It appears that Endurance International Group (EIG) customer tech support bloodletting is continuing with Bluehost workers in Utah being the latest to get the axe. The layoff is expected to affect more than half of BlueHost’s 750 employees.
The layoffs were announced at a meeting on January 19th and will affect 440 accounting, customer support, human resources, and training staff. According to a Reddit thread, the layoffs will occur between March through October of this year.
While an audio clip recorded at the meeting is worth the listen, the statement issued by Endurance provides the gist visually:
Transitioning our Orem office is a significant business decision that impacts approximately 440 Bluehost jobs locally. We’re evolving the way we take care of our customers by consolidating the support function from Orem to our existing office in Tempe, Arizona. Many of these roles may also relocate to our offices in Provo and Salt Lake City. This will enable the Bluehost brand to continue to grow as a choice provider of online services.
This was not an easy conclusion, made more difficult because of the sense of community and camaraderie we embrace in Orem. Shifting the majority of our resources and attention to centralize support, sales as well as professional services is a long-term strategy for the benefit of the business and our valued customers. This decision will enable greater efficiency across our family of Endurance brands for the benefit of our customers.
It is our priority to ensure a mindful transition for our valued employees and we are extremely grateful for their dedication.
Of course this statement is exactly what one would expect from a publicly traded company with backing from private equity firms. When corporate entities acquire competing brands, there’s a reasonable expectation that streamlining and efficiency will render some positions redundant. Hence Endurance laying off over 200 employees at Constant Contact – 15 percent of its workforce – days after its $1.1 billion acquisition closed last February isn’t that surprising.
While not privy to the motive, beyond all that pro capitalist wall street jargon, this isn’t that.
BlueHost customer support and sales are moving to Tempe, AZ which is where Endurance manages a couple of their other brands, Hostgator and iPage. In the latter part of 2015, EIG eviscerated the Arvixe support team when A Small Orange (ASO) took over managing Arvixe tech support. Within months the ASO and Site5 brands were also being ‘streamlined’. You have to wonder why spend hundreds of millions of dollars acquiring successful brands with good reputations and talented staff only to get rid of everything except the customers (editor's note: Read on for more about the customers!).
EIG may give a hint in their third quarter 2016 filing.
We have certain hosting and other brands to which we no longer allocate significant marketing or other funds. These brands generally have healthy free cash flow, but we do not consider them strategic or growth priorities. Subscriber counts for these non-strategic brands are decreasing. While our more strategic brands, in the aggregate, showed net subscriber adds during the quarter ended September 30, 2016, the net subscriber losses in non-strategic brands and certain gateway brands contributed to a decrease in our total subscribers of approximately 42,000 during the quarter. We expect that total subscribers will continue to decrease in the near term.
Overall, our core hosting and web presence business showed relatively slow revenue and subscriber growth during the first nine months of 2016. We believe that this is due to flat marketing expenditures relative to 2015 levels on this business in the first half of 2016 as a result of our focus on gateway products during that period, and to trends in the competitive landscape, including greater competition for referral sources and an increasing trend among consumers to search for web presence and marketing solutions using brand-related search terms rather than generic search terms such as “shared hosting” or “website builder”. We believe this trend assists competitors who have focused more heavily than we have on building consumer awareness of their brand, and that it has made it more challenging and more expensive for us to attract new subscribers. In order to address this trend, during the third quarter of 2016, we began to allocate additional marketing investment to a subset of our hosting brands, including our largest brands, Bluehost.com, HostGator and iPage. We plan to continue this increased level of marketing investment in the near term, and are evaluating different marketing strategies aimed at increasing brand awareness.
It appears that Endurance plans to continue with increased level of marketing to attract new clientele to replace the ones they are shedding. They are also evaluating different marketing strategies aimed at increasing brand awareness…
There are a couple of adages about marketing strategies that come to mind. One is about a bird in the hand is better than two in the bush. Another attributed to a Harvard article is that it costs five times more to acquire a new customer than to retain an existing one. Endurance’s 2016 4th Q report is out in February so maybe then we'll know how that is working!
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Endurance International Group (EIG) web hosting brands include:
- A Small Orange
- Apollo Hosting
- Intuit Websites
- IX Web Hosting
- Networks Web Hosting
- SEO Hosting
- SuperGreen Hosting
- Webstrike Solutions