An e-Commerce site behaves like a smaller version of a general stock market where buyers’ behaviors are constantly changing. Despite this, most e-Commerce professionals are neglecting time variables as they relate to the performance of their own e-Commerce site. This leads them to make misinformed and sometimes poor business decisions.

Key Takeaways:

  • Visitor behavior is time varying
  • e-Commerce sites must be able to adapt to changing visitor behavior
  • Learn about innovative technology

The market situation is constantly changing…

As we close the book on 2012, many of us are checking our investment statements and portfolios to learn how we’ve done over the course of this past year.

No matter which market index or individual stock you look at, you’ll see fluctuations that are driven by investors that behave differently from one time interval to another.

Here is the most recent S&P 500 chart:

S&P 500 Chart: 1/3/2012

Just about any piece of news can move markets significantly up or down. The only certainty about the stock market is that buyers and sellers will behave differently from one moment to another.

… and your e-Commerce site changes, too

Visitors to your e-Commerce page (potential buyers) are being exposed to many factors on a daily basis: competitors’ promotions, news, seasons and holidays – each with the potential to cause daily changes in their behavior or preferences.

Many e-Commerce pros do recognize fluctuations in their visitors’ behaviors, but believe that those changes are small, relative to the average value of a particular metric.

Real-world web visitor behavior is surprisingly different. In fact, if you analyze time-varying reports like the one below, you’ll quickly realize that your e-Commerce site’s performance resembles the same kind of fluctuations observed in the S&P 500 chart:

e-commerce performance fluctuations

The magnitude of change is quite remarkable. For example, the chart above is an example of a real life e-Commerce brand where RPV fluctuates from as much as $27 to as little as $7 per visitor.

… so, why is time so important?

It is unfortunate, but ignoring the time-varying nature of your web visitors’ behavior can have a huge negative impact on your e-Commerce Revenue Performance Management (eRPM) strategy.

Here’s why:

A majority of e-Commerce professionals are now realizing that they cannot achieve revenue growth through demand generation initiatives alone. Spending more money to buy more traffic is becoming increasingly risky and complicated – It is a game with diminishing returns. Instead, they are focusing on the visitor experience and the revenue performance of the e-Commerce site itself.

The most widely-used approach is to run A/B or multivariate testing (MVT), or to apply personalization solutions to squeeze more revenue from existing web traffic. Testing vendors are advising companies to test content, layout, or functionality of the web pages and then to implement the winning versions. Similarly, rules-based targeting vendors are encouraging the personalization of web content for different audiences or types of visitors.

Although both of these approaches seem sound on the surface, they fail most of the time. The reason for this failure is the time-varying nature of the web visitor behavior, which makes it highly unlikely that there is any single version of a web page that is consistently “good”. In other words, what may have worked in the past will more than likely not work in the future. As shown in the chart above, a static version of your e-Commerce site fluctuates significantly over time, and this significantly reduces the revenue growth potential of any online testing or personalization solution.

HiConversion to the rescue

We’ve pioneered and patented a disruptive e-Commerce optimization solution that adapts to a visitor’s behavior in real time, allowing e-Commerce professionals to achieve consistent and predictable e-Commerce revenue growth.

The optimization algorithm leverages big data, predictive analytics, and multivariate modeling to adapt to fluctuations in visitor behavior as it happens.

The chart below shows the real-time optimization algorithm in action, demonstrating its ability to adapt to visitor behavior change while also producing an overall +21.52% RPV lift.

another set of e-commerce revenue fluctuations

That 21.52% RPV lift translated into hundreds of thousands of dollars in new sales for this client – money that they wouldn’t have had without an adaptive optimization solution running in the background.

e-Optimizer® chart showing overall revenue lift

Conclusion

The time-varying nature of your visitor’s behavior is not well understood in the e-Commerce space. As a result, companies are making business decisions and selecting testing or personalization tools that are not capable of adapting to visitor’s ongoing behavior changes.

For those who are interested in learning more about this aspect of e-Commerce business we recommend our white paper: Beyond Testing and Personalization of e-Commerce.