Monday, May 7, 2001

$25 Billion Potentially Lost Due To Poor Web Performance

In its new 2001 report, an update of the original "Need for Speed" published in July, 1999, Zona Research focuses on the economic impact of Web performance and abandonment of multi-page transactions, based on Web site and transaction performance data from the Keynote Broker Trading Index, and the Keynote Retail Benchmark, as well as other Keynote data. The report concludes that transactional latencies will eventually become the dominant factor in Web site abandonment, particularly as still-prevalent dial-up modems are replaced by higher-speed connections.

Zona Research also reveals the effect on performance of Web page design and page assembly at the server. The $25 billion in lost Web business includes over $21 billion per year lost when users abandon a site due to excessive delays in Web page transmission. $4 billion, or 7.9 percent, of the revenue loss was found to be due to transmission errors caused by the Internet infrastructure, still a significant factor in site abandonment.

In its report, Zona Research adapts a multi-page cumulative abandonment concept developed for Web load testing by Alberto Savoia, chief technologist for Keynote's KeyReadiness™ load testing service. Savoia's Law states that users abandon sites based upon demerits, or ‘dissatisfiers', accumulated as users wait beyond their patience threshold.

From its review of Keynote's measurement data, Zona Research concludes that consumer Web sites, particularly retail sites, have actually increased latency times, or user wait, by over 20% over the past year. "It is clear that retailers are much more concerned about delivering fancy graphics and dynamic banner ads to Internet buyers than they are with delivering acceptable performance levels to potential buyers," said the report. Online brokerages, on the other hand, have made their sites more responsive.

Zona Research also found billions of dollars in site abandonment potentially lost due to performance variation in local geography and backbone differences. The performance of a set of Web transactions as measured by Keynote's Transaction Perspective™ service from 10 U.S. cities varied by 16 to 83 percent over the fastest path, amounting to between $7.4 and $11.0 billion in site abandonment.

Finally, the Zona Research report observes that the $25 billion in abandoned revenue is not necessarily lost forever, but represents potential sales for Web sites that can deliver a high-performing user experience. The report claims, "While retailers should definitely view pieces of that $25 billion as potential lost revenue due to their own poor performance, they can also view it as the total cross-industry potential for picking up revenue from competitors with clumsier Web sites than their own."

"Web user dissatisfaction and abandonment due to accumulated Web page delays is costing Web sites a lot of business," said Savoia. "A blazingly-fast home page is only part of the performance equation. Our dissatisfactions and abandonment models clearly show that there is a significant risk of losing a user on every single page in a multi-page transaction. Web site administrators and IT need to be particularly concerned about performance under heavier loads. In most of the load tests conducted by our Web site scalability testing group, we see that small increases in page response time lead to significant increases in user dissatisfaction and abandonment."

Online Affinity Banks Are Succeeding
New online banks are successfully targeting groups such as long-haul truckers, high-tech workers and the gay and lesbian community, says a new report from Meridien Research.

"Affinity banking offers a solution to small institutions fighting to carve out a niche and survive in the fiercely competitive online banking space," said analyst Christine Barry. "They can differentiate themselves, increase customer loyalty and reduce customer acquisition costs."

Affinity banking lets consumers show pride and support for groups they're affiliated with. For some people, that's more important than the bank's fees or interest rates.

Virtual Bank, a Florida-based company, has adopted this strategy by working with technology companies such as EMC, Textron, Compaq and WorldCom and creating co-branded banking sites for their employees.

While these affinity banks have gotten off to a fast start, it's uncertain whether the business model will succeed over the long term, Meridien says. These banks will face growing competition from big banks that are investing in customer relationship management tools and starting to customize their services. Affinity banks may simply provide a quick fix.