What Hosting Can Learn From McDonald's

In the course of creating great companies that are thriving and competitive, there often arises a period of slow or even negative growth - particularly in these challenging economic times. One reason frequently cited for slow growth is simply mass. That is, as an enterprise increases in size it becomes harder and harder to produce growth. This is doubly true in web hosting where existing customer churn can eclipse new sales growth and leave the company with little to show for its sales efforts. One massive company that is managing not only to show great growth in this tough environment, but is also gaining market share at the expense of its competitors is McDonald's. Yeah, you know - the guys that invented the Happy Meal. McDonald's - as in Ronald McDonald the clown is their spokesperson.

McDonald’s Corp. is the world’s largest restaurant chain, and yet still managed to post a 10 percent gain in recently announced third-quarter profits. Here are some numbers to think about. McDonald's is on track to earn $4.9 billion in 2010. After the company announced its third-quarter earnings, McDonald's stock jumped 2.6% to an all-time high of $79.48. Of course, shares of McDonald's have been climbing to new records at a torrid pace during past two months. In this era of companies that can't seem to make any money at all and when the overall macroeconomic picture is as gloomy as ever, McDonald's stock is up more than 30% this year.

So how is this company managing to create record value for shareholders these days? More importantly, what can web hosting companies learn from McDonald's and apply to their own businesses? Here are a few things to ponder.

Lesson Number 1: Listen to the marketplace and test, test, test. McDonald's created its franchise in 1948 on burgers and fries. You can still purchase those items at any local McDonald's to this day. You can also purchase a whole lot more. One of the items that has given the restaurant a huge boost this year has been the introduction of McCafe Real Fruit Smoothies and Frappes on July 13. This is a product that didn't even exist a year ago. McDonald's has a long history of conceiving new menu items and then testing them carefully - first in test kitchens and then through controlled rollouts in actual restaurants. This is a process of continuous innovation and experimentation. The company also adapts its storefronts to match local conditions in each country around the world. Not all products are huge sellers - or even make the final menu cut (remember the McRib sandwich?). The lesson to be learned for web hosting companies is that the market's tastes change and it is your company's job to change with those changing tastes. If you haven't tested the marketplace for virtual servers or Cloud offerings yet - you may want to put that on your 'to do' list. 

Lesson Number 2: Be available when your customers need you. One advantage that McDonald's holds over many of their competitors is store hours. McDonald's is simply open longer - so it takes in more business. Most McDonald's restaurants are open 18 hours a day. Many others are 24/7. McDonald's was one of the pioneers in fast food breakfast and has never looked back. The lesson for web hosting providers is obvious - if you don't offer both sales and support 24 hours a day then you are missing out on business. We live in a global village. While it may be the middle of the night in North America, it is morning in Europe or afternoon in Asia. Besides, many web hosting customers are web designers or developers who often work late hours - or press on through the night to meet strict client deadlines. A smart web hosting provider will make their expert staff available around the clock to meet the needs of these markets. 

Lesson Number 3: Don't forget to brand your product. There are several big brands that have earned a certain standing with their brand that others envy. For example a few of those are Coca-Cola, Disney, and McDonald's. These companies have spent years and millions of dollars building up their brand images and goodwill. The longevity and persistence of great brands gives them a distinct advantage in the consumer's mindshare. When advertising, they don't have to constantly explain who they are or what they produce. They can focus on the good feelings one gets when interacting with the brand. While few, if any, web hosting companies can match the brand budgets of the biggest brands - the idea of promoting your brand is still important. You logo, color palette, and tag line are all important to the long term impression that your brand will give. McDonald's has long supported charity with it's Ronald McDonald House initiative. Perhaps hosting companies can select a charitable organization or cause to support - while building the brand equity at the same time. For example, dedicated web hosting company 34SP.com has long provided free hosting for registered UK charities. This is a win-win for the corporate world and the world that we all live in.