Author: Dvir Ben-Aroya / Source: The Next Web
Hosting providers like GoDaddy, 1&1 Ionos, and even Wix and Squarespace, started out offering a single service to business owners. Most of them developed parts, or even all of their service technology in house, that resulted in a range of unique and differentiated services.
But they quickly realized they could be more than just a domain name registrar or web hosting company. They began offering a range of digital services to help businesses operate and promote their companies online.This was a sensible move, as there are more than 24.8 million small businesses in the United States alone. The services offered include things like domain hosting, website creation and hosting, and email hosting among others.
But to scale quickly and to meet this rapid demand of digital services, some of these service providers adopted a reseller model for the additional services in their portfolio. Rather than build their own technology and host it in their own data centers, they partnered with other companies that provided the services and resold them, partnering with tech giants like Google and Microsoft to offer collaboration and commutation solutions through G Suite and Office 365.
In most circumstances, this would seem like a strategic move. However, when it comes to team collaboration and communication solutions such as email, this is a big mistake.
The problems with the reseller model
First off, all of the service providers adopted the same strategy. Instead of differentiating themselves, they all teamed up with the giants of the industry to provide identical offerings for business owners.
Low differentiation means low margins for the service providers.Secondly, the precious data about how their clients use their email, cloud storage, and calendars goes to the likes of Microsoft and Google. That means the service providers don’t have access to this important information about user activity and behavior. With this useful data, service providers could better understand who their small business clients are and then tailor and personalize their services to them. Google, for example, can then use the data to offer their own services or competitors’ services to these customers across Google search or ads.
Finally, the third (and most impactful) problem is customer loyalty. When it comes to these services the customer will almost always stay loyal to the apps they use and not to the provider that offers them in order to stay productive. Switching can be hugely disruptive to employees’ work.
Let’s…
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