You gained a lot of customers during the Internet boom. Now every time they use your site, especially when they don't buy anything, they're inflating your operating expenses. Here's how to shed those unwanted costs and reveal a slimmer, more profitable you.
How many Web pages can you serve for one cent?
Do you know? Do you care? You should. While your e-commerce operation may not generate the traffic of an Amazon or an eBay, that doesn't mean you shouldn't be concerned about how much each visitor costs you.
Because, almost invisibly, those costs may be bleeding you.
In the early days of the Internet boom, "stickiness" was the goal. Drive the masses to your URL, trap them with the digital flypaper of your clever applets and riveting content - and worry later about how you were going to make money off them.
Now it is later.
For certain, the Web has cut a lot of fat from the cost of dealing with customers. Self-service online apps reduce the need for customer service reps. Online sales cut the requirement for expensive storefronts and pricey human help. But companies have already extracted all the easy dollars; the bottom-line battlefield is beginning to move to the cents.
Spurred by a desire to find any and every way possible to add to the bottom line, many companies have begun to do the maths and are making changes designed to decrease the costs they incur per visitor (call them transaction costs) or drive up the average revenue earned from every person who hits their site. From tweaking the user interfaces in an effort to help visitors buy more, faster, to testing ways of filtering out the window-shoppers, to fully reconstructing the back-end infrastructure, smart e-commerce execs are finding ways to wring every extra cent out of what was often a slapdash operation put in place during the boom-boom 90s, but which now must justify its existence based on profitability, not pizzazz.
The savings are out there.
How you find them depends on the particular challenge your business is facing.
Sabre Holdings is the $US2 billion corporation behind such travel services as Travelocity, the Sabre Travel Network and GetThere. Few industries have been changed by the Web as much as travel.
"The basic shift is from expert agents - professional agents - to consumers or intuitive users," says Craig Murphy, CTO at Sabre Holdings. "An expert agent wants targeted information; a consumer wants more options. More options take more data processing."
As consumers demand more features - everything from search tools to weather reports - they are also more likely to spend time browsing and dreaming about a trip than they are actually buying tickets. Consequently, the "look to book" ratio is going up, Murphy says.
Since keeping costs low is key, Sabre last year began to shift from HP-UX Unix platforms to Red Hat Enterprise Linux AS on Intel running the open-source MySQL database.
The reasoning behind this change is straightforward. With proprietary systems, every time Sabre needed to add a server because of increased load on the site, it had to pay significant incremental hardware and software costs. But with Linux and MySQL, Sabre can duplicate a standard software configuration onto a low-cost Intel-based computer for a fraction of the price. So the daydreaming jet-setters can keeping dreaming, without breaking Sabre's bank.
Solution: Use open-source software to reduce overall computing costs.
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