Beyond Registration Numbers: Increase Your Revenue Leveraging Domain Data

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1 iopen-i Advisors Beyond Registration Numbers: Increase Your Revenue Leveraging Domain Data Registrars, registries and web hosts can optimize their marketing and business strategy and drive more sales with data-driven Business Intelligence (BI). And it doesn t have to be difficult!

2 Table of Contents Introduction - Getting started with data-driven growth Discover new opportunities through competitive analysis Using data to build personas and improve your customer experience Find the real value of your marketing spending Drive loyalty and retention with reactivation campaigns Conclusions... 12

3 Introduction - Getting Started with Data-driven Growth Most registrars, registries and web hosts are asking themselves How do I grow? Building a sustainable and successful business takes more than simply pumping volumes: it requires constant focus on finding the right mix of new business and recurring revenue and the ability to grow the average revenue per user. Domains are a great way of generating recurring revenue, not to mention they are often the first thing all new customers need to pick in your sales flow. This means that even if you don t consider domain registration your core business, it is still a very smart strategy to optimize your domain business. But simply selling more domain names - especially at low introductory prices - is only a small part of growing your business in the long run. There are many things you can do to ensure long-term success from your domain business, ranging from minimizing your customer acquisition costs by finding better ways to target your marketing efforts to optimizing your user experience by helping customers find the right domain name or the right add-ons. These activities, however, require a more systematic approach to be successful, and in particular rely on your ability to extract insights from the data at your disposal and use them to adapt your strategy. This is the general outline of the process that makes data actionable: - Identify what your business problem is - Find the relevant Key Performance Indicators ( KPIs ) that clearly define the desired end results - Find out how to measure the KPIs - Find out ways to test your theories - Work to optimize your outcomes This process is incremental and measurement is key to improving business performance because it tells you what s working and what isn t. Luckily, measuring performance can be precise, quick and easy. In any organization, there s is an initial struggle where parties have to agree on a specific problem to solve and how to measure success. But this is necessary. Establishing the right initial KPIs helps focus your team s effort on a goal and find out if your actions have positive outcomes. In this guide, we mention a few goals and how to measure them. 3

4 The data-driven mindset in the domain and hosting industry is being led by companies such as technology provider DomainsBot and strategic consultants Open-i Advisors. DomainsBot s name suggestion service has helped registrars provide a better domain buying experience to their customers, driving a 15 percent average increase in domain registrations and providing invaluable data on search patterns and conversion rates. DomainsBot extends this offering with Pandalytics, a domain analytics platform that lets users dive deep into domain data to understand distribution, usage patterns and trends leading to better business decisions and more revenue. Open-i Advisors is trusted by some the top businesses in the Internet industry to find out what data is most important to their growth and develop a course of action that are datadriven. Open-i s approach fuses decades of industry expertise with quantitative insights to turn raw data into decision- iopen-i Advisors making information. Open-i consultants work closely with clients to create a clear roadmap for business growth using data and analytics, and guide them every step of the way towards a more successful business. Based on DomainsBot and Open-i Advisors experience in this field, this paper aims to present the reader some actionable examples of how to use analytics effectively to cut through the clutter, uncover key metrics, and to understand the business implications of their raw registration numbers. 4

5 1. Discover New Opportunities Through Competitive Analysis Domains under management (DUMs) are probably the most popular metric in the domain industry. ICANN s requirement for gtlds and ntlds zonefiles to be freely available has made it very easy for popular ranking sites to use this type of information for beauty contests based on the number of domains managed by each registry or registrar, a topic also often discussed at length on industry blogs and at events. However, looking simply at the number of the domains registered does not necessarily give an accurate picture of the health of the underlying business. For instance, a domain sale could be a one-time transaction, or it could be the start of a multi-year relationship and the source of revenue from many complementary services. Going deeper into the data helps you better understand customer behaviour - whether domains are in use or are parked, and what other services are associated to them. This helps you estimate the real value of each customer acquired in terms of revenue, both immediate, prospective and recurring. Beyond looking at your own situation, data analysis lets you know where you stand against competitors and investigating acquisition opportunities. While the role of WHOIS as a data source is about to be considerably diminished as more stringent European data protection regulations go into effect, there are still many other ways to get a better understanding of the true value of each registered domain. For instance, you can gather information on web pages with a web-crawler, making it possible to understand whether a domain is actively used or simply parked. Analyzing the website s content can further provide details such as how often the website is updated, how many pages it has, what language it s written in, and other information that will give you a sense of how the domain is being used. This information can be used to identify which of your customers would be more receptive to certain campaigns. For instance, you could identify all the customers that run e-commerce websites using a basic SSL certificate, and upsell them to one better suited for their type of business. To know where you stand against competitors, you can take regular snapshots of your own performance and compare it to your main competitors in a specific market or territory. 5

6 If you are looking to acquire a competitor, taking a deeper look at their data can help you find the gems in the rough, or save you from making a very bad investment. For instance, you may find a smaller company may have many customers with active sites which signals a higher likelihood of renewing and even opportunities for upselling other products after the acquisition is completed. On the other hand, a seemingly attractive registrar might boast a large number of domains under management, but a closer look may reveal most are inactive or parked, or concentrated in the hands of few customers. Putting all these signals together provides a good way to estimate the real value of each customer acquired in terms of revenue, both immediate and prospective. Data analysis helps you reveal new opportunities and make more informed decisions. If you are a registry or reseller-focused registrar, data analysis can also help you get a better understanding of the quality of your channel partners. Analysis helps you identify the registrars and resellers that bring quality business and separate them from those that might do high volumes but have overall low usage rates and will most likely perform poorly when renewal time comes. 6

7 2. Using Data to Build Personas and Improve Your Customer Experience The introduction of new TLDs has brought a new level of sophistication to the domain industry, making it more important than ever to know the ideal customers for each extension, what characteristics they value most and how to craft the message that appeals to them most. When it comes to understanding the potential appeal of a domain name extension, a common approach to estimating the size of the addressable market has been to look at existing domains in.com and other legacy TLDs that include the word matching the extension at the end of the second level domain. However, simply looking at number of domains leaves out a lot of crucial information on who the customers behind those domains really are and how to address them effectively. Even after a TLD has launched and has active customers of its own, it might still be difficult to understand whether the original assumptions made are really accurate or whether they are just preconceptions that are harming your marketing effort rather than helping it. The common marketing approach to this problem is to create fictional personas that represent the ideal customers you want to attract. Building personas helps marketers identify the common traits of the customers that are most likely to buy the product so that they know what motivated them to buy and use the product.???? Some important questions include: - Who are your customers? - What is most important to them? - What else do they like? - What will they need in the future? - How do you find more people who are interested in your product? Using data to build more realistic personas helps you provide a user experience to your current customers that meets all their needs, and gives them the experience they wanted when they first signed up with your company. 7

8 Performing accurate data analysis on your existing customer base or on your target audience can paint a much more detailed picture of reality. For instance, while many claim to target small business owners or startups, using data allows you to understand which segments of these macro-groups are more likely to respond positively to your product and your brand. You might also discover that many of the people in your target audience are bloggers in a specific niche, or that your product is particularly popular in a certain geographical market that you had originally overlooked. More generally, this approach can also help registrars and web hosts get a better understanding of their customer base. Looking at how the domains they manage are used might highlight certain patterns in their existing user base that are worth exploring more. For instance, there may be a high percentage of developers, or many customers blogging on self-installed Wordpress sites. That information can then be used to adapt special offers and messaging to target specifically that type of user, increasing the satisfaction of existing customers and helping to attract more of that kind. Data analysis lets us build accurate personas using real data on the usage of these domains and what content is on these sites, and the type of customers buying these domains. The actual data may challenge preconceptions about your customers. This could open up new opportunities in underserved market niches and improve the effectiveness of your marketing spend by using messages that resonate better with the target audience and the channels that are best suited to reach them. 8

9 3. Find the Real Value of Your Marketing Spending Advertising and marketing play a central role in attracting new customers to your business, but there is no doubt that customer acquisition can be one of the most expensive parts of your business. There s an old lament about advertising: Half the money I spend on advertising is wasted; the trouble is, I don t know which half. Thankfully, data analysis can help you ensure your whole budget is spent effectively. Creating data-based customer personas helps you understand the demographics to target and how to optimize your marketing messaging to people who are most likely to become ideal customers. You can also optimize your marketing efforts by evaluating the results of different promotional pricing tactics. You can test the impact of raising or lowering pricing to ensure your promotional pricing for domains is reasonable enough to get customers to buy, but not so low that you re giving up too much potential revenue. It should be an ideal balance. Campaigns featuring heavily discounted domains often have the unintended result of attracting customers who hoard cheap domains, then don t renew at the normal price. Because of this, evaluating the results of a campaign based solely on the number of domains registered can be misleading. You can estimate the true ROI of a campaign by using a web-crawler to count how many of these domains sold are developed after three or four months, which is a good indication of whether the registrant is likely to renew the domain at full price next year. Registrars and hosters can also benefit by using the same approach when deciding which extensions to promote. Running an activity on a specific extension could take away focus from other TLDs and may have a negative impact on sales in other extensions. Usage data can give you a complete picture of the ROI of a campaign and can help you more effectively compare campaigns on different extensions, and see which ones bring more revenue, for instance, by looking at what other services customers bought together with those domains. The way customers react to your marketing and pricing can tell you a lot about how people are looking at your brand and the services you offer. And by carefully tracking and analyzing the results of your marketing efforts, you can get more of the customers you want.you can get more of the customers you want. 9

10 Using data to build customer personas isn t only useful to ensure that you are catering your marketing message to those who are most likely to become ideal customers. As the market changes, these personas ensure you are maximizing the value of your place in it. Parts of the domain market can be somewhat volatile ; b y revisiting these personas on a regular basis, and adapting them based on trends you are seeing both in internal and market data, you can make better business decisions. A strong additional benefit of using this methodology is it should make you not only better at marketing to your potential customers, but also better at retaining them, and maximizing their potential revenue with you. The same types of data that you collect to build and hone your personas can inform your products and customer service over time. You are well served by taking a data-based approach to customer life cycle management as well. The more you know your customer s needs, the better you are at serving them. The more you anticipate their needs based on trends, the better chance you have at keeping them. The happier they are with you, the more likely they are to give you good word-of-mouth advertising. In general, data can make you more nimble, by showing you what s working and what s not. One of the keys is to ensure that anything you spend time or money on, is given a metric for success associated with that expenditure. Most marketing vehicles have some sort of trackable KPI or metric ; i f it can t be measured, you should think long and hard about its intangible value before applying resources to it. Your main goal should be to do more of what s working, and less of what s not. If you build up your marketing portfolio by the numbers, it really can be as simple as that. 10

11 4. Drive Loyalty and Retention with Reactivation Campaigns Often customers buy a domain with the intention to turn it into a functioning site, but this sometimes doesn t happen. Many domains never live up to their owner s intentions - whether they re distracted by other priorities or don t have the time and skills to use it. And when these undeveloped domains come up for renewal, their owners are often unlikely to renew them. Crawling of all the domains you manage for ones expiring in the next couple months would give you a good indication of which ones are at risk of going unrenewed. Having segmented your user base this way, you can target a specific reactivation campaign at these users without having to offer special discounts across the board to all your other users that were going to renew their domains anyway. Your reactivation campaign could provide a renewal discount or a free site builder to customers who decide to renew their domains instead of letting them expire. Reactivating existing users is a much cheaper way of driving revenue than acquiring new ones, and being able to target this type of campaign specifically at those domains the originally had a low likelihood to renew might help you rescue some valuable recurring revenue, and potentially also open up an opportunity to upsell more services later on. 11

12 Conclusions There s a lot of data analytics you can do on your own using your own data and publicly available data you can scrape from various data sources. Once you start taking a data-driven approach to certain aspects of your business, you will likely see more problems that can be solved using the collection and analysis of data on KPIs. Because decisions are based on data and not on gut feelings, you gain an outsider s perspective of sorts since your thinking is not clouded by conventional thinking and assumptions. While you can certainly perform many of the activities described in this white paper on your own, you should also consider whether it s more cost-effective and efficient to rely on the services of companies such as DomainsBot and Open-i Advisors that have developed tools and expertise in this field that can get you off the ground faster. Overall, the commitment to data-driven decision making can involve some reorganization of your company, which can always be difficult, but it ultimately helps you build a more effective and more successful business in an increasingly complicated and competitive marketplace. About Open-i Advisors and DomainsBot This white paper has been brought to you by Open-i Advisors and DomainsBot, which are both committed to helping companies in the domain name space achieve data-driven growth. DomainsBot provides domain and hosting professionals the data, insights and tools to better understand their customer base and their competitive landscape and to identify the best new opportunities. For over 10 years, our technology has helped leading players in the domain and hosting industry like Web.com group, Directi, OpenSRS, Neustar, Afilias, Domain.me and Minds & Machines make better business decisions, stay ahead of the competition and generate higher revenue. Open-i Advisors is an expert team of Internet industry consultants who turn quantitative insights into decision-making information. They build your ideal roadmap for business growth using data and analytics to guide you every step of the way. iopen-i Advisors