Website Downtime Cost: How it Hurts Businesses

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Dani Nolan

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2019 October 21st

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Though it’s a rare sight today, long-time users of Twitter will recall the days when the website was regularly overburdened by traffic, causing temporary downtime for its users. This temporary access was signaled by a symbolic image of a group of twittering birds attempting to hold up a large whale, causing disgruntled users to progressively associate this bothersome downtime with this “fail whale.”

Suffice to say, no one enjoyed a “fail whale” sighting and today, no one enjoys visiting a website that is experiencing prolonged downtime. Whether your website is fully inaccessible or simply running much more inefficiently than usual, any period of downtime can lead to negative user experiences that harm your business’s bottom line in the long run.

In this article, we'll discuss the causes of downtime, how much outages cost businesses as well as how to minimize the risk of an offline website. All in all, downtime can truly put a damper on a company’s ability to conduct business online. Every second of downtime can result in lost sales through a digital platform, not to mention the harm such downtime can do to a company’s reputation and customer loyalty.

Here's an overview of what we're going to cover.

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Causes of Website Downtime

Website downtime can result from a variety of causes, ranging from planned outages to truly unexpected attacks upon hosting servers. Though these causes may lead to different reaction plans, both hold the potential to interrupt a business’s digital services and decrease the productivity of its employees. Take these primary causes of website downtime into consideration as you create a business-wide plan to prevent and mitigate downtime.

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1. Planned Downtime

Website downtime and “unexpected outage” have almost become synonyms in the minds of many people who do not have IT training. But the truth is that they are not the same because website outages can, in certain instances, be pre-planned. These instances of planned downtime can be instituted by a company’s IT team in order to accomplish a variety of systematic goals, such as upgrading crucial hardware and software without taking the entire system offline.

Planned downtime is almost always expected and scheduled. Both IT and management are aware of the upcoming downtime and make plans accordingly. Users and the clients of the company are usually warned in advance so that they can remain productive during the outage. Additionally, website visitors may see a notification informing when the website will return to normal operation.

2. Hardware and Software Malfunctions

While IT systems are becoming more advanced and reliable every day, no single piece of hardware or software is infinitely reliable. As such, malfunctions are bound to happen eventually, leading to website downtime. Nearly any component within an IT system can malfunction, from a piece of hardware that short circuits to software that fails to keep up with the volume of traffic it is processing.

Malfunctions within the servers hosting a company’s website are also a significant cause of website downtime. Given that most companies host their websites off-site, this can really create prolonged downtime periods until the host company is able to act upon their faulty infrastructure. In all cases, these malfunctions can be a major hassle for website users both within and outside of the company.

3. Cyber Attacks

Though it is an extreme case, downtimes can be caused by DDoS attacks (short for “distributed denial-of-service” attacks) which website administrators should take into account when planning to prevent downtime. In most cases, a DDoS attack is imposed by an exterior malicious hacker flooding a website’s host server with excessive requests, causing it to slow down and potentially crash.

As might be expected, such attacks can severely interrupt business website operations and create prolonged periods of downtime. Often, IT professionals responding to such an attack must first quarantine the source of the attack before they can work to reestablish the website’s stability.

4. Hosting Provider Errors

The previously mentioned hardware and software issues from the server’s side could be caused by poor server management. Accidental data deletion, not keeping the software up-to-date, or the lack of effective maintenance could lead to various errors that might affect the websites stored on that server.

The risk of these errors can be minimized by choosing a reliable hosting provider. Pay attention to the company's reputation and make sure they have reactive customer support (ideally available 24/7) in case you need help.

Financial Cost of Website Downtime

Website downtime can truly be costly a company, both in terms of financial returns on investment and digital credibility. Both are critical in order to remain successful in a modern online marketplace, so it is in the best interest of both IT professionals and management leaders to stay fully informed of how website downtime may affect their bottom line.

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While the general threat of “losing money” comes with every instance of website outage, not every outage results in the same problems for every type of website. An eCommerce platform, for example, will be severely impacted by any type of outage because prospective buyers will not be able to complete a purchase. Downtime on other corporate websites may also result in lost productivity or added costs associated with IT maintenance.

While these are generalized examples, many (if not most) business websites experience downtime at one time or another. These are examples of billion-dollar companies, however, website downtime might hit small businesses even harder in terms of lost clientele.

In the following examples, each of the companies experienced widely publicized cases of website downtime that resulted in some degree of lost business.

Amazon Outages ($99 Million Loss)

Back in 2018, worldwide distributor Amazon struck out on one of the most important sales days of their fiscal year, resulting in potentially millions of dollars in lost revenue. On their annual “Prime Day” in July, Amazon experienced an hourlong period of website downtime during which the users could not browse the catalog or complete purchases.

One estimate pinned this critical downtime period with a nearly $99 million loss in revenue, taking into account the average volume of sales Amazon would have experienced over the same period of time. While such loss is not the end of the world for this mega-retailer, smaller eCommerce businesses could be severely harmed financially if they experienced a similar outage.

While Amazon never announced the exact cause of the outage, some tech experts believe that the downtime symptoms point to a possible conflict between the core sales application and the content distribution network. These misaligned bits of code may have cost Amazon millions in income, which should act as a warning to other retail IT teams to always double-check their work.

Facebook, Instagram, WhatsApp Outages ($154 Million Lost)

Social media isn’t just for sharing photos with friends and family anymore. Many businesses use their social media presence as an onboarding location within their larger marketing scheme, ensuring that they meet prospective customers where they spend the majority of their time. But like any other digital platform, these social media channels can experience unexpected downtime that can impact its users’ bottom line.

As the Verge explained, Facebook alone holds the ability to severely impact the economy whenever it experiences a blip in regular operations. This was certainly the case in May 2019, when a day-long service interruption on Facebook and its connected platforms prevented most users from accessing the website. This, in turn, hurt the ability of advertisers who rely on the platform to engage new customers from making virtually any profit on that day.

In terms of numbers, it’s estimated that the social media giant lost around $154 million in revenue.

As the platform-specific currency of social media, this day-long outage also caused many businesses on Facebook and Instagram to lose out on engagement opportunities with their audience. While it is difficult to quantify this loss in terms of revenue loss, a decrease in engagement can make it more challenging for a given business or advertiser to maintain their audience due to the platform’s underlying algorithms.

This can, in the long run, impact online businesses’ bottom line.

Netflix Outage ($1.2 Million Lost)

The web’s favourite streaming platform Netflix has suffered several crashes over the years. However, the biggest crash hit in June 2018 - both the Netflix website and its streaming apps went down worldwide.

Streaming TV shows and movies is a preferred past time of many, so no surprise here that the subscribers went mad. For a platform like Netflix, even the shortest downtime could mean losing business to its competitors such as Hulu, Amazon Prime Video or HBO.

In terms of numbers, the company lost approximately more than $1.2 million in revenue. The biggest hit to the company, however, was breaching the viewers' trust.

eBay Outage ($1.05 Million Lost)

eBay’s name is etched in the web’s history forever - the auction platform suffered a 24-hour downtime in 1999. At the time, it was the longest online downtime ever recorded.

To make matters worse, this outage had disastrous consequences because eBay didn’t have a backup system in place. It’s estimated that the company lost $5 million in sales and had to make financial arrangements for the sellers and vendors. More disturbingly, eBay's stock price plummeted that day.

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A more current huge eBay outage happened in July 2018 - the site and app were down for just under an hour.  Although the crash wasn't as disastrous as in 1999, it cost the company more than $1 million in revenue and greatly affected its stock prices.

Twitter Outage ($336,000 Lost)

As mentioned before, Twitter wasn’t known for its stability back in the day. The social media giant still experiences outages once in a while. In July 2019, the microblogging platform was down for about an hour worldwide. Both the main website and apps were affected as users were unable to post new tweets.

The outage put a dent in Twitter’s stock pricing, which fell by 1% after the outage. In terms of revenue, it’s estimated that the company lost around $336,000.

Cloudflare Outage

Root level outages can also lead to severe website downtime periods. This happened in July 2019, when the popular CDN (Content Delivery Network) Cloudflare went down. During this outage, a large volume of websites that operate through Cloudflare’s CDN all went down at the same time as a result of a misfired software update.

More specifically, this outage happened when an attempt to enhance the built-in firewall went a-rye and the update was simultaneously released to all users at once. This caused a massive CPU usage spike that starved the rest of its services for over 20 minutes.

Cloudflare’s significant mistake in IT rollout should act as a warning to smaller business websites who are particularly vulnerable when their larger hosts and managing networks make mistakes. Because certain industries or niches often share a delivery network like Cloudflare, a single brief period of downtime can really harm an industry since everyone’s eggs are in the same basket.

Companies with major concerns about such root level outages should ensure that their service agreement covers downtime caused by the service provider’s mistakes.

Website Downtime Hurts Business Reputation

There are plenty of old sayings about how profit is the only priority for a business. But in the case of website downtime, there are other, less tangible results that can severely impact a business’s profitability due to shifts in customer perception. Particularly, website downtime can severely impact a business’s overall reputation, especially if such bothersome interruptions become routine.

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“Trust” can be a tricky metric to measure, whether you run a brick-and-mortar store or an online-only business. But “trust” can impact how likely a customer is to pay you for a product or a service in the first place or return for further business down the road. As such, it is essential that you maintain your customer’s trust whenever possible by minimizing instances of unexpected and unannounced website downtime.

If you are looking to build user trust in your website and your brand’s reputation overall, remember the consequences of extended or constant website downtime. Each of these factors can cause a loss of revenue in the long-term, so mindful administrators should take them into consideration when addressing their website’s stability issues:

1. Negative User Experience

Because the internet has largely stabilized and become a regular part of everyday consumer life over the past decade, downtime of any type or cause can leave a bad taste in a user’s mouth. While this is certainly the case for returning customers, the threat of negative user experience is particularly important to new or first-time customers. In both cases, prolonged downtime (which can be as short as a minute or two) can cause users to jump ship and find a more reliable outlet for the purchasing power.

Negative user experience isn’t an isolated issue that is immediately connected to downtime. In fact, negative user experience can also become a long-term problem that follows a website or business’s brand even after it has stabilized its digital platform.

This can be witnessed in the case of Twitter, which was long known for its repeated site-wide crashes and the inability to deal with increased traffic levels during major social and cultural events. This harmful reputation followed them for many years, causing a generalized mistrust of Twitter’s brand resulting from their bad user experience.

2. Communication Crisis and Brand Loyalty

If your business has used an online platform for a number of years, you’ve almost certainly grown a sense of brand loyalty among your most devoted customers. Even functional business websites, such as those used by banks, are able to create a reasonable set of expectations among regular users. If those expectations are not met, such as during a period of downtime, loyal customers are often among the first users to let you know that you have let them down.

Whether through email, on social media, or over the phone, these customers will expect some degree of customer service to reassure them that their brand loyalty has not suddenly become misplaced. If your company is not prepared to deal with these complaints as part of their downtime moderation plan, you may expect a communication crisis that will drive even the most loyal customers away from your website in the future.

While there may be a chance to bring these once-loyal customers back in the future, such poor planning for downtime can severely impact your business’s reputation for the perceivable future. Prospective customers may also catch wind of your newly tattered reputation and steer clear, leaving the door open for more potential revenue and brand loyalty to leave with them.

3. Interference with SEO

When Google’s internal algorithms look at the millions of websites online today, they carefully rate each website based upon their reliability, safety, and ability to remain operational at all times (among other factors). As such, businesses who rely on SEO to improve their search engine rankings should redouble their efforts to maximize their website’s uptime. Frequent downtime can cause your website to lose its prime position in Google’s ranking algorithm.

Short downtime (especially the one that's planned) shouldn't hurt your ranks, a former head of Google's webspam team explains:

If your website is down for a relatively small amount of time, it's not going to disappear from the search results. But if your site is down for longer, let's say couple of days, there's a big chance Google will drop it from the search results.

- Matt Cutts

But keep in mind that repetitive downtime periods can also impact how Google ranks your website among user queries. While some periodic downtimes can be reasonable (such as to perform regular maintenance or updates), cyclic periods of unexpected downtime (caused by high traffic, for example) can cause Google’s algorithms to place you far below more reliable websites.

If you don’t take these SEO-related issues into account while planning your downtime response plan, you may find your volume of customers and resulting profit decreasing as time goes on.

4. Losing Business Opportunities

As any business that has sought out investors – either privately or through a bank – knows, prospective investors want to see that your company has all of its ducks in a row before handing over their valuable resources. When these investors examine your business’s portfolio, they are looking for a reliable return on investment.

In other words, investors need to trust that you will be a worthwhile business partner. A website that routinely experiences extended periods of downtime does not establish that trust, unfortunately.

These missed opportunities can be a “silent killer” to an extent. Your company may be passed over by prospective investors without so much as a blip, causing you to miss out on extremely valuable investments – all because your website’s reliability didn’t match your company’s intended reputation. Therefore, website administrators should be mindful and ensure that their website’s reliability reflects their overall commitment to trustworthiness at all times.

Minimizing the Risks and Consequences of Downtime

While responding to unexpected downtime can be critical for any business that wants to maintain their digital reputation, minimizing the risk of such downtime periods can be of equal (if not higher) importance in the long term. Many industries – from banking to small businesses – have to deal with risk-minimizing, so reducing downtime risks should come as a natural extension of many businesses’ core efforts.

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Even the best-laid plans aren’t perfect, though, and some degree of downtime risk will always be present due to problems outside of your IT team’s control (such as software and hardware problems on a hosting provider’s server). Even so, these are a few factors you can take into consideration while determining how your business will actively work to prevent downtime across its digital platform.

1. Use Reliable Hosting

This goes for both hosting providers and hosting plans. When considering a hosting company for your business site, always pay attention to the company’s reputation and what it promises. Research if the provider didn’t have any major outages or data leaks in the past. Additionally, look for additional features such as an added SSL certificate, daily backups, reliable customer support, and at least a 99% uptime guarantee.

Choosing the right hosting plan is as important as choosing the provider. Evaluate how much traffic your site will attract and how media-dense it will be. As a rule of thumb, if you’re hosting a business website, it’s better to pay more and consider options other than shared hosting. Investing in a VPS or dedicated server will guarantee more stability.

2. Perform Regular Backups

One of the most crucial actions you can take is creating regular backups of your website. A backup is essentially a copy of your website that could be restored when things go wrong (for example, if your site is under a DDoS attack). Many hosting providers offer daily backups with the hosting plans, so always pay attention if the hosting company makes this claim.

Having a fresh copy of your working site will save you a headache (and most likely a lot of money) in times of need. Lost data could have disastrous effects on your brand’s reputation as well as the bottom line.

3. Use a CDN (Content Delivery Network)

A CDN is a cluster of servers that helps to optimize content distribution in different geographical locations. Since it is made up of many servers, it aids in distributing the traffic evenly between them - minimizing the risk of a website crash due to a traffic spike.

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When using a CDN, if the main server experiences a hardware problem, the traffic could be redirected to other servers. A content delivery network will help to minimize the downtime for the users and potential clients by keeping a version of your website online. 

The before-mentioned Cloudflare is one of the most popular CDN providers in the industry. However, CDNs also fail - while using it will add a layer of functionality to your website, it shouldn’t be the only measure you take in making sure the website’s uptime is great.

4. Consider Using a Monitoring Service

If you use managed hosting, you might be covered here. Monitoring services immediately notify you if there’s a problem with your website’s uptime - whether it’s completely down or slow to respond.

Investing in a monitoring service could help to avoid a huge problem before it happens. Uptime Robot is a popular free website monitoring tool that small-to-medium websites often use. It would be wise to contact your hosting provider and discuss monitoring - some companies offer custom solutions for their clients.

Website Downtime Costs: It’s Not Just the Loss of Profit

Ultimately, website downtime can be described in simple terms: it hurts your business financially by degrading your digital reputation and decreasing opportunities for prospective customers to engage with your goods and services. Downtime can be caused by various factors, some of which are even out of your control.

As such, your company should prepare itself properly and make plans to prevent and decrease the risk of falling victim to extended downtime periods.

While there isn’t a single surefire method of preventing all downtime, a savvy company will be able to properly mitigate downtime’s disastrous effects through careful planning and implementation of safety measures. Don’t delay – take the time necessary to plan for downtime before your company is taken by surprise, leading to severe consequences for your bottom line.


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Written by Dani Nolan

An experienced content professional with a creative mind. If I'm not writing, you can probably find me in the backyard playing with dogs or at some weird art show.

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