First, let’s get in the mood for this post.
While in the past, in the corporate arena, this question was mainly targeted at the VP of Sales, today marketing folks are feeling the pressure to perform based on tangible, business KPIs.
One of these KPIs, revenue attribution, is both powerful and tricky.
It answers the following: what revenue should be attributed to a specific marketing activity? Here’s a simple example. Let’s say you do a webinar about your product, and 200 people registered to it. Out of these 200 people, 50 bought your product, priced at $20 a pop. So if the only marketing activity you did was that webinar, all the revenue generated from these sales will be attributed to the webinar. If it cost you less than $1,000 to produce it, it was a good marketing activity. If it’s the other way around, you’re in trouble.
However, it isn’t that simple.
Generally speaking, there are 3 ways to attribute revenues to marketing activities:
- Last touch attribution: in this model, we attribute all the revenues from an opportunity to the last touch with the relevant lead/contact. For example, if a lead signed up to a web service that costs $50, after clicking on a Facebook ad, I will attribute this $50 against the Facebook campaign budget.
- First touch attribution: just the opposite. In this model we are looking at the first touch with the lead and tracking its source. Let’s say your company is doing a webinar that generated 39 new leads. It might be that after attending the webinar they opened 4 newsletters, attended 3 more webinars, and downloaded 4 white papers. Still we will attribute all the revenues generated from these leads against the budget of that webinar.
- Multi touch attribution: remember the previous example? Now think about a model that takes into account each and every touch point. Yes, that’s extremely complex. How much of the revenue should be attributed to the first webinar vs the second webinar? What’s the weight of the white papers in the buying decision process? These are complex questions, that require some heavy lifting to answer.
Finding the best model for your business isn’t a simple thing. When we had to make this decision, we talked with our clients and partners, and tried to reverse engineer our deal flow to see what are the most important events in a customer life cycle.
We came up with these guidelines for figuring out the best revenue attribution model:
- Track everything: we built a framework that enables us to track almost every touch point with our leads and customers. It requires clear funnel mapping, and making sure that all the required technologies and tools are in place in order to track the most important interactions along the funnel.
- Attribute revenues to touch points that you can actually affect: if a revenue attribution point cannot be affected, it is useless from a business perspective. The whole idea of revenue attribution for us is to be able to affect future revenues by increasing the investment in that point. If revenues are attributed to a touch point that we can’t affect, it becomes the equivalent of office gossip – cool to know, but not a lot you can do about it.
- Don’t neglect the rest of the journey: even if you are not attributing revenues to a specific event, by tracking and analyzing it you can learn a lot about your leads and business as a whole. For example, you can see if a channel is bringing in new leads more than others, which channel is best aligned with your paying customers, and more. We’ll dive into this point in one of my future posts.
Internally, we chose first touch attribution model. Our sales process is complex, and we create multiple touch points with our audience. We also enrich profiles using data from social networks. Therefore, the key for us is to get contact details of a lead the first time. After that we have many ways to engage with these leads, and it is impossible to figure out what event actually pushed a lead to become a contact.
We are still fine tuning the implementation process of this model in our marketing automation platform and our CRM system. I will write more about it in future posts.
Revenue attribution is an important concept in B2B marketing. It enables companies to cut through the noise and fine tune their marketing budgets. I’d be happy to hear more about how you use this model – feel free to share in our comments.
Revenue Attribution 101
February 25, 2014
Kfir Pravda
First, let’s get in the mood for this post.
While in the past, in the corporate arena, this question was mainly targeted at the VP of Sales, today marketing folks are feeling the pressure to perform based on tangible, business KPIs.
One of these KPIs, revenue attribution, is both powerful and tricky.
It answers the following: what revenue should be attributed to a specific marketing activity? Here’s a simple example. Let’s say you do a webinar about your product, and 200 people registered to it. Out of these 200 people, 50 bought your product, priced at $20 a pop. So if the only marketing activity you did was that webinar, all the revenue generated from these sales will be attributed to the webinar. If it cost you less than $1,000 to produce it, it was a good marketing activity. If it’s the other way around, you’re in trouble.
However, it isn’t that simple.
Generally speaking, there are 3 ways to attribute revenues to marketing activities:
Finding the best model for your business isn’t a simple thing. When we had to make this decision, we talked with our clients and partners, and tried to reverse engineer our deal flow to see what are the most important events in a customer life cycle.
We came up with these guidelines for figuring out the best revenue attribution model:
Internally, we chose first touch attribution model. Our sales process is complex, and we create multiple touch points with our audience. We also enrich profiles using data from social networks. Therefore, the key for us is to get contact details of a lead the first time. After that we have many ways to engage with these leads, and it is impossible to figure out what event actually pushed a lead to become a contact.
We are still fine tuning the implementation process of this model in our marketing automation platform and our CRM system. I will write more about it in future posts.
Revenue attribution is an important concept in B2B marketing. It enables companies to cut through the noise and fine tune their marketing budgets. I’d be happy to hear more about how you use this model – feel free to share in our comments.