Facts and figures
Multiple studies conducted by authoritative organizations show that the slower the web application, the less traffic, SERP ratings and conversions it gets, while bounce rates increase; in other words: people leave the queue to your digital office premises before your staff even have had a chance to greet them. Every second costs a fortune.
If you are interested in reading more statistics and studies, please enjoy a few: a study from NNGroup and one from Google the All-father.
Search engine rankings
As the top player in the search business, Google the Incredible prefers to serve websites that load faster. Why? Because this company is in the business of delivering search results ASAP and more than anything else (apart from cash) it wants to make their users happy and engaged. People who get search results faster seem to be happier. Those who don’t get results fast enough, abandon Google. The tech giant doesn’t want that to happen, does it? So, it makes sense for them to favor websites that are faster because that helps both the business and users.
The search engine is also keen on providing a valuable content, but, assuming the two competing resources are equally useful, the one that loads faster will become more preferable and thus appear more frequently and climb the elusive ad-filled SERP ladder.
People are getting exposed to websites that load faster and it is a no-brainer to want to return to these resources especially when the content is valuable enough. There is a bit of a hassle that nobody wants to go through: the waiting process for something to load, particularly for an unfamiliar web page. There is always an enticing tickling that grows with every passing second that beckons to look for other options available at the tap of the fingers.
“This website is slow. Forget about it.”
Visitors drop second and third pages when they identify the snail pattern — “This website is slow. Forget about it.” Users don’t want to put up with that. Next time you browse the Internet, notice your own reaction towards slow websites. Think, perhaps, others have similar feelings towards your business web app.
If you personally or your company is environmentally conscious you should act upon making your website faster. The longer it takes to load the website, the more electricity is consumed by the devices, servers and intermediary infrastructure. If the website has nine and three quarters of visitors per month, then it’s a nuisance. But if the website serves tens of thousands of people on a regular basis, you should consider the impact.
There are websites out there that just drain the battery: humongous billboard size images, HD quality videos, constantly changing ads, event listening scripts and so forth; it makes the CPU run faster consuming more electricity and takes its toll on the battery life. Lithium battery production isn’t exactly an environmentally friendly endeavor. There’s absolutely no necessity in adding to that pile.
It’s math time. Let’s assume a hypothetical business website gets the following amount of traffic and has these metrics. We will use this data to estimate the costs in two different real-world scenarios. We’ll set some variables:
AV – average number of visitors per day = 1000;
RV – returning visitors per day (are OK with waiting) = 40%;
NV – new visitors = 60%;
ANV – acquired new visitors = NV/2 = 30%;
AV = RV+NV;
BC – bounce constant = 10%;
CR – conversion rate (visitor to customer) = 2%;
T – time = 365 days;
AC – average cheque (purchase) = 50 USD;
SB – speed benchmark constant = 3 seconds;
AS – actual website load speed = 8 seconds;
CAC – customer acquisition cost;
CPC – cost per click = 2 USD;
L – losses.
You can easily substitute these numbers with the ones relevant to your website and calculate in parallel as we go through these examples.
Scenario number one — when your company drives traffic to the website by advertising on search engines and social media. Our hypothetical website loads within 8 seconds (AS) while the benchmark is 3 seconds (SB). People are generally OK with waiting for 3 seconds but what happens next is that with every second past this SB threshold another 10% of visitors bounce (leave). So, 8s minus 3s = in 5 seconds 50% of new visitors will leave.
Out of a 1000 visitors (AV) 40% are returning visitors, so, they might be OK with waiting because they know what to expect. But half (50%) of the remaining new visitors (NV) will leave our website. Imagine you own a coffee shop and half of the new people that had entered the store decide to go somewhere else after waiting for 8 seconds. That’s crazy!
You own a coffee shop and half of the people that had entered the store decide to go somewhere else after waiting for 8 seconds.
How much does it cost to acquire a customer for your website? In our case we’ve taken the 2 USD cost per click (CPC) index which is not that unusual for most competitive US industries. If we were to calculate the customer acquisition cost (CAC) based on only one parameter, the CPC, we’d calculate it based on total clicks purchased divided by users that didn’t bounce. Mind you, that we are not looking at the amount of purchases made or conversions, only at the amount of people who had decided to wait for the web page to load. So, 2 USD times 300 total acquired new visitors (ANV) equal to 600 USD marketing budget per day; divide this by 150 acquired new visitors that didn’t bounce (50% of ANV). The CAC is 4 USD per person per day — twice as much as the CPC.
This means that by allowing your website to be slow your company is throwing away 150 x 2 x 365 = 109 500 USD per year.
Use this full formula to calculate your marketing losses if your website’s AS > SB > 3s:
L = ANV x (AS-SB) x BC x CPC x T
L (losses) = 300 x (8s-3s) x 0.1 x 2 x 365 = 109 500 USD / per year
That’s a year worth of salary of a highly skilled employee. Who’d dare to say that the website performance optimization is a ridiculous concept? Imagine what you could do with this extra money now that you are becoming aware of the loading speed issue.
Zero online advertising
The second scenario to look into is when the company doesn’t spend a dime on online advertising. In this case there are no Losses involved. But there is something else though — opportunity costs (OC).
It doesn’t matter what type of industry you’re in, what kind of business model you have — any business relies on getting paid; every person who has visited your website and left before the page has loaded is a missed opportunity. And you can calculate that amount.
Every person who has visited your website and left before the page has loaded increases opportunity costs.
The conversion rate from our example is 2% (CR). From a 1000 visitors (AV) per day the company is supposed to sell to 20 people (CR). The average cheque is 50 USD (AC). The average daily revenue should be 1000 USD. But due to the fact that the website loads 8 seconds (AS) the company loses 300 new visitors daily and thus the total amount of users that interact with the website is 700. The conversion rate is the same, so, instead of getting 1000 USD per day, the company sells to 14 people making 700×0.02×50 = 700 USD.
The opportunity cost is staggering: (1000–700) USD x 365 days = 109 500 USD per annum.
The formula to calculate the opportunity cost is this:
OC = ((AV x CR) — (RV+NV x (AS-SB) x BC) x CR) x AC x T
OC = ((1000 x 0.02) — (400+600 x (8s-3s) x 0.1) x 0.02) x 50 x 365 = 109 500 USD / per year
The price to pay
If you believe in the concept of the opportunity cost and your company also spends money on advertising, you can add up both of them to get an entrepreneurial shock — in our case study — a walloping 220k USD of cash passing by annually due to a website being loaded five seconds slower than the bloody benchmark! With all your marketing teams and advertising efforts you’d still feel like performing in a town square during the storm: no people, no money and significantly less health the next day. If only the band knew that there are stables nearby and its master knows how to get to the neighboring Sunnyvale town fast.
A walloping 220 000 USD of cash passing by annually due to a website being loaded 5 seconds slower than the industry benchmark.
Is there a cheap solution to the problem of slow loading websites; a plug ’n’ play type? Well, yes indeed, there is. There are ways to tackle this problem in a way that would cost you around a hundred bucks. If your company still runs the business website on WordPress, there are plugins that you can procure that are supposed to ‘help’. Or you could hire a ‘fifty-dollar-expert’ from CL, Fiverr or Freelancer and see what they’d come up with. These are the types of pseudosolutions for folk who want an illusion of a solved problem; those who are thinking along the lines of “anything goes as long as it’s cheap”.
100 dollar pseudosolutions for people who want an illusion of a solved problem.
If you are more of a serious type of an entrepreneur or executive, someone who is considerate, patient, interested in meaningful actions and cares about the outcome, then there is a solution for your business as well. Although it would definitely cost more than 100 USD, it is significantly less than the amounts that your company loses on a regular basis. It takes time to analyze web pages, images, videos, scripts, processes and identify ways of handling the problem. But it’s doable and totally worth it. You might want to contact awezzom team to help you solve the problem with a slow website speed and stop losing money.
Other money-draining issues
Is there anything else apart from website speed that makes your company lose money? Of course there is, but that’s a different topic because it also requires a thorough explanation. Some of the most common problems business websites have are:
- Cluttered space
- Shallow content
- Vague value proposition
- Poor visual hierarchy
- Terrible user experience
- Complex user interface
- Outdated design
Read why it’s important to refresh your business website’s design and become a more prudent decision maker.
By improving the website loading speed you are decreasing the number of bounces, insuring a better ranking score in search engine results, making your visitors happier, ensuring your marketing spending is more efficient and creating more business opportunities for your company simultaneously. All in all, I think, it’s worth doing it.
The website that loads within a 3 second threshold has more chances of rising to the top of search results because companies like Google would favor a fast loading website. Having a slow website that loads longer than the industry benchmark is bad for your business. By allowing your web application to be slow, you are voluntarily increasing your customer acquisition costs. Can your business afford to make the website load faster and stop losing customers? Absolutely! As long as the website generates money, you will most definitely be able to afford the web performance optimization.
Having a slow website that loads longer than the industry benchmark is bad for your business.
Does it mean that if your website is faster than all your competitors’ web applications even by a fracture of a second your company would be #1 in search results? No, not at all. But if your web pages load within the 3 second threshold and your rivals’ pages aren’t, then you have a competitive advantage as far as Google the Almighty is concerned.
The consequences of not having your website performance optimized are pretty much straightforward: your business will continue wasting money on online advertising, paying for clicks just to let people abandon the process midway; you will miss many business opportunities; competitors will eventually catch up and get the upper hand.
To check your website speed for free you can visit GTmetrix. You don’t need to register or pay to use this resource. It’s awesome. Test your home page and the most important sales page and substitute the AS in the formula with a page speed result.
There are many web development companies out there that could help with fixing the website loading speed issue but there is only one that is truly awezzom.