As more and more CMOs of B2B organizations become responsible for driving revenue, it’s becoming necessary for them to adopt a revenue attribution solution. Previously, marketers could be satisfied with generating leads or opportunities and calling it good. From a measurement perspective, channel analytics and marketing automation could satisfactorily track marketing performance to leads. But to effectively track revenue, revenue attribution is a must.
So what is revenue attribution? Revenue attribution is the tracking, connecting, and crediting of marketing efforts to their downstream revenue generation.
There’s a lot in that definition, so let’s break it down.
The first component is tracking marketing efforts, so that later you can apply revenue credit. Accurate tracking means tracking every touchpoint (or at least the key touchpoints) throughout the full funnel, from the first touch to the last, both online and offline touchpoints.
If you’re systematically omitting certain kinds of touchpoints—say, with single-touch attribution or online touchpoints only—not only will you undervalue the touchpoints that you didn’t track, you will also overvalue the touchpoints that you did track.
Let’s dive deeper into that. If you are using attribution software that only tracks a limited part of the buyer journey—for example, only a single touch, only up to a certain stage like the opportunity creation stage, or only after the lead creation stage—your attribution data will be inaccurate. That’s because you’re systematically missing marketing touchpoints. So if your attribution software only starts tracking at the lead creation stage, marketing efforts that generate the first touch that is often anonymous are not tracked, and therefore can never receive revenue credit. That’s not the only problem. Because there is a fixed amount of revenue to be credited among the touchpoints that are tracked, and that first touch is undervalued, all other touches will be overvalued.
Here’s the math using a linear model for simplicity. (Note: linear models have their own problems, which we’ll get to later.) Let’s assume that this deal is worth $10,000.
Tracking All Touchpoints
Tracking Touchpoints Starting with Lead Creation
So when you go do your analysis, the three channels involved in the deal (Paid Social, Email, and Field Marketing) will look like they generated $3,333 of revenue, while Organic Search will look like it contributed nothing. Not only is that completely undervaluing Organic Search (by $2,500), it overvalues the other three channels by $833 or 33%.
To accurately do revenue attribution, you must be tracking every significant touchpoint from first touch to last.
The same problem happens when you don’t track all channels. For example, many marketers are only tracking digital channels. In our example above, the closed-won touch may appear as a Direct touchpoint instead, which would lead to undervaluing the impact of Field Marketing and overvaluing Direct.
The next step in revenue attribution is to connect touchpoints to each other and to the respective account. In B2B purchases, the buyer is typically not a single person; rather, it’s a group of coworkers, called an account.
A common buyer journey involves one person discovering the company and doing high level research, and then looping in coworkers to do further research. At the opportunity stage, a decision maker is brought into the journey, who ultimately signs the deal.
If the touchpoints aren’t connected, the buyer journey will look short because only the decision maker’s touchpoints will be attached to the deal. All of the touchpoints from the other people involved in the deal will look like they led to lost or still open deals.
To accurately reflect this account’s journey, the touchpoints from all individuals involved must be connected to the account through the process of lead-to-account mapping. Lead-to-account mapping, as the name suggests, maps the leads (individuals) and their touchpoints to their respective accounts, to create the true buyer journey.
The final step in revenue attribution is to apply revenue credit to the touchpoints in the buyer journey through revenue attribution models. There are many attribution models (we’ve detailed all of the attribution models here), but they primarily fit into three groups: single-touch, multi-touch, and custom models.
Single touch attribution models apply 100% of the credit to a single touchpoint. This leads to the same issues that we outlined when talking about the problems with not tracking touchpoints throughout the full funnel. Applying 100% of the credit to one touchpoint will overvalue the effectiveness of that specific channel and undervalue all others.
Multi-touch attribution models attempt to solve that issue of model bias by giving credit to multiple touchpoints in the buyer journey. However, multi-touch models are not created equal. There are simple models like the Linear model, which gives equal credit to every touchpoint. So if there are 100 touchpoints in the buyer journey, a middle touchpoint will get the same amount of credit as the lead creation touchpoint or the touchpoint that closed the deal.
A more nuanced multi-touch model is the W-shaped model, which emphasizes three key touchpoints at buyer stage transitions: the first touch, the lead creation touch, and the opportunity creation touch. Each of those touchpoints receives 30% of the revenue credit, and all other touchpoints share the remaining 10%. While this does do a better job at mirroring the buyer journey, it assumes that marketing stops at the opportunity stage.
The Full-Path model is similar to the W-shaped model, but it does track beyond the opportunity stage. It gives 22.5% credit to the first touch, the lead creation touch, the opportunity creation touch, and the closed-won touch. The other touchpoints share the remaining 10%.
These multi-touch models are great ways to give revenue credit to touchpoints through multiple stages of the funnel, but for companies that want to get more advanced and reflect the unique characteristics of their process, a custom attribution model is necessary.
Custom attribution models allow companies to define their funnel stages and then set the percentage of revenue given to each stage as appropriate. For example, if your company is in a market where it’s extremely difficult to break through the noise and get discovered, you may want to give the first touch a significant amount of credit. Or if you’ve analyzed your buyer journey and noticed that the touchpoint that creates a demo request is a strong indicator of success, you may want to give that stage more credit.
Custom attribution models afford marketing organizations the opportunity to create a model specifically for their buyer journey. However, it’s not always easy to know the right custom model, which is why Bizible offers a recommended custom model based on historical data and machine learning. This can be used as a starting point, which you can then tinker with to create your custom model.
To summarize, here are the three components to revenue attribution:
- Tracking all touchpoints from first touch to last, online and offline
- Connecting touchpoints to each other and to the respective account to create the full buyer journey
- Crediting touchpoints with revenue through multi-touch attribution models like W-shaped, Full-Path, and custom models
With these three components, marketing teams can accurately attribute revenue to their marketing efforts and measure their true performance.