Modern marketing organizations operate as revenue centers, not cost centers. CEOs at top-performing companies utilize revenue attribution to understand which activities produce revenue bookings. Revenue attribution models give executives a clear line of sight from the corporate strategy through customer touch-points in the company’s product, marketing, and sales strategies. Download our SBI Magazine Special Issue: Revenue Attribution.
It’s hard to execute a Marketing Strategy to grow revenue faster than your competitors. Leverage the How to Make Your Number in 2018 to access a revenue growth methodology to hit your number quarter after quarter, and year after year.
If your company is not using a revenue attribution model, you are not alone. But it’s time to get started.
Revenue attribution models the process for measuring the revenue credit associated with each marketing effort. There is no single best approach. This article helps determine whether first-touch attribution is optimal for demonstrating the value of your campaigns.
Take football as an example. Last October 30 was a gray day here in Washington, D.C. My 9-year-old son Ben and I were watching a game together. Quarterback Matt Ryan threw an 11-yard touchdown pass to wide receiver Mohamed Sanu with 31 seconds remaining, rallying the Atlanta Falcons to a 33–32 victory over Aaron Rodgers and the Green Bay Packers.
I leaned over and asked Ben, “Who gets credit for that touchdown?”
“Sanu gets credit,” Ben replied.
“What about the quarterback?” Ben said, “Yeah, him too.” Before I could even ask about the center or the tackles Ben piped up, “Everyone had a role.”
So here’s the thing: A 9-year-old’s first response was to give credit to the last person who touched the ball. This is an example of single-touch attribution. Specifically, it is a last-touch attribution model. The example where “everyone had a role” is a multi-touch attribution model.
If Ben had told me that the center deserves the credit, that would be an example of first-touch attribution. The fact that I cannot even remember the name of that center illustrates how rarely we give credit in first-touch attribution models when an outcome lies significantly down the line.
First-touch attribution models are simple and support new logo acquisition.
The first-touch attribution model allocates all the value to the first program that touched the deal. Typically, this is the lead source.
If you care about topline growth, you need new logos to fill your pipeline. A first-touch attribution model will tell you what channels are generating leads that close the fastest, the most often, and at the highest dollar amounts.
Single-touch models are also the easiest to implement. They are typically not very complex but the trade-off is accuracy. As in the football metaphor, a lot of things happen after the first touch. Assigning all credit to the first touch can be potentially dangerous. But if you need more new logos, then you need to know where to get them most efficiently.
Many executives are cautious about finding the right entry point into the world of attribution modeling. When I spoke with Kristen Luck, growth strategist and strategic advisor to CMOs at more than a half-dozen different companies, she said, “Nine out of 10 executives I work with who should understand attribution models simply have never considered them, and don’t understand them.”
If you want to get ahead of your competition and grow faster than your market, a revenue attribution model is a good place to start.
Revenue attribution models require alignment of sales and marketing.
According to MarketingProfs, organizations with tightly aligned sales and marketing functions experience 36 percent higher customer retention rates and 38 percent higher sales win rates than organizations with misaligned sales and marketing functions.
There’s no better way to get a sales team excited about marketing than to show the results of marketing investments. This shouldn’t be a once-a-year exercise. As often as your organization is sharing pipeline results and revenue information, review data on the most successful marketing campaigns as well as which ones are falling short. You’ll find that your sales team becomes much more engaged and supportive of marketing initiatives. Keep feeding the machine and showing results, and you’ll have a happy sales team.
After alignment, you need to focus on data integration. Marketers must be able to analyze data that sits on different systems and in different locations, in a wide range of forms and formats—including structured and unstructured data sets. They must be able to collect data from channels such as websites and mobile apps, and to connect to outside sources via APIs and other methods. In addition, marketers need ways to manage and filter data and metadata so they can explore patterns and apply meaningful data to improve marketing and advertising results.
Dmitri Adler, founder of Data Society, told us, “Analytics platforms must do more than report results. They must provide ways for users to explore data with visualization and other tools, and to manipulate it to provide better insight into where your revenue is coming from.”
Measuring the impact of your marketing investment on revenue is valuable only if you utilize that information to drive future decisions.
It can be challenging to determine which programs are working and which are not. Sometimes it’s just easier to continue with the status quo. However, following that path leads not only to inefficiencies and wasted money, but also to poor results.
To figure out how your marketing activities interact to drive purchases, start by gathering data. Many companies we’ve worked with claim at first that they lack the required data in-house. That is almost never the case. Companies are awash in data, albeit dispersed—and often, unintentionally hidden. Relevant data typically exists within sales, finance, customer service, distribution, and other functions outside marketing.
First-touch revenue attribution helps you focus on the signal rather than the noise. By applying this model, you will be able to remove the programs that are generating zero new logos or minimal revenues. These funds can then be redirected to generate more savings for your organization or redeployed to increase topline growth.
Our clients who have employed these models have often seen a 20 percent increase in new logos over as short a time as six months.
To make your number in 2017, start modeling revenue attribution now.
If you are thinking that you need to wait until you have more data, your failure to apply revenue attribution will likely make you miss your number this year. Of course, more data is usually better, but that should not stop you. A wealth of third-party data providers can help fill any gaps.
Determine the value of your total marketing effort. Prove what’s driving revenue and what didn’t work by demonstrating the return on investment your organization needs.
Have expectations gone up and left you wondering if you can make your number? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate yourself against SBI’s sales and marketing strategy to find out if:
- Your revenue goal is realistic
- You will earn your bonus
- You will keep your job