ROI: the importance of speed

Websites that load quicker increase brand satisfaction, brand engagement, goal completion, traffic, conversions, average value per visit and decrease abandoners. This section will elaborate on these returns; and explain the urgency why you need to spend your valuable time on this important matter.

Returns

Brand satisfaction

When web pages are loading quicker, visitors can experience more of the pages that represent the brand. They will be able to search through more information within the same time, and are thus more likely to reach their goals. Visitors are less frustrated by waiting, and they are more likely to experience the flow, an enjoyable mental state known in psychology that makes you really focused on your tasks at hand.

So not only can we impact and provide more marketing messages to our consumer, they are also more likely to fulfill their goals and become less of a detractor due to long waiting times.

By speeding up your websites, you can easily increase the brand preference with several to tens of percentage points.

Traffic

Quicker loading times will lead to more unique and returning visitors.

Visitors who have experienced a slow website are likely to stay away the next time. Jupiter Research shows that a long loading time is one of the main reasons for not coming back. To take an example from the offline world: when you can choose for two groceries, with equal offerings, but one is known for having no queues at the counter, you will definitely go for the quick one. Obviously this offline behavior is equally found online.

Not only will you benefit from returning visitors. Due to an increase in brand engagement, it is more likely that visitors will recommend their friends to visit your website. However there is also a more “hidden” effect that can eventually be very strong. The page loading time on your natural search traffic can have huge impact; search engines will also give you a higher page rank due to improved quality score, leading to more search engine traffic.

Google’s philosophy is to serve the right content, quickly. Although you might have the right content on your website; if your website is not serving it quickly it won’t fit their philosophy – and you’ll be punished (heavily) for that. This not only affects natural search. Speedy pages make even your Google campaigns more effective as the quality score influences your ranking on sponsored links as well.

So improving speed loading times will drive more traffic from search engines, will give you more returning visitors and gives you more unique visitors due to increased brand satisfaction.

Conversion

Page loading time is strongly correlated to conversion. No matter if you want to convert towards a direct buy, sending leads to retailers, capturing user information (e.g. have them register) or influence social media; faster pages will increase those conversions. When page loading time is quicker, consumers see more pages, reach more goals, and are much more likely to convert; this leads to more direct and indirect revenue.

When operating an e-commerce website, the opportunities to increase revenue are even greater than conversion alone. It is also likely that the average order value (AOV) goes up significantly. The AOV will increase because visitors spend more time browsing different products and you can provide them more easily (without the risk of loosing them) with cross-sell opportunities during check-out.

Again to make the comparison in the offline world: imagine you manage a team of sales agents. Suddenly one of them tells you about a effortless way to increase conversion with 20%. Would you opt for this? Of course you will!

Whenever you have to prioritize your valuable time and set your priorities – ensure speed is on your list. And to be sure about your priorities – calculate the business impact on your investment.

Business Case

Speed improvement example

Below we analyse an example of an e-commerce website that has improved their loading time. We suggest that you do a similar calculation based on your own real world figures. I will give you a spoiler: due to the multiplying effect of speed, a minor speed improvement can have a huge effect on your earnings.

Imagine you operate a website that receives 100k UV of traffic a month. Two percent converts into a sale with an AOV of 200 USD and a profit margin of 10%. The average page loading time is 5 seconds.

You invested initially 80k USD to set this website up and you spend 10k/month on hosting and maintenance fees and 20k/month on traffic generation and another 40k USD on versatile costs.

Your investment in traffic generation generate 30k UV via Google adwords and 20k UV via other affiliate programs. Rest of the traffic comes from natural sources: 10k UV comes from natural search and the remainder of 40k UV comes from (offline) communications, PR, social media and other referrals.

Investments to operate first year
Setup costs 80k
12 x monthly maintenance costs (10k) 120k
12 x monthly traffic generation investments (20k) 240k
Other costs 40k
TOTAL INVESTMENT: 480,000 USD


Returns after first year – without speed optimization
Visitors 1.2M UV
Conversion 2%
AOV 200
Profit margin 10%
TOTAL RETURNS: 480,000 USD
ROI break-even

Now imagine that you invest 50k USD and you manage to get your loading time from 5 to 3 seconds – which is absolutely viable. The page loading time decreases with 40%; which would imply that visitors can see 40% more pages in the same time as they spent before. Besides, as they enjoy the site more, they are likely to stay longer, and also: your visitors are more likely to come back. Due to these reasons conversion will go up significantly, as well as the AOV. It is reasonable to assume that conversion will increase with 25% and AOV with 10% or more. These numbers come from the experience of real cases.

Due to improved loading time, Google’s page rank will score your pages better – so natural traffic will grow significantly, as well as your adwords campaigns. Traffic from both sources can easily increase with 20%, boosting your traffic from 40k to 50k UV/month reaching a total of 1.32M uniques.

Returns after first year – with speed optimization
Visitors 1.32M UV
Conversion 2.5%
AOV 220
Profit margin 10%
TOTAL RETURNS: 726,000 USD
ROI with extra 50k on WPO 196,000 USD (37%)

Just by improving the website from an average loading time from 5 seconds to 3 seconds makes this website suddenly profitable within the first year 196,000 USD instead of a being break-even! This is caused due to the multiplying effect; the improvements result in more traffic, higher AOV and higher conversion.

Conclusion

Many websites operate without serious attention to speed optimization. Even if you do not manage to get 10% increase of traffic, 25% higher conversion rates and 10% AOV as in above example – we hope this still gave you the eye-opener that your speed investments will pay off.

Well, now it is up to you to do the math yourself with the figures that apply for you. What do you get in theory? What are your real results? Share with the community so others can learn from you. Place you comment below.

Some related infographics / material:

http://www.technologyreview.com/files/54902/GoogleSpeed_charts.pdf

http://www.gomez.com/wp-content/downloads/GomezWebSpeedSurvey.pdf

http://designsbytes.com/2011/04/06/great-infographics-on-importance-of-website-load-speed/



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