No online sale is made in a vacuum. Many businesses today should be tracking their sales using a different conversion attribution model than they are. These models can more completely reflect what is truly happening with your sales funnel by tracking more parts of the sales process.
To some, using this technology may seem like a headache. After all, it means tracking more variables and having to learn new tricks with your software. But smart business owners and savvy marketing directors soon understand that attributional segmentation can be a step toward more profitable campaigns. The proper conversion attribution model allows businesses to trim the fat where needed, sometimes creating significant savings. That same funding can then be redirected to the channels most responsible for pushing sales. This post will cover some of the attribution models available and speak to a few issues to help you choose the right model for your business.
What is Attribution and What Makes it Possible?
Typically, multiple channels (and sometimes multiple entities) take part in the sales funnel for a given product or service. Until recently, it was quite difficult to accurately track an individual sale from introduction to completion, when possible at all.
These types of tracking and analytics software are available at different price points and with different levels of sensitivity. Some programs are meant to be hosted on a business’s on servers, while many tracking and analytics programs are offered under the software as a service (SaaS) model.
Google Analytics offers attribution tracking, although some may only be available to business who use Google Analytics Premium. Google does offer a data-driven attribution model that is able to utilize non-Google data.
Which Attribution Model is Best?
Different attribution models are good for different types of products, services, and sales funnels. Why not take a look at the following attribution model types and think about which one makes the most sense for your particular business?
The Last Interaction Model gives 100% of the credit to the channel with which the customer interacted immediately prior to purchase. This model is most useful for products that have little or nothing in the way of a consideration. It is useful for many types of ecommerce sites that sell lower priced products. It is also one of the two major models used in affiliate/performance marketing, where it is generally referred to as CPA (Cost Per Action or Cost Per Acquisition).
The Last Adwords Click (or other advertising network/platform) assigns the whole of the conversion to the last Adwords ad the costumer clicked before converting. “Adwords” in this case can be replaced with a number of different advertising platforms. This model is useful when ad traffic is the main traffic source to a site. Even when there are other channels directing traffic, it can be a useful model to measure the effectiveness of advertising.
The First Interaction Model gives the whole of conversion credit to the first channel with which the customer interacted. For most businesses, this approach is best suited to branding, or to measuring the results of the initial campaign or product introduction. Among brands that utilize performance marketing, this model is used when the brand’s affiliates gather leads instead of sales. (These companies may use other attribution models internally, once the prospect has entered the sales funnel.)
The Linear Attribution Model assigns equal credit to all channels in a given sales funnel or sales path. This model is most useful when constant contact must be made and kept with each prospect. Businesses that sell high-ticket items and services often uses sales processes that fit well with the Linear model.
The Time Decay Model gives more credit to more recent interactions. Percentages of credit are often assigned using exponential ratios. This model is useful in a variety of time-based scenarios. It may be especially useful with retargeting, where a customer may need to be exposed to a marketing message multiple times before taking action. the Time Decay Model may be able to help businesses understand how many messages and what length of time it takes to reach conversion with a particular audience.
Extensive monitoring can result in the development of new models. This will allow a business to understand which touch points are most vital in the sales process, and reward or record those interactions accordingly.
Attribution & High Purchase Intent Keywords
Obviously, a keyword phrase that includes the word “buy” has high purchase intent. Keywords that include exact model or model number also count. Keywords that include descriptors, such as color choice also obviously have higher purchase intent. If someone looks up “iPhone” they could be looking for lots of different things. But if they look up “pink iPhone,” they are much more likely to buy. If they aren’t in buying mode just yet, you can still be nearly sure they are midway through the sales process.
When it comes to conversion attribution, keywords with high purchase intent are more likely to have a short path from introduction to conversion. Of course it could be that the buyer clicks on a brand’s paid ad after having seen have the shortest path from introduction to conversion.
For products that are not absolutely 100% unique, buyers have sometimes gone through preliminary stages of the sales funnel on another brand’s time. Consumers who search with high purchase intent keywords are typically in the evaluation or purchase stage. They may click a new brand’s ad and make the evaluation and purchase decision as a combined step. Or they could be simply ready to make the purchase, and ready to make a decision based on price or other convenience.
Different attribution models are important to consider when working with both high purchase intent keywords and longer tail keywords. While no one model is best for all cases of long tail keywords, it’s safe to say that the First Interaction Model and Last Interaction Model won’t deliver the proper intelligence here. The Linear Attribution Model and Time Decay Model (or some hybrid thereof) may be useful in these cases. Long tail marketing is also one case in which it may be important to come up with an attribution model that assigns different values to different channels or different points in the sales process.
Attribution & The Rise of Retargeting
The growing use of online retargeting makes some form of conversion attribution a practical necessity. Even if a business retargets consumers with a single channel (Google Adwords, for example), it may still be important to know how many times a customer needs to be exposed to a message before taking action, any recurring contexts that encourage action, etc.
Retargeting has become popular with many merchants online for the simple reason that it works.
Attribution & Performance Marketing
Most online affiliate or performance marketing models are split into one of two camps: Cost Per Lead (CPL) and Cost Per Acquisition (alternately, Cost Per Action; CPA). CPL represents payment on first interaction when the affiliate creates the first interaction, then hands the customer over to the merchant. The merchant business operates the rest of the sales funnel on its own.
The CPA model awards affiliates for being the last point of contact. It’s been a common complaint among many affiliates that the CPA model “robs” those affiliates who are better at raising brand awareness and initiate a conversation than they are at closing the sale.
Attribution models, properly understood and implemented, could cause change throughout the affiliate marketing space. It remains to be seen exactly how commissions may be reassigned or reevaluated.
The performance marketing space moves quickly–often exposing first changes in marketing in other industries or marketing models. Attribution modeling may still be a handful of years away from making an impact on this community, however. For one thing, implementation models may not be practical at the moment. The practice may meet resistance from multiple parties who feel current models fit their own business interests better.
No matter what type of sales process your business uses, chances are that it could benefit from tracking conversions via one attribution model or another. Using different attribution models often delivers surprising results to business owners and marketing teams. More importantly, learning which is the right attribution model for your business using it can help you channel your funds and efforts where they are most useful. It can also help you channel funds to where they are more effective to increase your bottom line.