Revenue Attribution – What, Why, and How?
Marketers run campaigns on different channels – social media, search engines, emails, etc. Tracking conversions from these channels is fairly simple. You install the tracking pixels provided by these channels on your website and the pixels track conversions when they happen and attribute to respective sources. Easy! But, if it were that simple, what would bring you here? The answer – you are a B2B business.
Conversion tracking works great for B2C businesses like eCommerce. You add conversion tracking to ‘Add to Cart’ or ‘Purchase’ and that is it. B2B businesses, on the other hand, have a complex selling process. The sales process takes months, has higher ticket values, has sophisticated pathways, and involves multiple decision-makers. Clearly, traditional conversion tracking alone won’t cut it. This is why we need marketing and revenue attribution.
What is Revenue Attribution?
Here’s how a traditional funnel looks like…
Marketing teams generate marketing qualified leads and that’s where their job ends. To serve qualified leads to the sales pipeline from where the leads would go to SDRs, BDRs, AEs, etc. You know the drill!
Now, this is a long and complex process and marketing can find it complex to connect the purchase with the original touchpoints. Where did the lead originally come from? Which campaign? Which ad copy? Which keyword?
Revenue attribution helps marketers connect purchases with various marketing touchpoints and activities. It can enable you to say something like “We have closed 30 deals worth $100k this month from our Google Search Ads on X keyword with a customer acquisition cost of $300.”
Revenue attribution can be considered a part of revenue marketing where marketing is connected to revenue. Aside from that, you can also know which channels are working and which are not and scale accordingly.
Benefits of Revenue Attribution
So far, we have talked about the analytical benefits of revenue attribution but that’s only one key benefit. Revenue attribution has butterfly effects in your entire selling process. Let’s look at all the benefits of revenue attribution.
Need to generate revenue reports to show how exactly your campaigns have contributed to revenue? Revenue attribution will help you measure profitability of every campaign you run.
A survey conducted by Fournaise Group found that 80% of CEOs do not trust or are not very impressed by the work done by marketers. Ouch! Revenue attribution helps you change their perceptions and lets everyone know exactly how you contribute.
Resource Optimization and Scaling
Remembering the Pareto Principle, 80% of the outcomes come from 20% of the efforts. Revenue attribution helps you tie specifics of your marketing activities to revenue and lets you know what works and what does not. This means you can spend less time and resources on mundane tasks that are not directly contributing to revenue.
Identifying profitable high value channels also means that you can route your budget to those and scale them easily.
Attributing revenue to channels and customer profiles also means that you can prioritize leads having desired attributes and coming from desired channels. Have you discovered that traffic coming from Linkedin belonging to the Hospitality industry with employee count between 50-200 converts the most? Why not prioritize them and have live chat reps attend to them when they are on your website?
Prioritizing leads means you put more resources on the best prospects which in turn translates to better quality customers.
Sales and Marketing Alignment
With revenue attribution, marketing can pass on projected revenue and other marketing attribution data to sales reps. This means they not only get to prioritize the bigger deals but also get key marketing information that can help them understand motivation and close deals more efficiently.
For example, if the attending rep knows that a lead came after searching a high intent keyword (which is a solution of your product), he/she can tailor the conversation to resonate with it. Also, knowing the ticket sizes will help reps maximize their productivity.
Solving the Limitations of Conversion Tracking
Conversion tracking, as I mentioned earlier, is fairly straightforward. It tracks specific events on your website and your advertiser’s platform and connects it to the visitor on a holistic level. What this basically means is that if you set up tracking on form submissions, you will get to know how many people filled out the form and from which campaigns they came from. So, if you are selling a $10 product and the purchase happens in a short span of time, everything is tracked on time and the report looks great as you look at data of thousands of customers. Now, how does that resonate with a $50k deal? The original lead comes from one computer and his/her colleagues visit from other computers and the deal goes on for weeks. Maybe, months…
This is where you need attribution. Revenue attribution tracks the entire customer journey from multiple touchpoints and connects these touchpoints to revenue generation. So, while conversion tracking connects X to Y, revenue attribution connects the entire story. From there, you can analyze the data to know what sales and marketing engagements are actually impactful. For example, let’s say a re-engagement email got a cold lead back to your website who was then impressed by a specific piece of content. This lead, later down the line, purchased your product.
Attribution will help you understand the causes and effects and connect to revenue.
Revenue Attribution Models
Attribution models can either be Single-Touch or Multi-Touch.
In single-touch attribution, you attribute conversion to only one touchpoint. So for example, if you are attributing to the original visitor source and the customer originally came from a Facebook Ad, the campaign gets credited when the conversion happens. This will always be the case even if the customer was compelled to purchase after reading an email from you.
Using single-touch attribution, you connect revenue generation with a particular action, something which can easily be done with conversion tracking. And, this is something B2C businesses will use because the purchase happens relatively fast and attributing to one key action is usually enough.
Single-touch attribution is usually done through either first touch or last touch.
This attribution strategy credits conversion to the very first touchpoint. No other touchpoint is credited in this model. For example, if 100 customers buy a $100 product coming from a Facebook ad campaign, the revenue for the campaign will be marked as $10,000 and all the credit for conversion will be given to the campaign.
This is by far the most common B2C attribution strategy and uses conversion tracking provided by the distribution platform (Google, Facebook, Twitter, etc.). This model is also useful for B2B businesses.
The last touch attribution model credits the final action the user takes before converting. For example, if a lead receives an email with a discount coupon and the purchase gateway link and goes ahead to purchase, the email with the coupon is what gets credited for the conversion.
The idea behind this stems from the fact that the last touchpoint made the customer convert. This might be an email with a discount coupon, a pop-up, or simply critical information. Unlike first touch attribution, this does not aim to connect campaigns to revenue. Instead, it wants to know touchpoints that are purchase influencers.
The biggest advantage of this strategy is that it has very little room for error. Why? Let’s think of this scenario. A visitor comes to your website after interacting with an ad on Google Search using a desktop. Now, this person gets added to your audience through the Facebook pixel and sees a retargeting ad from you later while browsing from a mobile device. If you were using first-touch attribution, joining the dots here would be very hard. But, with last-touch attribution, the last action the user performs before the conversion happens from the same ‘session’. This leaves very little room for error.
If you are a B2B business, once you master single-touch attribution, it is time to graduate to multiple-touch.
While discussing single-touch attribution, the shortcomings of it became very apparent. You can only credit one particular event for the conversion and it works for one person who is the lead and the buyer. But, in B2B, there are several moving parts – several touchpoints that heavily influence conversion, several decision-makers, several sales reps, and a long and complicated process before purchase. Therefore the need for understanding the effects of different touchpoints is evident, especially when you are closing 5 or 6 digit ACV deals.
Multi-touch attribution is what B2B businesses need and it is what we have focused on, in this article. With this model, several touchpoints are weighed and credited for the conversion.
In a linear model, all chosen touchpoints in the customer journey are given equal weightage. So, if filling out a form is a touchpoint and watching the product webinar another touchpoint, both are credited equally for the conversion.
The advantage with this is that it is a fairly simple model where you don’t have to scratch your head and decide which touchpoint is more important. This advantage is also its downside. Not all touchpoints are equal and using this model, it is hard to understand which touchpoints contribute more to the conversion.
Time Decay Attribution
The time decay model credits touchpoints based on the time of interaction. In most cases, the most recent touchpoints are credited more for the conversion.
This model can be considered a more sophisticated version of the last touch model. A spiritual successor, if you will. Instead of attributing only to the last touchpoint, it makes the assumption that the later touchpoints are more important for the conversion than the earlier touchpoints and credits points accordingly. While it gets things right where later engagements drive leads to purchase, it also disregards initial touchpoints which are key to revenue attribution.
U Shaped Attribution
The problems of the Time Decay model are solved with this model. The U-shaped model gives more importance to the first and last touch than the rest of the funnel. This is the most balanced model considering the fact that you attribute what brought the lead and what got them to purchase at the end of the day.
While the U-shaped model prioritizes the crucial first and last touchpoints as they are important for the sale, it downplays the middle of the funnel. This is a problem because the middle of the funnel is what keeps the customer engaged. But, compared to other models, this is still the most balanced attribution model.
These are some of the most commonly used attribution models you can get started with. Eventually, the model you create will be based on what is important for you to understand revenue channels and expand them. Different companies create different customer journeys and it is impossible to find one size that fits all.
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