Most marketing departments have a general sense of the value their marketing efforts generate in terms of sales and supporting other business goals. But broad estimates of this value can obscure important insights into campaign- and channel-specific performance—which can hurt your ability to optimize your marketing mix and your overall strategy.
Revenue attribution gives your marketing team better visibility into marketing campaign performance. It also offers crucial insight into the role multi-channel marketing engagement plays in driving revenue for your business.
In the digital age, few marketing campaigns are solely responsible for conversions and sales among their target audience. Most customer engagements are part of a multi-touch marketing effort across many different channels. But even when these points of engagement are intertwined, revenue attribution models can quantify the value of each interaction.
Use this guide to acquaint yourself with revenue attribution and how it can help you achieve both your current and your long-term marketing goals.
The importance of revenue attribution for your marketing strategy
The ultimate measure of marketing success is the return on investment (ROI) from your marketing spending. The higher it goes, the better you’re doing in driving business revenue.
Revenue attribution can lead to a higher marketing ROI by providing a framework for understanding the actions and campaigns that drive this revenue. The challenge of attribution has become even more complex through the rise of multi-touch marketing and unwieldy customer journeys that can move back and forth between online and offline channels.
Visibility into past performance helps you understand the success of past campaigns. But it also provides crucial insights that offer strategic value as you optimize campaigns for performance in the future. At the same time, revenue attribution quantifies this performance as it relates to revenue-generating activities—which distinguishes revenue attribution from contact attribution.
Although these attribution methods have many similarities, revenue attribution is far more important to understanding and illustrating the monetary value of specific marketing campaigns and channels. Certain marketing channels, for example, may play an integral role in generating a lot of contact with prospects who later become conversions. But contact attribution overlooks the amount of revenue generated by these activities.
A higher volume of contacts driven through one marketing channel, for example, might represent a smaller percentage of total marketing revenue generated—and those revenue figures are more reflective of your overall marketing ROI. Contact attribution has its place in evaluating your marketing strategy. But when it comes to driving revenue and maximizing your return on marketing and ad spend, revenue attribution modeling is essential.
How revenue attribution improves your marketing performance
Successful revenue attribution helps marketing departments reach the following achievements:
- Gain a more comprehensive view of customer journeys. Unlike last-click attribution, which is the default approach for many analytics platforms, thoughtful revenue attribution offers insights into the full sales and marketing funnel.
- Analyze macro and micro trends affecting your marketing strategy. The possible insights from marketing attribution are limitless: From the strengths and weaknesses of your funnel to the behaviors and preferences of your most lucrative customers, revenue attribution helps you understand your marketing strategy through the lens of ROI.
- Identify gaps in stage-specific engagement. Faulty messaging or a lack of effective content in a particular stage can disrupt your sales funnel. Attribution can help you spot these drop-off points and address them through your content.
- Connect online and offline campaigns to better understand multi-channel engagement. Revenue attribution improves your understanding of how disparate marketing channels support one another. Digital tools such as call tracking software can build a data bridge between offline campaigns and their digital counterparts.
- Generate insights to improve your marketing mix. As you gain a better understanding of the marketing channels and campaigns that drive the highest ROI, you can adjust your marketing budget to optimize your spending and drive better returns.
- Support better strategic decision-making. When you understand the implications of your marketing strategy on your revenue generation, you’re able to guide smarter decisions that support a higher ROI and demonstrate this value to executive leaders.
Choosing the right revenue attribution model for your business
When choosing a revenue attribution model, it’s important to consider your business model—especially when it comes to revenue generation. Different approaches to revenue attribution may be more appropriate for your business based on how they align with your customer buying behaviors, as well as your customer journey.
If, for example, you’re a SaaS business that generates revenue through a monthly subscription, a linear approach to attribution can be a reliable measure of marketing success. This is because subscription-based services are highly dependent on cultivating long-term relationships with customers, and maintaining positive engagement throughout the life of their subscriptions. A linear revenue attribution model works for this approach by dividing revenue credit evenly among all marketing engagements deployed with a specific customer.
On the other hand, if you’re a company built around short sales cycles and concentrated engagement with potential customers, a time-decay approach may be the right choice—while offering additional context from what you get through a last-touch attribution model. Time-decay attribution gives the most revenue credit to the last point of contact, but it distributes some attribution to all points of engagement and gives more credit to interactions that come closer to the conversion.
Longer sales cycles, meanwhile, might require a U-shaped attribution model. And in cases where revenue generation is complex, a data-driven approach may be necessary.
Tips for calculating ROI based on revenue attribution
Once you’ve chosen your revenue attribution model, take these extra steps to make sure you’re set up for success:
- Make sure your analytics tool supports your preferred model. If you’re unsatisfied with the attribution options in your analytics tool, you may want to switch to a different platform.
- Always account for strategic marketing changes when determining when and how to calculate ROI. For example, if your company has just shifted its primary marketing goals or implemented other major changes affecting your marketing campaigns, those changes likely need several months, if not longer, before reliable ROI calculations can be made.
- Analyze ROI over different time frames—especially periods of time that coincide with specific marketing campaigns or events that may affect performance.
- Don’t overreact to a small sample size. Give your attribution model time to identify trends and value over a long period of time, and among a large segment of your target audience.
- Be flexible with your marketing mix. As you apply the lessons you learn from your revenue attribution efforts, don’t get locked into a certain approach. Many different factors can affect your optimal marketing mix. Target customers can change, new products may develop, and customer behaviors may shift as digital marketing evolves. Optimize your marketing mix as you see fit, but be willing to reverse course if your attribution data backs up that decision.
Attribution knowledge is power
Your marketing strategy is only as strong as its revenue generation. As businesses raise their expectations, revenue attribution is key to raising the bar for your own performance, and demonstrating your success to executive leaders.
When you’re ready to optimize your marketing strategy, always follow the money. In the end, revenue will tell the story of your marketing success.