November 20, 2020
One challenge marketers face is gaining a 360-degree view of their customer so that the business can accurately determine campaign revenue and ROI. The best way to go about this is by determining the most appropriate attribution model to use in order to distribute credit to the right touchpoint through the entire customer journey.
When customers interact with your business online, they go through several touchpoints until they convert into leads or paying customers (e.g. submitting an online form on your website or making a purchase). In this case, you must utilize an accurate attribution model strategy in order to understand which channel is most effective throughout the entire customer journey. From there, you can determine which channels you should allocate more effort and resources to in the future.
What are attribution models, and which one is right for me?
As companies run various cross channel campaigns, it becomes challenging to measure the ROI for each one. This is exactly why attribution models are created.
An attribution model is the rule, or set of rules, that defines how credit for sales and conversions is allocated to touchpoints in conversion paths.
There are several types of attribution models, however there’s no “best one” or “most accurate one” for your SaaS product since traffic channels and customer journeys are often change in such a way that from time to time. You must adapt and diversify your attribution model strategy, especially if your online traffic gets hits from various channels.
What are the different types of attribution models?
As mentioned, there are several types of attribution models that can perfectly fit your SaaS product, here are the most common ones:
First Interaction – As simple as it sounds, this type of attribution model gives the all credit to the first touchpoint the customer has interact with. For instance, if the customer interacted with your ad on Google and ended up on your landing page but didn’t take any action, then interacted with your Facebook retargeting ad and converted on your website, the credit will go only to the first touchpoint: the Google ad.
Last Interaction – This type of attribution model gives all the credit to the last touchpoint of where the customer converted. Being the opposite from first interaction model, credit will only go to the last click that led to conversion within the customer journey.
Last Non-Direct Click – This type of attribution model excludes any "direct" interactions that occur before the conversion. This means that if your customer had to go through, say, 6 touchpoints in their entire journey before they got converted, it will exclude direct hits they had with your business. Direct interaction means they were already familiar with your business and they looked it up directly on Google or just typed in your exact URL, so there’s not much point in including these interactions within the attribution model when trying to calculate ROI effectively.
Linear - With the Linear attribution model, you credit a conversion evenly between all the interactions the customer had with your business. Each channel and medium will receive the exact same credit through the customer journey. For example, if the customer had 8 interactions with your business before it got converted and the customer purchased in a total sum of 200$ you should simple attribute each touchpoint evenly by dividing the total sum: 200$ by the number of touchpoints, which is $25.
Time-Decay – This one has much similarity to the Linear attribution model in many ways as it divides the attribution through all touchpoints, but it gives more credit to the touchpoints that were closer to the time of conversion. This is beneficial because it accounts for more factors in a buyer’s decision.
What tools should you be using?
Now, you know what attribution models are and which ones are more likely to fit into your SaaS product strategy, but what tools should you be using? How do you pick the right model? How often should you change your attribution model strategy? Let’s take a look.
When you say, “marketing attribution models,” the first thing that comes to mind is Google Analytics. And rightfully so: many marketers use Google’s streamlined attribution model to assign credit to different touchpoints within their buyer’s journey.
However, Google Analytics’ abilities to measure the success of each step of the buyer’s journey are limited since it cannot simply receive the required data from all traffic sources one may have to their website. With this in mind, marketers should choose wisely when selecting the right marketing attribution platform for their brand.
What mistakes are you making?
Top marketers are using different attribution models—many utilize several platforms at once to deliver the most accurate attributions as possible. With that in mind, what do top marketers do in order to be successful in their attribution modelling?
Tip: Creating your customized attribution model – Yes, it’s possible! In many cases, depending on the industry you serve, it’s even recommended. Top marketers are creating customized attribution models in order to exceed expectations when it comes to making sense of their marketing data.
The bottom line? It’s all about your ROAS.
ROAS (return on ad spend) is an important marketing metric that is parallel to ROI. ROAS measures how much your business earns in revenue for every dollar spent through all marketing efforts.
While ROAS are similar to ROI, ROAS will present and measure the exact cost of an ad campaign against to the overall investment that is counted in ROI measurement.
At its core, ROAS measure how effectively you spend marketing dollars through each ad campaign on every channel.
Tip: How are ROAS calculated? If your ROAS are 10:1, that means you are making $10 in revenue for each $1 you spend on advertising campaign.
Choosing the best attribution model can be a daunting task. You must keep in mind that not every marketing attribution model is ideal for every type of business. Making the correct choice hangs significantly on what marketing channels you are using and what type of information you need to present along the funnel. Constantly testing and ultimately finding the best attribution model will get your business on the right track and help you produce more cost-effective marketing campaigns and will improve your conversion rates.
Ran Yosef is Chief Marketing Officer at CommBox, with responsibility for all marketing programs, brand management, and corporate image. Prior to joining CommBox, he worked as a marketing director and as a marketing manager at several companies, a true marketer that started the career from the ground up.
Ran’s greatest strengths are his creativity, drive, and love for analysis.
Data driven marketing executive with years of experience in developing and leading SaaS companies to define and deliver out of the box brand experiences that grow market share and build customer loyalty.
Ran is mastering SEO strategies and he is the mind behind the CommBox blog, as well as designing different marketing strategies that accelerate growth.
He is obsessed with creating an organizational culture based on the correct marketing approach.
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