a customer. The more customers you get, the larger advertising budget you get, the larger staff you get, and the greater the attraction to your company becomes.


Simon

Yes ... but I have to be reminded of those facts from time to time I think "hosting company" and immediately think resellers. My "tunnel vision" keeps making me forget that we are also talking datacenters too.

I loved the industry Its been 8+ years since I had to stop working ... can you tell I still miss it ... a lot???