How Does Downtime Effect Your Business?
What is downtime?
What happens when your website throws a 404 code, telling people the content it’s available? Or what happens when your employees can’t log in to do their work? Lastly how effective would your email marketing campaign be if the link brought potential customers or clients to webpage that they can’t see anything on? This is the effects that downtime has on your business.
Downtime is anytime when a computer, is out of action or unavailable for use. When your business experiences downtime, it costs you money.
How Downtime Costs You Business Money?
If your a multibillion dollar company or are running the company by yourself downtime costs you money. There’re 8 ways downtime normally costs your business.
- Lost of sales revenue
- Lost employee productivity due to malfunctioning systems and internet.
- Potential employee overtime costs to meet deadlines
- Cost of restoring IT systems
- Supply chain ripple effects
- Customer dissatisfaction
- Brand/loyalty damage
- Low employee morale and turnover due to stress and consequences of down time.
8 Ways Downtime Costs You Money
1. Lost of sales revenue
When people experience downtime lost of sales revenue tend to be the first thing they think of. If people can’t get to your site to order products or services, then you can’t make any sales.
2. Lost employee productivity due to malfunctioning systems and internet.
When you can’t connect to the internet, and your email, ticket systems, websites ect, aren’t working, neither can your employees. For example when your website is down, you can’t get any emails, that your sales team reads and answers. Your marketing team can’t optimize your site with current SEO(Search Engine Optimization). Any current marketing campaigns driving your customers to your website is useless.
3. Potential employee overtime costs to meet deadlines.
In business we all have deadlines we have to meet. These deadlines keep our business running, keep customers happy, and ensure the business is profitable. Downtime makes completing deadlines difficult. Besides all the money you wasted from your employees not being able to work, you now might have to pay them overtime to complete the work they weren’t able to do.
4. Cost of restoring IT systems
Some business still use their own datacenter. If your business does, you might need to fix or replace expensive hardware, software and equipment. With downtime costing you so much money your business might pick the option that gets your servers up and running the fastest. The problem with replacing hardware, software and equipment that gets you the fastest results is it might not be the best long-term solution. Costing you more money in the long run.
5. Supply chain ripple effects
Downtime can cause supply chain ripple effects. Let’s say you can’t login it your inventory program for the day, and because of that you have one of two options. The first option is you don’t know what you have on hand, so you don’t place an order. This causes you to run out of inventory before you can get a new shipment in. The other option is you can guess what you need for inventory levels. You over estimated how much inventory you needed, and ended up wasting 100’s of dollars in inventory. This is just one example. Downtime can also make it harder for your suppliers to contact you, and for you to mail out your packages to customers on time.
6. Customer dissatisfaction
As customers we expect excellent customer service, a great product, and for the company to make our lives easier. Customers are dissatisfied with downtime because their shipping is late, they can’t reach you to ask and get answers, and that is an inconvenience to them. This makes it less likely that they will be repeat customers. 61% of SMBs report that more than half of their revenue comes from repeat customers, rather than new business. Also a 5% increase in customer retention can increase a company’s profitability by 75 percent.
That’s only factoring in the customers that have already order a product or service and could become repeat customers. You also loose out on potential customers, that weren’t even able to get, to buy, or ask about your product or service.
7. Brand damage
If your not online does your business really exist? People sharing their thoughts and feeling about a business can hurt or help that business. When your business experiences downtime, that can cause negative customer experiences. The customers that experienced a negative experience might write a review, tell their friends and family, or post it on social media. According to Nielsen 43% of consumers are more likely to buy a new product when learning about it on social media. Also customers are 77% more likely to buy a new product when learning about it from family and friends. That can lead to a shocking amount of lost customers and revenue. While a business can try to make up for a negative experience according to Parature it takes 12 positive customer experiences to make up for one negative experience.
If your current and future customers go to your website, and see that it’s down they will leave. If it goes down again, while there on the website, it creates a lack of trust. Can they enter in their credit card, and personal information and it’s not going to be stolen. Another question that might pop up into a customer’s head is if your business is even reliable enough to place an order with.
8. Low employee morale and turnover due to stress and consequences of down time.
Your marketing team, your sales team, your IT team, your customer service team is stressed out. The brand, and customers they worked so hard to get to your website and stay repeat customers are jumping ship. Your customer service team is getting angry phone calls from customers that didn’t get there packages on time. Your IT team is working overtime to make sure everything is running smooth. Everyone that is working in the business is stressed out and feels disappointed that they work and effort that they put in was worth nothing in the end.
This can cause your employees to quit their job. 3 million employees have left their job voluntarily every month since June 2017 according to data from the US Bureau of Labor Statistics. Now your managers and yourself have to worry about find a new employee. New employees on average cost 1,200 USD to train according to the 2014 Training Industry Report. Not to mention 31% of new employees quit their job within the first 6 months of employment. This can lead to an expensive revolving door of employees quitting and hiring new employees.
There are 5 main reasons your server experienced downtime.
- Human error
- Hardware, software, or technical malfunctions
- Poor Web Hosting
- Traffic Overload
- Hacking attempt or malware.
Some easy ways you can help prevent these 5 main reasons for down time is to make sure you have a skilled IT team, and a secure, up to date datacenter. When you plan and design a datacenter or pick one make, sure you can add more room on your server if you start getting a lot more traffic. Make sure you have some sort of anti virus protection. Lastly in case you can’t recover all of your data, make sure your business has a disaster recovery and back plan.
Making sure you have a datacenter and the expert knowledge to keep your downtime at a low can be expensive. That’s why some businesses decide to colocate their servers to a datacenter that offers colocation services.