Moore’s Law and eCommerce Conversion rates

by Jim Cain

We had a great time at the Internet Retailer conference in Chicago last week. It’s always great to get some face-time with our customers and partners, look at new business opportunities, and see what kinds of technologies are coming down the pipe.

There were over 500 exhibitors this year at IRCE, and apart from some interesting new tech, the thing that really resonated with me was that the standard boilerplate one liners hadn’t changed when it comes to technology impact.

“We will double your eCommerce conversion rates”
“Every campaign you run with us will improve conversion rates”
“We will let you take control of your conversion rate”

Et cetera, et cetera…

When I was on the vendor side 6 years ago, we were using the same pitch, and it is both as effective and as untrue now as it was then. There are almost no vendors who have analytics tie in as part of their onboarding process. By this I mean as part of their product deployment, the vendor gives best practices and support around seeing the impact of their tool inside your Google Analytics/Yahoo Analytics/Coremetrics/Omniture reports.

This isn’t to say that vendors don’t provide reports. It’s just that each tool reports in a silo that doesn’t allow the client to see the impact on their overall business and central reports. This makes it next to impossible to see the impact of all your technology initiatives on your conversion rates.

Moore’s law and the ever-growing conversion rate

Moore’s law, which was written by one of the founders of Intel in 1965 about the increase in the effectiveness of computing power, states that:

“The complexity for minimum component costs has increased at a rate of roughly a factor of two per year… Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years.”

What he is basically saying here is that the power of computers will double every year for at least a ten year period. He was right on the money.

Now in order to achieve this annual doubling, all of the components that equal computing power need to be working together and centrally reported. In fact the quote above is from an article from 1965 called “Cramming more components into Integrated circuits”.

I don’t know a single online retailer who hasn’t bought into the Moore’s law pitch in regards to their conversion rates – they think they can just keep doubling conversions if they keep adding new parts.  I also don’t know any who have ever definitively proved that this has happened.

By tying all your vendors and initiatives into your web analytics tool, you have the ability to created the ‘integrated circuit’ that will allow you to map out, understand, and optimize your eCommerce conversion rate.

Next week, we’ll look at an example of why you need to get all your data eggs in one basket and talk about how an eCommerce firm grew sales by 40% through understanding analytics.

Jim Cain

Founder and CEO, Napkyn Analytics

See more posts from Jim