Connectivity matters – once the network stops working, things get difficult.
£3.7 billion and over 50 million hours; that’s what UK businesses lost from Internet downtime in 2023. Despite the incredible amount of digital transformation happening before our very eyes, especially in the retail sector, unplanned IT outages are still a burden that’s been so stubborn to address. But while the bottom line is directly impacted from network downtime, there are indirect costs that threaten to do more than deprive a business of revenue.
These indirect costs are more subtle and prove to be damaging on a variety of fronts in the long-term. With customers now expecting all their wants and needs to be addressed at their own convenience, the crippling impact of downtime is something no retailer wants to endure. Without a network that’s reliable and robust, downtime becomes more than just an annoyance – it becomes a real threat.
What causes network outage?
Before exploring the impact of downtime, it’s worth mentioning the causes behind unplanned outages. Understanding the numerous scenarios that can occur is a key step in crafting a more complete strategy to both prevent and remedy downtime. The sooner the issue can be remedied, the less an organisation must suffer at the hands of an outage.
Some of the common causes for downtime include:
- Human error – the complexity and stress of managing network infrastructure means even well-trained IT professionals can slip up (even if it entails simply pulling out the wrong plug!)
- Hardware failure – older devices are subject to overheating and a gradual degradation in performance, with continuous maintenance becoming a costly and time-consuming process that only staves off the inevitable
- Cybersecurity attacks – ransomware and phishing attacks can bring any organisation to a halt, with dangerous outside players exposing gaps in the security infrastructure and causing havoc
- Software failure – by not taking the time to adequately test, or even regularly update, existing software, then systems can become corrupted by bugs and other vulnerabilities which can easily disrupt the wider network
- Increased demand – with customers interacting with High Street brands across multiple touchpoints, network infrastructures are becoming more complex and require more tools to function properly; failing to anticipate increased demand can cause the network to fail
- Factors beyond control – power outages and natural disasters can easily disable the network infrastructure, with the scale of these occurrences potentially causing downtime for a prolonged, and costly, period of time
Mitigating these causes is a topic for discussion later, but for now we can focus on downtime and how costly it can be.
Downtime and your revenue
For every minute that passes by when the network stays down, it’s another minute that deprives a business of generating sales. 53% of IT leaders cite the loss in revenue as their greatest challenge when faced with an unplanned network outage, and for good reason.
Downtime can result in an average loss of over £80,000 an hour, with these losses easily stretching into the millions if the network remains out of action for a significant period of time. It’s the most immediate consequence of an unplanned outage.
That revenue can be lost in both the physical and digital space, as retail enters the omnichannel age. Point of sale (POS) devices are, of course, vital to processing customer payments, and the number of touchpoints customers can utilise is rapidly expanding.
Self-checkouts, for example, are now becoming more common across retail spaces, while greater focus is also being placed on websites and ecommerce to keep pace with changing customer spending habits. The number of digital buyers worldwide stands at 2.71 billion people, and network downtime deprives those online-focused customers of the power to purchase.
That downtime also means the money spent on search engine optimisation (SEO) and paid advertisements will go to waste. Revenue generated from ad-influenced conversions won’t come to fruition, while a lack of website availability and functionality will cause a website to fall down the search engine rankings. While ranking recovery should begin in a week or so, search engines give priority to active websites and downed websites are under threat from being de-indexed.
Revenue generated from ecommerce will certainly take a hit from that.
81% of retailers report POS downtime at least once a year, and as customers start to frequently run into challenges caused by network downtime, they become frustrated. The revenue starts drying up… and so do the customers.
Downtime and your customers
81% of organisations agree that customer experience (CX) is a huge differentiator between competitors. In fact, 90% of customers have said that the experience provided is far more meaningful than the products and services. Adapting to customers and their ever-changing preferences is paramount for any business looking to outdo competitors, but when downtime strikes, it’s your customers that feel the brunt.
After only one bad experience, one in three customers are more than happy to walk away from brands. That’s how much is at stake when an unplanned outage occurs, and the system goes down. When customers can’t even make the simplest of purchases, they’ll turn to a competitor to make sure they get the service they need.
If this period of downtime is prolonged, or even becomes a more regular occurrence, then that precious trust and sense of loyalty customers feel for brands begins to erode. One-off purchases at one High Street brand starts to become more consistent, with customers starting to form a new relationship with that competitor.
In an industry as competitive as retail, customer churn is something that’s better avoided; after all, acquiring new customers is five times more expensive than retaining them.
That negative brand reputation is hard thing to shake, with one in three retailers reporting damage to their brand during one of these outages. Customers seeing brands having to continuously pay fines due to breaking their Service Level Agreements (SLAs) relating to uptime, or industry-specific requirements, will start doubting whether to continue doing business with that specific brand. Indeed, that downtime leads to an increased number of customers turning to support services to find the answers they need.
However, that surge in demand means long response time and further dissatisfaction. 90% of customers cite instant customer service as crucial, and having to deal with below-par first response times will only cause customers to get more frustrated and disillusioned. More anger, more churn – it’s as simple as that. Of course, don’t rule out the possibility that downtime also brings customer support services into chaos, which only adds to the growing frustration.
With the number of customers starting to dry up, it’s not just reputation and revenue that drops. Without having real-time customer data at hand, the High Street once again starts to suffer at the hands of downtime.
Downtime and your data
Retail is just one of the many industries that rely on data-driven insights to enact digital transformation. Customer data can come in numerous forms, such as product preferences and basic shopping patterns, and is critical to building a more customer-centric experience. A deeper understanding of the buyer journey, in both the online and offline realms, helps to create that seamless, personalised experience customers are craving. But without that data, retail leaders are left blind.
When POS systems go down, vital transaction data is lost, such as the products purchased and their location, which deprives retailers of information on how to further personalise that customer’s experience. Customer data can also be leveraged to better manage inventory and avoid the possibility of either having too little stock to satisfy customer demand or overstocking and wasting precious capital.
Cameras that can also be used to track and better analyse the exact movements of customers around a store will also be offline, causing those insights on how to map out store layout and understand where customers spend most of their time to be lost.
Utilising customer analytics means organisations are 23 times more likely to outperform their nearest competitors; losing that access to data, even if only for a few hours, can have a massive impact in the long-term.
What makes downtime even more dangerous is the potential loss of existing data itself. If a system is disrupted, existing data can easily become corrupted, or even stolen in the case of a nefarious cyberattack. Not only will it cost both time and money to recover that data, but reputation will have to be reclaimed as well. After a data breach, 46% of organisations suffer damage to their reputation, and customers will think twice about purchasing from a brand that is open to attacks on their systems.
Again, it’s another devastating long-term effect of downtime, especially when considering that losing customers to competitors will deprive High Street businesses of that data so vital to providing a better experience.
Identifying existing weaknesses in your cybersecurity estate is an excellent way to protect customer data, but downtime will still decrease the number of opportunities to collect, and act upon, customer data. That unplanned outage will also have a direct impact on another integral component of any successful High Street brand – productivity.
Downtime and your productivity
As technology becomes more integrated in the daily operations of businesses across various industries, a greater number of tools are needed to ensure that everything stays fully functional. When the network goes down, employee productivity is severely impacted, with POS devices, cameras and sensors all being temporarily out of action. On average, companies lose 545 hours of productivity, which clearly demonstrates how costly downtime can be.
As retail gradually becomes a paperless environment, employees are left stranded as the tools and programmes they need to work are temporarily unavailable. Without any efficient work taking place, it becomes difficult to recoup any ongoing expenses from the value generated from sales. What can make this employee idleness even worse is if network outage becomes a more regular problem, as it can directly affect morale.
The average turnover rate in retail stands at just over 50%, and continued disruption won’t help address the ongoing problem of employee retention.
That decline in productivity is felt not just by employees in stores, but right across the supply chain as well. Again, automation and the Internet of Things (IoT) are becoming fixtures in warehouses and depots, utilised in various forms such as processing orders, monitoring inventory, and even maintaining the quality of products. Downtime puts these operations at risk, as shipments are missed, stock can’t be monitored quickly, and product can become spoiled.
Customers expect businesses to be ‘always available’ and won’t look favourably upon retailers who can’t perform reliably.
Unplanned outages can be felt across the ecosystem, bringing disruption to employees in traditional brick-and-mortar stores and those maintaining operations across the supply chain. That break in continuity is a great risk to the fortunes of any business, and only give more precedence to the need to have a network that is always operating at peak performance.
Defeating downtime with innovative infrastructure
Downtime can happen in a blink of an eye and can be hard to anticipate. Retailers don’t want to experience the numerous costs that come with such disruption and must be ready to transform their network capabilities. The task may seem daunting, but working with an accredited and respected managed service provider (MSP) like Gamma can make that step towards networking excellence far less intimidating.
Thanks to proactive monitoring and a dedicated support team, the downsides of downtime can be minimised while guaranteeing both strong connectivity and enhanced productivity. With a system that’s always up-to-date and strategies in place to protect against critical data loss, High Street businesses are within reach of achieving networking excellence and providing a clear path to re-imaging business communications.
Downtime doesn’t seem so undefeatable, does it?