REAL BUSINESS GUIDE: The perfect online business
Thursday, 30th August 2007 by Real Business
...or six ways to save money and generate revenue for your business on the net.
HOSTING - A HOME FOR YOUR HOME PAGE
Dumb but telling questions
- Do we need a server all to ourselves or can we get away with sharing one?
- If we have our own server, does it need to be secure for online payments?
- How much traffic are we expecting on our site and does the amount of transfer we have
match this?
- What added extras does our hosting company offer us? And could we get more elsewhere?
For mid-sized companies with minimal transfer (the amount of information you can send or receive online), hosting is a big money-saving opportunity. Okay, a large web site that attracts thousands of visitors a day will probably need a dedicated server and a fair amount of transfer. But if your site is smaller and attracts a handful of users per day, you can scale down your hosting requirements to a shared or virtual server and decrease the amount of transfer. First, get several quotes from hosting companies. Try your web design agency as it may well have cut a preferential deal with a hosting company by buying space and transfer in bulk. It may be able to offer you savings as a reseller of that space.
Nick Jenkins is MD of Moonpig.com, an online personalised greetings card retailer that is based in London. His hardware isn't. "As long as you're confident in the level of service you'll get out of London, it's quite a bit - roughly 30 per cent - cheaper to host out of London," says Jenkins. "The important thing is to ensure the customer cannot tell the difference. If the site gets slower, it will affect your revenue."
This economic climate provides the ideal opportunity for cutting great deals with hosting companies. "We just re-signed our hosting agreement," says Jenkins. "Prices have tumbled by about 50 per cent over the last year or so as there is less demand and surplus capacity. There is a limit to how low they can go, but there are bargains to be had compared to two years ago."
Host Europe claims to offer the most feature-rich, value-for-money web hosting in the UK. For £199 (excl VAT), you get 3GB of bandwidth, a share of a secure server on which you can also host a MySQL database. Host Europe will even throw in the registration of a domain name as part of the package - and you get access to a free helpline.
Expect this level of service, although different companies will offer different packages depending on the complexity of your needs.
VERDICT
First establish what requirements you have for your server. Now is a good time to cut a deal with a hosting company. Shop around and make sure you find out what extras it will throw in for you.
CONSIDER THESE VENDORS
Affinity (www.affinity.uk.com)
As well as providing hosting and internet access at the bigger end of the market, Affinity can help you if you're thinking of becoming a virtual ISP (VISP).
Tel 020 7670 1155
Fast Hosts (www.fasthosts.co.uk)
Fast Hosts provides hosting for all shapes and sizes starting as low as £19.99 per month with no minimum contract.
Tel 01452 541 260
Host Europe (www.hosteurope.com)
Host Europe goes under many guises including Web Fusion and Magic Moments. Prices start at £117.48 for various server set-ups at Host Europe. Magic Moments and Web Fusion packages start at £232.82 per year.
Host Europe Tel 0870 012 6600
Magic Moments Tel 0808 100 6200
Web Fusion Tel 0115 917 0000
Net Benefit (www.netbenefit.com)
Very flexible with a pick-and-mix approach to services starting at a very reasonable £17 per month up to £25 for e-commerce functionality and £99 for a dedicated or co-located server.
Tel 0800 072 2636
New Net (www.newnet.co.uk)
New Net offers a range of hosting services and has recently introduced New Net Business Gold. This includes 125Mb of web space and 1GB of transfer and comes in at just over £175 per year.
Tel 0845 355 4455
Virtual Internet (www.vi.net)
Virtual Internet has been going for six years and in that time has built up a reputation for reliability. The company hosts more than 100,000 domains and has backing from Compaq, Sun, Cisco and Microsoft. Prices start at £120 per annum for shared hosting.
Tel 0800 597 5225
VOICE OVER IP - VERY CHEAP PHONECALLS
Dumb but telling questions
- How much do we spend on telephone calls each month?
- Would we make more PC-to-PC calls, PC-to-phone or phone-to-phone calls?
Say you need to call Brazil to set up a business trip. You can do so for between 80p and £1.31 per minute. Or, if you can bear a bit of crackle on the line, you can do so for between five and 15 pence per minute, using Internet Protocol (IP) telephony.
Between three and five per cent of total global voice traffic was carried over IP networks in 2000. By 2007, this share may reach 75 per cent. IP telephony is the transmission of voice, fax and related services over packet-switched IP networks. Voice over IP (VoIP) is a subset of IP telephony, which uses private, managed IP-based networks.
IP technology chops up electronic transmissions into packets. Each one is given a "header", or address, and sent from one network node to another. The packets are bounced from one "router" to the next until they reach their destination.
Voice now has a dwindling share of all telecommunications traffic, as the volume of global data traffic continues to grow. To handle this, telecoms companies are building IP into their core networks and many expect IP to carry the bulk of voice communications within a few years.
Telia currently routes three to five per cent of its overall traffic through IP. "We firmly believe that all traffic will eventually migrate to IP, and we want to be learning now," says Paul Dahlgren, director, business line voice at Telia. Cable & Wireless is spending more than $2bn on a global IP network. BT, meanwhile, has implemented a nationwide IP network for voice and data in Spain.
The first form of IP telephony allowed two PC users to carry out a voice conversation online. This system - PC-to-PC - is still widely used. The call quality tends to be low, as the calls travel over the internet. But on the plus side, many ISPs offer the service for free.
PC-to-phone IP telephony allows a PC user with internet connection to call any phone, fax or mobile. Phone-to-phone facilitates communications between phone, fax or mobile users. The majority of IP telephony now travels over managed, private IP networks.
New-generation carriers are developing high-quality integrated voice and data IP services, that can be delivered through Virtual Private Networks (VPNs). "In a business environment, using a private network, you understand exactly what the client's requirements are, and have immediate feedback about the service provided," says John Floyd, head of IP marketing at Equant. VoIP is already in use in sectors such as consumer manufacturing and public services.
There are many opportunities to develop enhanced applications, combining voice with other information that can be digitised, such as video or graphics. This enables powerful applications such as teleconferencing. Other key areas are unified messaging and phone and web integration over IP, which allows companies to offer freephone access to customer service.
There are hurdles to overcome before IP telephony can be a universal substitute for circuit-switched calling. The call-quality must match traditional telephony for widespread business use to take off.
Providers are trying to overcome this by prioritising real-time traffic, such as voice, over other forms, such as e-mail. Equant uses a technology called Multiprotocol Label Switching to offer real-time communications over its IP network. Most business operators also offer service level agreements which measure latency, jitter and post-dial delay. Or you could increase the available bandwidth by buying it in.
VERDICT
Within a few years, VoIP running over managed networks will become equivalent to traditional telephony in quality and reliability.
CONSIDER THESE VENDORS
Deutsche Telekom
Offers several forms of VoIP. TK-System Octopus Open is a converged voice and data service, aimed at smaller firms, providing a common platform for data, voice and unified messaging. Surfcall is DT's local and international pre-paid card calling service. It also offers a business service called VoIP Inhouse.
Telia Wholesale
VoIP to carriers as well as resident and business VoIP services. Offers a combination of PC-to-phone and calling card systems.
BT Concert
The Bt/AT&T joint vetnure allows Surftime customers to place PC-to-PC calls and has plans for PC-to-phone. BT Ignite has begun trials in the corporate VoIP market.
France Telecom
France Telecom Long Distance offers wholesale VoIP to carriers.
Telewest (www.telewest.co.uk)
Trialing an "end-to-end" system on its broadband network.
Equant/Global One (France Telecom) (www.equant.com)
Equant operates a VoIP network with real-time service which can be used for VoIP, videocasting, live data feeds and trading.
Net2Phone (including Yahoo, Microsoft and AOL messaging customers) (www.net2phone.com)
Offers PC-to-phone and phone-to-phone VoIP services, which run on a combination of its own and partner private IP networks. Provides telephony services to the instant messaging customers of Microsoft, AOL and Yahoo.
Global One (www.global-one.ru/eng)
A Prepaid VoIP System, with "distance-free" off-net calling to more than 220 countries, and support for voice, fax and video.
Level 3 (3) Voice Termination (www.level3.com)
A wholesale VoIP service, providing "carrier grade" voice services via Level 3's IP-based network.
ITXC (www.itxc.com)
ITXC is one of the largest IP telephony providers, present in more than 103 countries. Provides least-cost routing to traditional carriers, customer service applications to businesses, branded PC-to-phone services and web-based call management.
ISPs - FIND A PROVIDER THAT PROVIDES MORE FOR LESS
Dumb but telling questions
- What sort of deal do we have (simple internet access, broadband, unmetered access, leased line)?
- What fees are we paying?
- What extras are we getting (how many e-mail addresses, any free hosting etc)?
- What sort of phone line would we be better off with - could a leased line save us money in the long run?
Most people say there's nothing to choose between any two internet service providers (ISPs), but there is. Much like the hosting business, internet service providers are battling away to attract customers and you can use this to your advantage.
An ISP that offers services exclusively to businesses may charge more for subscription than one that is consumer-based, but for that extra money you should get a better level of service, a more reliable connection or faster access speeds.
That's certainly what Will Collin found. He is the partner at communications agency Naked responsible for finding the best deal in terms of connecting to the net. "When we originally set up we started off with a BT ISDN line," Collin says. "When we moved offices we needed something a bit more substantial, which is why we upgraded to ADSL with Mistral."
Naked was founded in August 2000 and counts the likes of ITV Digital, the Tate, Reebok and PlayStation among its client roster. "Online communication is a part of what we offer our clients," says Collin. "That's why it's important to us. We have to have good access for e-mail and the transfer of large documents."
Collin reckons the correct choice of ISP and connection speed is crucial not just to serving his company's clientele, but also in enabling the business to grow. "The move to ADSL certainly enabled us to expand in terms of numbers so that has allowed us to grow the business, which in turn has increased revenue."
Don't be talked into over-reaching yourself by an ISP's sales person. "The ISDN thing we started off with is not bad at all," says Collin. "We knew why we needed to upgrade, but you certainly don't need to leap feet first into a broadband solution. There's no point in going for the latest whizz-bang technology just for the hell of it."
You can save money by knowing exactly what sort of capacity you need. And if you don't need to grow for a while, don't be tempted to pay for extra bandwidth needlessly. "ISPs can sting you with special one-off set-up fees, which increase with the level of the service," Collin warns. "If you're having ISDN or ADSL installed, there will be quite a lot of up-front costs. If you move offices you'll probably have to pay them all over again." So if you are moving offices soon, ask yourself: can your upgrade wait until then?
Also try to find out exactly what you're getting for your money. "Make sure you are aware of what the ISP is capable of guaranteeing you and what the carrier - usually BT - is capable of," advises Collin. "You can save some money if your ISP also does hosting."
Finally, ask questions specifically relevant to your business. Collin: "We had to find out the maximum size of e-mail we could send. Most ISPs will let you send files up to one, two or three Megs. If you're working with pictures, publishing files, etc - like we do - then your file size will be much bigger. And it's no good having an ISP that won't help you with the day-to-day operation of your business."
VERDICT
These companies are fighting for your custom. Good deals are yours for the asking. You could keep your current level of service and save your business money simply by shopping around for a new provider.
CONSIDER THESE VENDORS
BT Open World (www.btopenworld.com)
BT offers a good range of services for the smaller company from unmetered access at £17.63 per month to the fastest ADSL account at £187.98 per month - although price cuts are expected soon.
Tel 0870 241 4567
CompuServe (www.compuserve.co.uk)
CompuServe is the oldest business ISP in the UK. CompuServe Classic costs around £6.20 and £18.45, depending how long you're online.
Tel 0870 5700 300
Mistral Internet (www.mistral.co.uk)
The self-proclaimed favourite business ISP in the UK, Mistral aims to be available 100 per cent of the time - a goal it has so far managed to achieve. Prices start at £9.99 per month for the basic Mistral Dial account. Mistral offers ISDN, ADSL and leased line connectivity as well, although you'll have to contact the ISP for an individual quote.
Tel 0800 328 7253
MS Cable (www.mscable.co.uk)
Recently listed in Internet magazine as one of the UK's best-performing business ISPs. It offers the full gamut of services starting at £15.99 per month for the "Basic Business Plan" working its way up to £99 per month for 128K ISDN connection.
Tel 01782 544 700
Nextra (www.nextra.co.uk)
Standard dial-up access starts at £7.35 per month plus call charges or £17.61 for unlimited time online charged at local rate.
Tel 0845 355 9999
Nildram (www.nildram.net)
Nildram has been providing internet connectivity for five years and is one of the best ISPs in the UK. It offers basic connection to the net, through ISDN and up to leased lines.
Tel 0800 026 0932
Poptel (www.poptel.co.uk)
A co-operative with a social agenda, Poptel offers everything from single-user dial-up accounts to leased line connections. Plus a few other web-related services, too.
Tel 0800 458 9465
Sonnet Internet (www.sonnetinternet.co.uk)
Sonnet offers the usual services and some online extras. Charges start at £10 per month for single users or £55 per month for a small, networked office.
Tel 020 7891 2040
Dumb but telling questions
- How much are we paying per transaction at the moment?
- What other fees are we being charged?
- Who are we using as our online payment provider?
- Do we need our own secure server or can we make do using an online payment provider's?
- Is the purchase process branded with our logo and does it look professional?
First question about online payment systems: do you need one? This depends what you do. If you sell widgets, chances are you do. If you offer bespoke advice you probably don't need to take payments on your web site. There are exceptions to this and if the internet expert you use is clever, he, she or they might be able to find a way to adapt your service into a commodity that can be sold online.
Next question: how many transactions is your site likely to handle per month and what size will those transactions be? The vendors of online payment systems have wildly differing charges. What's right for your competitor might not be best for you.
"In terms of costs, there's no such thing as a free lunchbox," says Kevin Hicks, managing director of Brass Monkeys (www.brassmonkeys.co.uk), an online men's underwear retailer. His company has a turnover of just under £1m - one-third of that is taken online.
"We'd never done a mail-order operation, so we were seeking someone we could outsource payment-taking to," says Hicks. "We didn't want to get bogged down in the technical mumbo-jumbo - we just wanted someone to take it off our hands." World Pay offered Hicks just such a solution.
"We can use World Pay and its name to give our customers confidence, but we never receive a customer's card details so there can be no security breach at our end. Even opening up international markets is not an issue as World Pay has helped with the different currencies."
Nick Jenkins set up Moonpig.com in 1999 to offer personalised greetings cards and started out using BarclayCard Merchant Services' ePDQ online payment system. "I wanted to work with Barclays as they were unlikely to go under," says Jenkins.
With his own payment process, he could control what information Moonpig asked for and ensure that the site looked professional. "Barclays' argument was that their logo engendered trust, but if you don't have your own payment pages, they can look fairly amateurish."
Moonpig used Barclays for more than two years, but then the bank redesigned its software. Jenkins wanted to avoid the costs involved in integrating the new system and looked around for a new provider. "Naturally the first thing I looked for was flexibility of integration," he says. "There's no point in having a system that works now but that won't in a few years' time. I also wanted a system that let you pull in the details at your end, as you're more in control."
If you don't have a secure server for your web site, most providers offer a secure online environment. But don't just take the provider's word for it, says Jenkins. "If you can, call round other businesses to find out who they think is reliable for online payment provision."
Jenkins also has some advice about costs. "At first sight, they all seem to be much of a muchness but, as we went along, we've found that they really are different," he says. "The big thing is to negotiate with the provider. For example, if your average transaction is more than £10, you're better off with a percentage of turnover than with a per-transaction fee."
VERDICT
It's vital that customers feel secure using your payment process but you also need to ensure that the site looks professional.
CONSIDER THESE VENDORS
World Pay (www.worldpay.com/uk)
World Pay has two accounts tailored specifically to smaller companies (and a useful flowchart for helping you decide which one suits you best). There is a £50 for set-up fee; transactions cost 4.5 per cent for each credit card sale and 50p for sales paid for by debit cards. Remittance to UK bank accounts costs 35p per withdrawal.
Pay Pal (www.paypal.com)
Pay Pal offers one business account called Web Accept. There are no set-up charges; transaction fees range from zero to 2.9 per cent depending on the type. Withdrawing money to a UK bank account will cost $1.50 (around £1.05) per remittance.
Verisign (www.verisign.com)
Verisign offers a wide variety of online payment services and does not charge a per-transaction fee. Instead it charges a set-up fee and a monthly subscription. Set-up fees range from $179 - $249 (approximately £125 - £175) and monthly subscriptions start at $19.95 (about £14) for under 1,000 transactions per month to $995 (around £700) for unlimited transactions.
DebiTech (www.debitech.com)
DebiTech is a Swedish company that's been doing rather well in the rest of Europe. It offers processing services for all major credit cards issued in the UK, including Visa, MasterCard, Eurocard as well as American Express and Switch cards.
Tel 00 46 8 5275 2500
SecPay (www.secpay.com)
SecPay offers a range of services for online payment with prices depending on volume of transactions. It charges a £50 set-up fee and the lowest charges are either 1.9 per cent or a set rate of 39p per transaction as well as a £10 monthly standing charge.
Tel 01732 300 200
BarclayCard Merchant Services (www.epdq.co.uk)
BarclayCard Merchant Services offers an online payment service called ePDQ. This costs £125 to set up and has a monthly charge of £25. Further, BarclayCard will take two per cent of all turnover run through this service, although this drops to one per cent if turnover reaches £10,000 or above.
Tel 0800 616 161
Dumb but telling questions
- Does our home page tell customers what we do?
- Does our web site have the correct "meta data" (keywords, page titles, descriptions) that will help us secure a higher entry in search engine listings?
Selecting the right web designer for your site is probably the most important part of any online business. Many smaller company sites suffer from the "brother-in-law" factor - when someone at the company has a brother-in-law who "knows a bit about HTML."
Do not produce a web site because you think you have to. Think about what you want to achieve and what your customers will want to do on the site. Most people approach a business site with a question or a need. Make sure that the question is answered or the need fulfilled.
Law firm Campbell Hooper wanted its site to attract employees and update the image they were projecting. "We put together a brief saying we wanted it really fast with friendly photos," says marketing director, Jennifer Yap. "We wanted it a bit funky, but not too much."
The firm drew up a shortlist and called in the designers. "We were amazed. The price we were quoted varied from £10,000 to £40,000 for the same job," smiles Yap. "Imagine the money we'd have lost if we'd only called in a couple of designers and they'd been from the upper end of the price scale. Some were obviously taking the Mickey."
The most important part of the process was the brief. "You must have a comprehensive brief to give both in terms of what you want to say and what you need technically," says Yap. "And don't try and do it on the cheap. It's crucial that the agency understands your business."
Dumb but telling questions
- Who should we be targeting with our e-mail marketing?
- What incentives can we offer?
- Do we just want to spread the word about our company or do we have a specific objective - ie, sign-ups.
Virgin.net wanted to increase the number of sign-ups to its entertainment portal. So one morning Virgin's marketing department sent out 25 e-mails to journalists and well-connected industry figures. The e-mail said that Virgin.net had 20,000 cinema tickets to give away on a first-come, first-served basis. You just had to register. All tickets were snapped up in less than three hours; some 35,000 people registered.
Marketing director Karin Hayhow wanted to spread the word about Scottish ice-cream makers, Mackies. So she introduced Moo cards. Moo cards? "They're basically standard e-mail cards," she says. "They feature our five Jersey cows pictured in rural Aberdeenshire." The idea was for people to send their friends a Moo card from the site. "If the recipient viewed the card, both could win a tub of ice cream."
Using their own products Mackies can keep the price of marketing down to a minimum. "We wanted to speak to our consumers and using e-mail was an affordable method," says Hayhow.
VERDICT
Don't get a novice to design your web site - it is obvious. But don't accept the first quote either. Viral marketing can be a very cheap way of spreading the word about your business. Just be inventive.
CONSIDER THESE VENDORS
Reading Room (www.readingroom.com)
Reading Room is a web design agency offering a range of services tailored to the smaller business market. Prices start at £1,000 for a basic "Launch Pad" site and go up depending on functionality.
Tel 020 7734 9499
FREE WEB SITE HEALTH CHECK
As a special offer to Real Business readers, Reading Room is offering free web site health checks until May 30.
Call Margaret Manning on 020 7734 9499 quoting: Real Business.
Adtec Solutions (www.adtecsolutions.co.uk)
Adtec Solutions specialises in providing solutions for smaller companies and as such aims to keep its prices low. Adtec's design packages include hosting and start at just £9 per month for one page, £18 per month for three pages and £27 for five.
Tel 0870 241 7014
BT Ignite (www.ignite.com)
BT offshoot Ignite has worked with the likes of McDonalds and Barclays, and has a department dedicated to smaller companies.
Tel 0800 282 444
XKO Online (www.xko-online.com)
XKO Online provides web design services for a number of business clients and has a reputation for delivering the goods. The company has worked with Page & Moy Cruises, Oxford University Press and The Museums and Heritage Show.
Tel 01235 773 737
Senior Internet (www.senior.co.uk)
Senior Internet offers a variety of web-based marketing services in including viral marketing with a particular focus on the smaller company market. The site will give you a free audit as to how well your web site is listed with the search engines.
Tel 0115 9500101
Sift (www.sift.co.uk)
Sift is regarded as the UK's leading provider of online community know-how and technology. A viral-marketing specialist.
Tel 0117 915 9600
