The High Price of Internet Disruptions: New Study Reveals the Financial Impact on eCommerce Companies

Internet disruptions can be a real headache for any organization, but for eCommerce companies in particular, they’re proving to be a lot more than just an inconvenience. A new study by Forrester Consulting is bound to send shockwaves through the industry by quantifying the actual cost of Internet disruptions. Spoiler alert: it’s higher than you think.

Early this year, Forrester conducted a study that surveyed eCommerce strategy and technology decision-makers from North America, Europe, and Asia Pacific. The study focused on the financial impact of Internet disruptions and the role of Internet Performance Monitoring (IPM) in mitigating risk and enhancing revenue. Here’s a sneak peek of the study’s primary findings.

Millions of dollars are lost annually to Internet disruptions

Forrester found that 88% of respondents estimated that their companies lost over $100,000 due to disruptions in the month leading up to the survey. Over a year, this translates to $1.2 million annually in losses. Moreover, 51% reported losing over $500,000 in the previous month alone.

The correlation between Internet disruptions and revenue loss is clear for eCommerce companies - if the site is down, sales will suffer. However, the study reveals that there are other factors at play that make disruptions even more costly for eCommerce businesses.

The financial impact is just the beginning

Customers expect flawless digital experiences, and rampant Internet disruptions are causing customers to abandon their purchases and companies to lose millions of dollars. Tolerance for disruptions is at an all-time low, with customers and employees expecting seamless digital experiences. In fact, 74% of respondents reported that customers have little tolerance for disrupted experiences, while 71% said that employees expect the same frictionless digital experiences as customers.

According to the study, “As digital experiences become essential to business and everyday life, tolerance for disruptions is at an all-time low. This means when companies do not meet these expectations, customers and employees alike are more likely to find somewhere else to go.”

The impact of customer churn

The study also found that Internet disruptions lead to increased customer churn, with 65% stating that even small disruptions in the flow of commerce can cause customers to halt their purchase cycle.

Customer churn is a crucial metric for eCommerce businesses because acquiring new customers is more expensive than retaining existing ones. Loyal customers are more likely to make repeat purchases and provide positive reviews, which can help attract new customers. When disruptions lead to increased customer churn, it hurts a company's bottom line and makes it harder to grow. It’s no wonder 61% of respondents said Internet disruptions have resulted in lost revenue.

Full Internet Stack monitoring is not yet widespread

Forrester’s data shows that eCommerce companies struggle to identify, resolve, and prevent disruptions and successfully manage Internet performance. Apparently, only 29% of respondents said that their companies monitor the full "Internet Stack," which includes routers, firewalls, ISPs, DNS, CDNs, cloud services, website payment providers, video hosting services, and more. Forrester considers this a major issue, stating, “Given the importance of Internet performance and the impact disruptions have on business success, this number should be closer to 100%.”

This lack of visibility resulted in an average of 76 disruptions per month.

IPM can significantly increase revenue

So, what can eCommerce companies do to mitigate the risks of disruptions? Forrester strongly recommends investing in Internet Performance Monitoring (IPM) - a new generation of solutions that provide complete visibility into the Internet Stack to identify issues before they impact the business.

As the Forrester study notes, "It’s no surprise respondents report quickly identifying disruptions is incredibly challenging, given how few have invested in IPM." It also says, “Companies that don’t invest in IPM are vulnerable to huge financial losses as service disruptions drive away customers and employees.” 

The fact that 75% of respondents said IPM would deliver a “large” or “significant” increase in revenue is quite telling.

"The survey findings make a strong case for IPM, quantifying the consequences of not closely monitoring all aspects of a customer’s experience and addressing issues before they happen,” said Howard Beader, Vice President of Product Marketing at Catchpoint. “Monitoring the entire Internet Stack isn’t easy, with thousands of blind spots that could become disruptions or affect experience, but clearly failure to do so is having a material impact on businesses profitability and productivity.”

To learn more about the impact of Internet disruptions on eCommerce companies and how IPM can help mitigate these risks, download the full study by Forrester Consulting.

Watch a recording of the launch webinar with guest speaker, Vice President, Principal Analyst at Forrester, Sucharita Kodali.

To find out more about Catchpoint IPM and how our five enterprise solutions can help you enable Internet Resilience, download the Catchpoint Overview