Services > Why Monitoring > Lowering Operational Costs |
Lowering your operational costs increases the value of your company.
I. Direct, passive loss from downtime:
Every time your website is down, you are loosing money.
"Passive" means that the losses result from unavailability of the website or some of its systems and components.
Downtime is a Key Performance Indicator (KPI) for your website overall performance.
As long as your website or some of its systems and components are unavailable, it is considered "downtime". Usually, your ISPs are presenting to you the opposite statistics - the uptime. Numbers like 99% or 99.9% per year look quite impressive. However, in the first case, your website was not available for 87 hours, and in the second case - for almost 9 hours.
Downtime consists of three components:
- Period of time between the occurrence of a malfunction and its detection;
- Period of time needed for localization of the problem and detection of its source (cause) by the IT support team;
- Period of time needed by the IT support team for troubleshooting.
2. Loss of general costs:
General maintenance costs are the money you pay to have your website up and running.
Almost none of the services needed for your web operations do not work as a utility (yet). Therefore, you make fixed payments on a regular basis without taking downtime minutes into consideration. For every hour of downtime, the money you have paid is lost.
3. Loss of advertising dollars:
Most web-advertising and promotion campaigns are based on pay-per-click model.
You pay for every click on your links or banners. And every time you lose money, if the webpage is unavailable. For all the clicks made while your website or the specific web page were down, your ROI will be equal to zero, and all the money paid will be a direct loss.
Active loss - discussed bellow - will occur in all those situations when the web page linked to your banner is accessible but an unauthorized change of content took place without your knowledge (defacing). Not only you will lose your per-click payment, but also your risk of total loss of credibility increases exponentially.
4. Loss of transactions:
For every hour of downtime all the transactions that could have taken place, will be lost.
In this case, you do not lose the money you have already paid (the case above) but you are shutting down the opportunity to generate revenue. And this is a serious loss.
II. Indirect passive loss from downtime:
If losing your prepaid money or current transactions are the immediate and direct threats from your website unavailability, there are longer-term, indirect consequences, as well.
1. Loss of traffic:
Conversion Ratios are important for e-commerce websites, as well as for web-operations where the "eyeballs" count.
In some cases visits are converted into sales, while in others - visits are converted into clicks. Either ways, the law of the big numbers plays the most critical role. Even at a small Conversion Ratio, the absolute results look better with higher traffic. Not speaking of greater Ratios…
What is the traffic you would lose in an hour of downtime? How this affects your conversion ratios?
2. Loss of image:
When your website is down, your Customers are not pleasantly surprised.
There two scenarios that might affect in two different ways your image:
a/ "This page is unavailable" is the message they receive until one of them (angry) calls your (unprepared) representatives at your 800 number, and triggers the alarm. Wrong! They will continue to see that same message until your IT people fix the problem.
b/ Any web-based business that cares about its Customers would handle this situation differently. A nice apology would be displayed only minutes after the malfunction; fixing the problem will take up to 90% less time, and all the representatives answering the 800 number will be aware of the situation and ready to professionally handle it.
3. Returning Customers ratio:
As Conversion ratio is important for your first time Buyers, Returning Customers ratio is critical for your overall operational costs.
Retaining Customers is cheaper, revenue flow is more stable, and the overall business risk decreases with a relatively constant Customer base.
Unavailable websites, unstable web-systems, and malfunctioning web-components could only ruin your efforts to retain your Customers, and increase your overall costs, as you will have to count on new first-time Buyers. And this is the more costly proposition.
4. Cost of driving Customers on your website:
This last aspect of the passive losses brings the above-described problem one step further: rebuilding your traffic requires promotion.
Promotions - in any form and shape - drive your cost up (or your profit margins down).
This is one of the most disturbing indirect negative effects of the website downtime and unavailability. We all understand that competition is only one click away, and that losing existing or potential Customers is easy and free. Just don't redirect them to your competitors because your website is down and you don't know about it.
How much does it cost to attract new Customers or to bring the old ones back?
III. "Active" loss:
We define a web-business loss as an "active" when caused while the website was up and running.
Phishing, pharming, website defacing are some of the techniques observed over the last few years, and that became more sophisticated recently. In all these cases, some kind of unauthorized change has been done - web-content, links, DNS etc. As a result, the original website is up and running and downtime is not an issue. However, Customers see different content and attempts are made for their credit card information or identity to be stolen.
While in the case of the "passive" loss, the web-transactions or even the communication between the Client and the website do not take place at all, in the "active" loss scenarios people actively become victims of various frauds.
Rebuilding traffic, image or customer base after one or more such situations is costly, painful and long. It becomes a real challenge for the web-based business.
At WebSitePulse, we believe that using monitoring services is part of the responsible behavior, pro-active stance, and cost-conscious attitude of the modern web-business owner or operator.
With the increasing complexity of the Internet and the intensifying e- competition, websites' availability and smooth functionality will become an even more important competitive advantage.
In the near future, the question will be: Why not monitoring?