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Hosting Discussion > Web Hosting Forums > Web Hosting Discussion > Customer Churn in the Web Hosting Industry - Part 1 of 2
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  Post #1 (permalink)   12-12-2016, 05:14 PM
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Let's explore many of the issues that result in customer churn in the web hosting industry, focusing on those services related to VPS and dedicated servers, so this won't be about unlimited bandwidth and space, or kiddie hosts.

These are basically issues related to billing, unprofessional live chat, oversold services, unacceptable response on support tickets, poor communications and sub-par provisioning. Each of these, singularly, are critical enough to either lose prospective clients or send existing clients who had been with that provider for years Ė running for the hills and migrating elsewhere.

First up Ė billing issues and suspensions

TOS

Nothing irritates people more than feeling cheated when it comes to paying for any type of product or service, regardless of whether they should have known better. In web hosting, providers typically spell out their billing policies in their Terms of Service (TOS). Some providers have Terms of Service that look like they were written by a team of lawyers, while others barely cover the basics, and some not even that.

First, very few prospects scroll to the footer on a prospective web hosting providerís website and click on their TOS, and even fewer read the entire agreement - big mistake. That TOS comes back to bite many clients on the backside when issues arise, especially when it involves billing.

One issue of contention is usually the variance in the providerís marketing material as compared to the wording in their TOS. For example, some marketing materials will include phrases giving the impression that they offer an unconditional money back guarantee (for a specific time frame), but hang on. That ďunconditionalĒ guarantee has exclusions in their TOS.

Copyright infringement (DMCA)

One of those could cover suspensions due to DMCA complaints, which would supersede the guarantee. And while it seems fairly straight forward that copyright infringement should not be allowed on a providerís server, generally the client is given the opportunity to either contest the infringement or remove it. We just read of a case on a web hosting forum whereby the client was not given the opportunity to respond and instead their account was taken offline. This bears the question, ďWhat if the DMCA complaint was not justified?Ē What recourse does the client have when the providerís legal department stops responding, and the account is locked?

Subscriptions

Another issue of consternation relates to PayPal subscriptions. Quite a few web hosting providers use WHMCS as their billing system and offer PayPal as their payment gateway, however issues sometimes arise when clients cancel their servers according to the providerís guidelines in the TOS, but forget to cancel their subscription in PayPal, resulting in double payments.

There is no invoice to match to the payment as the service was cancelled by the client (by properly notifying the provider) and then by the provider in WHMCS, however additional payments were processed by PayPal (according to the clientís subscription) and deposited into the providerís bank account. At issue is who is responsible for cancelling the PayPal subscription, and what happens if this goes on for a couple of years? Obviously, the client feels cheated, but both the provider and the client share responsibility for improperly managing and auditing their financial records. The end result is usually customer churn regardless of how this issue is handled by the provider or by the wording in their TOS.

Live Chat Issues

Live Chat - Sales or Service based?

A good number of web hosting providers offer Live Chat services for prospects and clients alike and quite a few are advertised as 24/7, meaning that staff from the providerís side is available around the clock to answer queries.

At issue in the industry is whether that live chat staff should be able to address support tickets as well as sales queries. Weíll go on the fence here and say that the majority of live chat operators are employed to only address sale questions and have no access to support tickets.

Why? The overwhelming percentage of live chat conversions revolve around sales queries and service technicians are not adept nor trained to handle those and vice versa with sales representatives. We see declarations from time to time by prospects on web hosting forums saying they wonít do business with a host that doesnít offer live chat 24/7 if they donít address support issues, and thatís unfortunate because the majority of hosting providers offer excellent support via their ticket system.

Trolls and unprofessional conduct

Unfortunately, we read a good number of threads on various web hosting forums where upset members rant and rave about how their provider treated them on live chat, only to find out later when both sides have aired their version of events, that the original poster (OP) was either a troll or completely unprofessional in their live chat interaction.

Of course, the same applies in reverse as weíve seen plenty of screen captures of providerís making absurd statements, and then attempting to rationalize their actions. You should always be professional, regardless of the issue. We know that can be difficult at times when things are falling apart at the seams, but being adversarial solves nothing.

Live Chat Not Online - Really? 24/7?

How many times have you initiated a live chat session, to only wait and wait and wait for an operator on the other end to respond, and that never happens? Or when live chat is advertised as 24/7 and the status on the providerís page says, ďNot available.Ē

When live chat sessions are missed, more likely than not, sales are missed and that directly affects the providerís bottom line. It also says to the prospect, maybe this isnít the host I should be entrusting my mission critical data to, and they consequently move on to one of thousands of other providerís websites and sign on with them.

Think of the lifetime asset of one missed account. If your profit margin, for example is $24/month on a specific hosting service and your expected birth to cradle loyalty averages 34 months, then youíve lost $816 in profits Ė just because you didnít respond to a live chat request, for whatever reason. Multiply that times how often it occurs each month. These are numbers that can make or break a company.

Oversold services

There is nothing inherently wrong with oversold services unless they start to detrimentally affect a providerís services as overselling has successfully been implemented in the hosting industry for a couple of decades, but VPS services (in particular Ė OpenVZ) are sometimes oversold by ďbudgetĒ providers, trying to cram as many accounts as they can onto a cheap dedicated server Ė resulting in poor performance.

At issue is accountability as most VPS providers never disclose the full specifications of their servers, nor do they reveal how many accounts are provisioned on each. If, as a consumer, if youíre contracting for 1vCore and 2GB of RAM, do you know how many cores and how much RAM is really available on the server where your site resides? Probably not!

If your websites are running slow, are you running to GTmetrix or other online tools to determine the issue? Maybe itís not how many plugins you have enabled on your WordPress site (although that could be an issue) and maybe itís not the code in the theme slowing things down. Maybe itís the server where your site is hosted. Do you really know how optimized your providerís VPS or dedicated server hosting solution is, and if you asked live chat, would the sales representative be able to relay that to you? Probably not.

Letís not throw every VPS provider under the bus though, as there are outstanding providers in this industry, and we see evidence of that in the glowing reviews we read of day in and day out on the forums. My recommendation is to look for a balance of competitive price and outstanding performance. When you start cutting corners, specifically in price, something has to give, and thatís normally the quality of the server or the infrastructure backing it up (including customer support).
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