Web Performance Tuning = 10% Profit Increase – LoadStorm

Your website is a little slow – so what? Well, it is probably costing you money. I have been researching published facts about web performance because we are always trying to understand our industry better. This post should help you realize that improving your web application performance can directly impact your bottom line by 10% or more. Don’t believe me? Read on…

Aberdeen’s June 2008 report, Application Performance Management: The Lifecycle Approach Brings IT and Business Together showed that issues with application performance could impact corporate revenues by up to 9%. The research also showed that only 42% of organizations were satisfied with the performance of business-critical applications.

Shopzilla is one of the largest and most comprehensive online shopping networks on the web. They have much to teach us about performance engineering’s relationship to profitability. Their tagline “discovery made simple” emphasizes speed to find something. Easy, quick, low friction, and get what I want with no hassle. By focusing on the performance of their site and applications, they found the holy grail of performance improvements: higher profitability through increasing revenue while driving down operating costs.

Phil Dixon has shared real data that Shopzilla gathered from a year-long performance redesign and how the metrics affected the bottom line. Some of the most interesting findings:

• The redesign resulted in a 5 second speed up (from ~7 seconds to ~2 seconds)
• The speed improvement resulted in a 25% increase in page views
• Better performance increased revenue by 7-12%
• A 50% reduction in hardware was possible because of the performance engineering

Here are some of my favorite statistics that are quoted from an Aberdeen Group study called The Performance of Web Applications: Customers are Won or Lost in One Second:

• 45% are concerned about a lack of visibility into application performance
• 31% found that their IT staff also lost effectiveness due to subpar application performance
• 58% of respondents said they experience lower employee satisfaction due to poor application performance
• Business performance starts to decline when mission-critical applications reach the baseline of 5.1 seconds of response time delay
• 50% said they lost revenue opportunities because of poorly performing applications
• 32% said they experienced damage to their brand reputation
• Some 47% indicated that they had decreased responsiveness to the needs of external customers
• 60% of survey respondents reported the inability to identify issues before end users are impacted as a top challenge when dealing with applications
• Organizations are planning to increase the number of business critical applications by 67% over the next 12 months (from six on average to 10 applications)
• 60% of organizations were not satisfied with the performance of business critical applications
• 41% have issues with rolling out new applications without them being tested
• 31% believe virtualization of applications and data storage would further challenge application performance management

Performance Testing Affects Significant Dollars

Think about your company’s revenue. Let’s say we work for a hypothetical small web development shop with 10 technical consultants that generate about $2 million annually. What would you do with an extra $200,000?

Or suppose you work for a manufacturing company that sells its widgets online. If annual revenue is medium for a US organization, then you could see approximately $50 million LOST because your web e-commerce application is slow in responding during the shopping cart process.

If you work for a large, global corporation that fits in the Fortune 1000, then having web applications with poor performance could cost your company BILLIONS!

Think that is happening? My guess is yes. The reason we won’t read about it on TechCrunch, Yahoo, Mashable, MSN, or Google News is because nobody is tracking it. Not your company’s CEO, not Aberdeen, not the United Nations, and not even your best performance engineer.

How many companies conduct performance testing with the goal of increasing revenue? Some, but probably not many. Why? Because of the huge disconnect between the IT staff responsible for web applications and the marketing executives responsible for revenue. It is two different worlds. Rarely do they collide…until the site crashes for hours because of heavy volume attributable to a successful marketing campaign.

Load Testing Saves and Makes Money

Just as importantly, there are other ways load testing saves money. Performance testing early and often improves the development cycle. Shorter time to market gives your company a competitive advantage, which results in more product/service sold. And for us geeks, performance testing reduces the cost of defects because they are found earlier in the product life cycle where they are cheaper to fix. Read this if you don’t believe me.

I came across a tweet in #performance that pointed me to a good article on proof that speeding up websites improves online business. There is empirical evidence that better web performance can produce a 16% higher conversion rate and a 5% higher order value.

Speed and Simplicity Can Make You a Millionaire

You know how Google’s home page is so minimal? That was not by design – that was from a lack of designers! But the simplicity created speed, and the performance carried over to everything Google does. Speed is good business. Speed and simplicity has made Google a pile of money.

Microsoft and Google Collaborating on Performance Engineering?

Yeah, right. Well, it seems that they let two of their performance guys play nice at the Velocity conference this year for a joint presentation.

Key findings:

Dave Artz from AOL presented statistics that show page views drop off as page load times increase. Fastest pages get 33% more pages per visit per user than the slower pages. Get a copy of his slides

Performance Engineering and Flow

Dr. Mihaly Csikszentmihalyi, a professor and former chair of the Department of Psychology at the University of Chicago, pioneered the study of flow. He wrote that flow is the “holistic sensation that people feel when they act with total involvement.” His approach was scientific, but not specific to performance metrics produced from load testing. Being a psychologist, he was obviously studying how the mind works and its impact on productivity and success in life. That said, it does shed considerable light on how performance measurements such as response times or errors can affect the buying behavior of a visitor to your website.

In the classic web geek book “Website Optimization”, the second chapter includes an interview with Dr. to put his research into proper perspective for us performance engineers. There is a PDF file containing that 2nd chapter for free download. From the chapter:

“The bottom line is that people in flow are having fun, and truly enjoying themselves. Interactive speed is a significant factor in all models of user satisfaction. Make your pages load quickly and minimize the variability of delay. Be especially careful to avoid sluggish response after your pages have loaded.”

Performance testing is much more important than almost anyone dares to consider.

The facts are clear – poor performance of a website is a quantifiable worst practice for any business. If a site responds slowly or fails under load, then money is going to be lost. Bad performance leads to other bad things happening.

Some of the studies says 7%, some 9%, some up to 12%. Do you know anyone that would turn down a way to improve their profitability by 10%?

Where do you place website performance on your priority list? Perhaps you should take some of these statistics to your next meeting with the C-level executives. I dare you. Maybe it will get you a promotion because C-levels understand money!

Performance testing rocks.