In today’s world, it is more important than ever to understand…
- The inability to accurately measure and attribute revenue across multiple customer touch points means marketing decisions are rarely based on what actually drives value.
- Companies that are able to properly attribute revenue see better returns on their marketing dollars — at a lower cost.
- Data transparency shows value to all levels of the organizations, which proves marketing’s worth to the business.
Content: As the father of a two-year-old I’m used to seeing some interesting works of art. Who knew that Mickey Mouse was purple or that scribbling with 15 different colors of crayons on a picture of the Easter Bunny is the way he, or she, is supposed to look.
When my daughter came up to me and asked what I thought of her pictures my face must have looked like the expressions I’ve seen on the faces of countless marketing leaders over the years as they try to make sense of their campaign data.
While my daughter’s artwork could be described as cute, there is nothing pretty about spending significant resources, both in terms of media spend and resource allocations, on campaigns where revenue can’t be tied to costs. This inability to prove marketing’s value to an organization might be one reason why the average CMO has a tenure of only 3.5 years, the shortest tenure of any role in the C-suite.
Unfortunately, siloed technology systems, cross-channel journeys, poor tracking and unreliable data lead many spending decisions to be made by intuition rather than insight. Other leaders rely on marketing analysts to spend significant time cobbling together outdated data to produce reports for the disparate systems that cover the buyer’s journey, including but not limited to web analytics, CRM, email systems, ad platforms and more. This leaves many marketers asking why there isn’t a better way to track campaigns.
This is a solvable problem with the right mindset. However, before we talk through solutions let’s discuss why revenue attribution vexes marketing teams, as well as the value of measuring marketing performance.
Why Marketing Attribution Models Fail
In recent years few roles within an organization have changed as much as that of a marketer. Caught between the mandate to generate revenue growth and a changing strategic landscape — with more distribution channels, significant technological transformation, greater customer expectations and increased advertising costs — more channels, assets and tools are being employed to reach customers than ever before. Increased touch points with both known and unknown prospects combined with a nonlinear customer journey is the perfect storm in tracking customer engagement.
A 360-degree customer review remains elusive to most companies, which means this data problem leads to the following issues:
- Difficulty measuring overall and even campaign performance based on ROI metrics.
- Important interactions are not receiving credit for their role in the sale.
- Reporting takes too long to change campaigns in real time.
- Reporting is siloed based on each platform versus going across platforms.
- Individual system attribution models contradict each other and both take credit for the same sale.
Here’s a real-world use case. A prospect clicked through to your website from a LinkedIn ad on Monday but didn’t fill out a form or buy a product. That same person was retargeted via a display network ad on Wednesday due to having been on the site on Monday. Again the person didn’t convert. Then on Friday that same prospect typed your company name into a Google search bar, clicked the link to your website and downloaded a whitepaper. For simplicity sake we’ll say the person purchased an e-commerce product for $100 on that third trip to the website.
Based on marketing attribution modeling LinkedIn will credit the sale to that channel, the Google Display Network will attribute the sale to the ad platform and your internal web analytics tool will credit the sale to your organic search channel. So from a marketing analytics perspective that $100 sale will actually look like a $300 sale.
According to Accenture 90% of organizations view the CMO as the connective tissue between different lines of business — sales, technology, service and product — based on its ownership of customer data and insights. This means that the head of marketing at an organization is uniquely positioned to champion a 360-degree view of the customer within the company and the execution strategy needed to communicate different messages to each user where he or she is at in their journey as a customer.
A study by Forbes Insights found that only 13% of companies are “leaders” in leveraging customer data and that 89% of executives surveyed see a moderate to high risk of digital disruption likely to occur in the next three years.
Why Measuring Complex Buying Journeys Matters
Many analytics professionals understand the conundrum created in our preview example, so they will employ an attribution model to give credit where it is due. This means that the data must flow into a centralized reporting system that can tie user IDs to activities.
A last-touch marketing attribution model might give credit for the sale to the last activity — in this case the organic search — thus all $100 would be credited to that channel. The other channels see the cost of the activity (click) but no revenue.
A first-touch marketing attribution model might give all of the credit to how the customer first came in the door — the LinkedIn ad — which might work for this first purchase, especially since the time from the first touch to last touch was a matter of days. But that model doesn’t stand up on a longer sales cycle — think of how long it takes and how many people are involved in purchasing an expensive piece of technology. Or what happens if the person buys another product in a few weeks — does the first activity still get credit? What happens if the next purchase is 6 months in the future?
The best approach would be to deploy a multitouch marketing attribution model where more interactions get a piece of the credit. Maybe 25% for the first touch, 50% for the last touch and 25% for all other activities. In the example above it means that $25 would be attributed to LInkedIn, $50 would be attributed to organic search and $25 would be applied to the retargeting ad. This method helps marketers tie costs to revenue to determine where investments should be made and where they should be cut. Most importantly, by investing in revenue attribution you will be able to prove marketing’s value to the organization so it is looked at as a revenue center instead of a cost center.
Bizible, a leader in the marketing attribution space, found that the sale of its own product required an average of 167 customer touch points. Of these only 22 would be tracked by a form fill or lead within the marketing or CRM system. If Bizible employed a first or last touch model it would only be giving credit for 0.6% of the activities that led to the sale. Failing to measure these journeys isn’t just inaccurate — it is marketing malpractice.
B2B Marketing Attribution Strategies
When it comes to deploying the right attribution strategy for your business it is important to understand what you sell, how you sell it and the length of the sales cycle. Most B2B sales cycles can take a few months to up to a year to close. In these cycles it is important to understand all of the touch points to give credit to the channels that generate, qualify or speed up the sales cycle.
Best practice involves adding tracking code to your site and campaigns, whether this is a dedicated customer record that stitches together activities, like a CDP, or software that enables tracking of activities cross-platform. At Zirous we believe your choice comes down to whether the goal of this tracking is for analytics only or your desire is to allow your organization to personalize content in real time throughout the customer journey.
B2C Marketing Attribution Best Practices
Fortunately, most B2C journeys are shorter and more linear than B2B journeys. However as our scenario pointed out there are reporting complexities that need to be overcome. From a technology perspective many B2C sales cycles tend to be online, which has both good and bad outcomes. The likelihood of buying in a particular channel is generally greater, and those who buy might not have had many interactions with your brand yet. This means there is greater opportunity for cross-selling and up-selling in the moment, which is where a CDP shines. It also helps by kicking off abandoned cart emails and personalizing experiences in real-time.
No matter what you sell or how you communicate with customers the most important thing is to start collecting activities and come up with your attribution strategy. There will never be a time when you say you have too much information to make marketing decisions. This is an important initiative that can propel your company forward; start by coloring inside the lines.
With multiple moving pieces and expertise needed, Zirous, a technology data and insights company established by leading marketing and technology experts, can help any company get started with a successful revenue attribution program. Contact us today to learn more.