The company was founded in 2002 by Florida college student, Brent Oxley. The company is private and is not required to report financial information. The parent company, Endurance is a conglomerate and they have not broken out their revenue numbers by companies they own. The company mascot is a blue alligator named Snappy. This is appropriate as Oxley formed the company while still in college in Florida. Most alligators are green. However, since the company’s colors are blue, it’s fitting for Snappy to be mostly blue.
In 2012, Oxley sold the company to Endurance International Group but still owns the buildings. He sold for $225 million and said his reasoning was because he wanted to travel a bit before settling down to have kids. He does not currently have control of the company. The current CEO is Adam Farrar.
How the Company Started
Oxley thought college was a waste of time. He felt it got in the way of his dreams of creating an internet company. So, he needed a way to obtain a recurring income and hosting was the answer. He spent most of his time in college going to class and running his business venture.
Because he was earning money from his venture and using his dorm as his office space, he didn’t need funding. The venture was funding itself from the recurring income from subscriptions. He eventually dropped out of college since he was earning more than most. As his company expanded, he moved the operation to Houston where it still exists to this day.
The biggest problem came from trying to operate a business from his dorm. The internet in the dorms was terrible and had long outages most days.
Another problem is that the barrier to entry was rather small and other companies jumped on the bandwagon fairly quickly. HostGator was able to ride the wave of success and reputation, but competition brought the prices of hosting down considerably. This made it tougher to keep the margins that the company enjoyed in the beginning.
Growth caused problems for the company in that they had a difficult time finding good people to hire who could help them manage that growth. They offered several incentives but it took some time to get up to enough staff.
Why it Works
HostGator gained market share by being one of the first in the hosting space. Low-cost recurring services are a great way to keep subscribers due to the hassle of switching other providers.
Experienced webmasters would know how to switch easily. But, the average person-turned-webmaster is not familiar with the techniques to do so.
Their reputation also helped gain new customers. Many believed the company was second to none for the longest time. This sentiment is not as strong now that the ownership changed hands. Still, the company holds a tremendous lead.
The company was one of the first to offer free 800 numbers and Secure Socket Layers (SSL) to select hosting plan customers. SSL is becoming a big deal since Google has announced that is part of its ranking system for websites. SSL reduces the hacking incidents.
The company has implemented an initiative to be more environment-friendly by using green hosting services. It has been doing this since 2008.
HostGator has an affiliate program where participants can earn significant commissions by getting others to sign up. They give their affiliates the ability to offer coupon codes, which is a great way to entice customers.
The payouts for affiliates has been as high as $100 per new sign up. Affiliate programs can be great ways to bring in new sales for relatively little cost to the company. The affiliates take on much of the cost of acquisition.
HostGator was one of the first to offer shared hosting. This concept allowed webmasters who had several domains to host them all from the same account. It also gave people the ability to sell hosting to others.
As previously mentioned, the company allows its affiliates to offer coupon codes. This is a big seller in the hosting world. People crave online coupons and want to take advantage of any deals they can. They pay even when affiliates’ customers sign up for monthly hosting.
Most hosting affiliate programs require a year-long commitment for affiliates to get commissions. Since HostGator pays affiliates for monthly plan signups and gives affiliates the ability to offer coupons, this makes their affiliate program quite attractive. Anyone who is familiar with affiliate programs knows that it can drive a good amount of sales at relatively low costs.
The company also relies on word-of-mouth to gain new business. People looking for hosting will ask friends and family. Since HostGator is one of the most known, people will likely take that into consideration. If they can find people who have had good experience with the service, this will help in making the sale.
The company has a large advertising budget and you likely have seen commercials on television for their service. You will also see plenty of banners scattered throughout the internet and in print.
If you search the web for reviews on the company, you’ll find that it’s a love/hate type of situation. The reviews that are loved are often five stars. Whereas, people who criticize the company suggest never using them for various reasons. Much of the reasons have to do with downtime and customer service.
It’s interesting to note many of the bad reviews are from several years ago and more recent reviews have been much better. This could be that the company has improved its service and is being reflected in those reviews.
When checking out Reddit.com, many of the reviews were bad, but again they occurred at least three years ago.
The ratings by employees on GlassDoor.com are mixed. Overall, employees approve of the CEO, Adam Farrar. However, low pay and a lack of management transparency are the biggest complaints. The employees have mixed reviews about being taken over.
PCMag, back in July 2016, gave the company high ratings (4 ½ stars). They reported that the biggest drawback with the company is its lack of Windows-based hosting.
Lessons Learned By The Business
- Oxley spent the early years on support as the company was growing. Later, he concentrated on sales and marketing. However, one aspect he found successful was in alerting customers they can reach out to Brent directly if they need help. It stated this on their website.
- The company recognized that eCommerce was growing (and still is) and incorporated tools that would help their clients develop eCommerce websites.
- The company is aware early on that many of its customers are not tech-savvy. This caused them to develop or outsource solutions that were as close to one-click solutions as possible. They also needed to make sure the support staff would be able to either explain the concepts in ways customers could understand or that the support team had the skills needed to take care of customer requests.
How Other Businesses Can Learn From This
Do whatever it takes to make sure customers are happy and that their needs are addressed. When you have great customer service, everything else falls into place. Be sure to handle negative reviews or comments promptly. Too many companies ignore this and it can kill their businesses.