As a marketer, you know you must generate revenue to keep your team and budget off the chopping block. But how you report on revenue makes a significant difference in proving your worth. To report on revenue, marketers turn to more advanced performance reporting, including multi-touch attribution. But even then, not all multi-touch revenue attribution reports show the same value.
In this post we’ll clarify the differences between marketing-originated revenue versus marketing-influenced revenue versus true marketing-driven revenue.
This is the first “revenue” reporting that marketing was able to do because it’s based on what marketing efforts are creating leads.
For many marketing departments, the marketing automation platform is the core technology. When marketers started to feel the pressure to report on revenue, all the marketing automation vendors said that marketing-originated revenue was the metric that mattered. Coincidentally (or not), this was the only way marketing automation platforms (who understand the lead stage really well) could report on revenue.
However, marketing-originated revenue has a major flaw: it attributes all revenue to one touch, and ignores the impact of every other touch in the buyer journey. Essentially, marketing-originated revenue is lead-creation touch attribution.
The next evolution of revenue reporting is based on the concept of marketing influence. Somewhere along the journey, marketing had a touchpoint and influenced the deal.
Marketing-influenced revenue is based on conversion analytics, like what ad networks offer. AdWords, for example, tracks touchpoints through conversion events (i.e., form fills), and wants to attribute revenue to each of those conversions in order to prove value. If an AdWords ad led to a conversion in a buyer journey that eventually became a customer, 100% of the revenue is counted as marketing-influenced revenue.
It’s also a key metric for many multi-touch attribution platforms because it demonstrates the ability to track multiple touchpoints throughout the buyer journey.
Marketing-influenced revenue is not without a flaw either. If influence is confused for real attribution, it can drastically over-value marketing’s impact because it is susceptible to double- or triple-counting, or even more. If a buyer converted via AdWords, Facebook, and LinkedIn, and then became a customer for $100, each one of those channels would claim $100 in influenced revenue. Simply adding up the revenue from each channel, it would appear like marketing influenced $300, but the company only actually made $100 total from the efforts.
True Marketing-Driven Revenue
The third way to report on marketing’s impact on revenue leverages multi-touch attribution to distribute partial credit to each effort that made an impact on the complete buyer journey. While there are many multi-touch models (and the model you use matters), this is by far the most accurate way to report on revenue. If organizations want to make smarter decisions to grow revenue, this is the revenue report that they need to use.
To truly understand which marketing efforts are making a revenue impact, your multi-touch attribution needs to be comprehensive—to take data inputs from all activities, including offline marketing and sales activities. Advanced multi-touch attribution will then normalize the data in the buyer journey and distribute credit according to its impact on the buyer journey—converting an anonymous visitor into a lead, causing a demo request, converting a lead into an opportunity, and etc.
By using multi-touch attribution, teams avoid double- or triple-counting, since each sales and marketing action receives revenue credit in the context of every other sales and marketing action.
Revenue Metrics in Practice
These three different methods to report on revenue tell a vastly different story. More than just demonstrating that marketing is relevant (which is important), accurate revenue reporting is critical for optimizing and improving week after week, quarter after quarter, and year after year.
So let’s take a look at a simple example buyer journey and see what each revenue metric shows.
A prospect sees and clicks on an AdWords ad, visits your website for the very first time, and then leaves. The next day, they come back to your website via a LinkedIn ad and fill out a form to download an ebook, becoming a lead. Weeks later, they come back through Organic Search and request a demo. After a phone call from a sales rep, they become an Opportunity. A month later, after attending a conference, they close and become a customer for $10,000.
(We’ll use a Full-Path Model for multi-touch attribution.)
*$10,000 if you can track non-form sessions.
As you can see, each method produces vastly different results. According to the “Revenue Originated” report, only LinkedIn worked and it worked really well. All of the other efforts had no impact.
According to the “Revenue Influenced” report, everything that gets tracked gets full revenue credit. Since every effort claims complete credit, if you’re not careful about reconciling the report, it will look like marketing had a much greater revenue impact than reality.
Finally, the full-path revenue attribution report most closely reflects the true buyer journey. Multiple efforts contributed, and when summed it equals the true amount of revenue.
Interpreting Real Data
The marketing team here at Bizible took a look at our own 2017 performance data in Bizible to see how big the gap was between marketing-originated revenue data vs. marketing-influenced revenue data vs. our true revenue data with our multi-touch attribution model.
When it comes to Paid Social, which is primarily used at the top of the funnel, reporting revenue based on Origination overstated revenue impact by 20%. Reporting based on Influence overstated revenue by more than 200%.
At the other end of the spectrum, when reporting the revenue impact of Direct Mail, which is primarily used at the bottom of the funnel, Origination understated revenue by 50%, and Influence overstated revenue by more than 400%.
Overall, a Marketing-Originated Revenue report will overvalue the impact of top-of-the-funnel activities because it gives 100% of the credit to lead creating activities. It’s a useful metric for understanding what activities are good at driving leads, but little beyond that. In fact, if we used this data to optimize our marketing efforts, we’d end up spending too much on top-of-the-funnel activities and neglecting all the efforts that go into nurturing prospects down the funnel.
Marketing-Influenced Revenue is a great way to make marketing look good. For example, an influence report shows that Bizible’s marketing team influenced 98% of our customers in 2017. Our customers also interact with many different channels in the buyer journey, leading to report that shows marketing influenced about 500% of our actual revenue. Executives who understand Marketing-Influenced Revenue recognize what it truly means. It’s a feel-good report, but it is not data that you can use to take action or accurately demonstrate value.
Finally, our multi-touch attribution revenue report is the marketing source of truth in context. With this data, and the ability to dig in to understand which exact efforts and elements of efforts contribute to revenue at a granular level, marketers can confidently make decisions across the company about how to optimize and where to invest the next dollar. Because multi-touch attribution weights marketing’s contribution to revenue in context, this believable measurement will keep teams and budgets off the chopping block.