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What is Revenue Attribution?
Revenue attribution is the process of determining how much of a company’s total revenue can be attributed to a particular source. Businesses can connect sales and marketing initiatives to new revenue by tracking customer behavior across each channel using sales and marketing automation.
At its core, revenue attribution involves analyzing the entire customer journey — from when they first learn about a brand to when they make a purchase — to identify which sources generate the most revenue. Businesses can optimize their resources by understanding how different marketing tactics and channels affect top-line revenue growth.
The revenue attribution process is critical for businesses, as it helps them pinpoint where their sales are coming from and determine which strategies are most effective in driving profitability. There may be more than one source that contributes to a sale, so being able to trace revenue back accurately is essential for making sound marketing decisions.
- Marketing revenue attribution
- Revenue attribution model
Benefits of Revenue Attribution
Businesses rely on sales reporting to understand the success of their marketing efforts. Implementing revenue attribution lets them can track the actual revenue generated by specific marketing channels and campaigns, providing them with more granular data to apply to their lead generation efforts and marketing strategies.
Suppose an organization runs two marketing campaigns — one focused on social media and another on email marketing. Conversion tracking would tell them how many leads each one generated, but revenue attribution enables them to measure the actual sales associated with each campaign.
What if the email campaign had a high conversion rate but yielded a considerably lower average deal size?
Revenue attribution would show them.
Resource Optimization and Scaling
Attributing specific revenue sources to their respective campaigns helps businesses understand whether or not they’re worth investing in.
If customer acquisition costs are high through one marketing channel, revenue generation must be higher to make it worthwhile.
Revenue attribution enables businesses to accurately assess which sources are generating the most return on investment and make adjustments to the marketing budget.
As businesses scale their marketing efforts, revenue attribution becomes even more crucial — investing in the wrong channel could cost tens of thousands per month.
According to data from Spotio, nearly half of B2B sales reps say their biggest challenges are lead quality and quantity. And about two-thirds of lost sales are attributable to poor lead qualification.
- Sales team members don’t have much time to work with their leads, qualified or not.
- The leads that come through the funnel are wasting their time.
When it’s all said and done, the typical sales rep spends a very small fraction of their day engaging high-quality sales leads.
Revenue attribution is one of the best sources of information for lead scoring — it identifies which leads have the highest propensity to convert and their potential return, so reps can prioritize their time more effectively.
Determine Which Channels are Working
Nearly all companies connect with potential customers using an omnichannel approach. Email marketing, social media, content marketing, paid social, and organic search can all play a role in attracting leads.
Revenue attribution helps to measure the contribution of each customer touchpoint throughout the buying process, giving businesses insight into what works best.
From there, they can adjust their marketing mix accordingly — putting more resources towards channels that drive higher conversions and ROI, while cutting back on ones that don’t seem to have much of an impact.
Sales and Marketing Alignment
As many as 90% of salespeople and marketers believe their strategies and cultures aren’t aligned, according to research from ZoomInfo. For B2B companies, this costs at least 10% of total revenue per year.
Revenue attribution closes the gap between sales and marketing teams by connecting individual activities to qualified leads and revenue. With a shared goal of generating more sales, both teams work together collaboratively — marketing runs better campaigns, which generate true marketing qualified leads (MQLs) for sales.
Understand Customer Behavior
Revenue attribution gives marketers the most accurate data regarding where potential customers are engaging company content, products, and services. This makes it easier to build customer segments for personalized marketing campaigns that feature more targeted messaging and content.
Revenue Attribution Best Practices
Especially compared to its cousin, lead conversion rate, revenue attribution is much more telling of marketing performance. But the amount of data and analysis involved entails a higher degree of complexity, which is why best practices are so important.
Choose Attribution KPIs to Track
Revenue attribution KPIs are essential metrics that underscore the success of a company’s marketing efforts. The most important KPIs include:
- Customer lifetime value (CLV)
- Customer acquisition cost (CAC)
- CAC:LTV ratio
- Number of leads generated
- Average deal size
- Engagement rate and customer responsiveness
- Sales cycle length
- Revenue per lead (RPL)
- MQL-to-SQL conversion rate
- Lead-to-close conversion rate
It’s important to remember that marketing teams must look at each metric on a campaign-by-campaign basis for revenue attribution to work — looking at company numbers overall will only give a snapshot of overall performance, not the granular data necessary to connect the dots.
The reason B2B companies need to track so many performance metrics is that no one marketing campaign will immediately convert a lead into a paying customer. It usually takes longer than six months to make a sale, and the true number of sales and marketing touchpoints required in that timeframe could be as high as 50.
Connect Marketing and Sales Channels
The easiest way to align sales and marketing initiatives is to make sure all touchpoints are linked together.
Although this sounds complicated, it’s as simple as integrating CRM, marketing automation, and sales tools to keep a consistent flow of customer data that shows how one activity leads to another.
Connect Marketing Activities to Business Goals
Not every marketing conversion will visibly translate to progress toward revenue goals. Marketers need to track each campaign separately and follow each lead through the funnel to ensure they properly attribute each new revenue source to the right activity.
Again, system integration can help with this — when marketing automation data (e.g., conversion rates) integrates with CRM updates (e.g., movement in the sales pipeline), teams can better track and measure the impact of individual activities.
Implement Revenue Attribution Automation
Revenue intelligence software automates the attribution process by ingests customer data from across the funnel and compiling it into comprehensive reports that tell a story of how customers interact with marketing collateral.
From there, companies can easily review which campaigns had an impact on ROI and make informed decisions about their marketing mix going forward.
Revenue Attribution Models
There are numerous revenue attribution models (i.e., ways to match the cost of lead acquisition with the revenue generated). The one that best fits a company’s needs depends on how complex the customer buying process is.
First-touch revenue attribution is a model that allocates the entire sale or conversion to the initial touchpoint. This approach is based on the idea that the first interaction with a prospect is the most crucial, as it helps create awareness and piques their interest in your product or service.
The first-touch model is particularly useful for companies with relatively simple buying processes and shorter sales cycles (e.g., DTC ecommerce brands). It can help identify the effectiveness of top-of-funnel marketing efforts in generating leads and driving initial engagement, but it doesn’t take into account any subsequent interactions that may have influenced the prospect’s decision to make a purchase.
Last-touch revenue attribution is the opposite of first-touch method — it assigns all the credit for a sale or conversion only to the last sales or marketing touchpoint before the customer makes a purchase. This approach emphasizes the significance of the last interaction, as it is often the one that directly leads to the decision to buy.
This model can be beneficial for companies interested in evaluating the effectiveness of their bottom-of-funnel marketing efforts, such as retargeting campaigns, personalized email promotions, or sales outreach (though it doesn’t provide a complete picture of the sales cycle).
It’s also easy to track and configure, making popular among businesses new to revenue attribution or that have limited resources to invest in more complex models.
Multi-touch revenue attribution is a more advanced model that assigns credit for a sale or conversion to multiple marketing channels involved in the customer’s journey from awareness to decision. The multi-touch approach recognizes the cumulative impact of various touchpoints and provides a comprehensive understanding of the effectiveness of each marketing channel.
Multi-touch attribution models are ideal for companies with complex sales processes or longer sales cycles, where multiple interactions influence the prospect’s decision to buy.
U-Shaped (Position Weighted) Multi-Touch Attribution
U-shaped multi-touch attribution, also known as position weighted attribution, assigns 40% of the sale credit to both the initial and final touchpoints in the purchase process, while distributing the remaining 20% evenly across all other touchpoints.
With position-weighted attribution, touchpoints that create initial awareness and those that close the sale hold the most weight, while the middle stages still receive credit.
U-shaped attribution is well-suited for businesses that want to measure how effective their top-of-funnel and bottom-of-funnel marketing efforts are while recognizing the role of lead nurturing activities in the conversion process.
W-Shaped (Score Weighted) Multi-Touch Attribution
The W-shaped multi-touch attribution model, also known as score weighted attribution, assigns credit to three critical customer journey touchpoints:
- The first contact
- When they convert into a lead
- When they turn into a sales opportunity
Each of these critical milestones receives an 30% of the credit, while the other 10% is distributed evenly among the other touchpoints.
Score weighted attribution emphasizes each of the “most critical” milestones in the sales process while acknowledging that even smaller instances contribute to the end result.
W-shaped attribution is an excellent choice for businesses that want to understand the effectiveness of their marketing campaigns in driving prospects through the entire sales funnel, from initial awareness to the decision-making stage.
Linear attribution distributes the credit for a sale or conversion evenly across all touchpoints in the buyer’s journey. It recognizes the collective contribution of each interaction, without giving any particular weight to specific stages in the buying decision process.
This model is well-suited for companies that believe each touchpoint plays an equally important role in driving prospects towards a purchase decision. It can help businesses identify consistent patterns in their marketing efforts and gain a broad understanding of the overall effectiveness of their campaigns.
That said, linear attribution doesn’t adequately highlight the significance of critical milestones or high-impact interactions in the buying process. For companies with larger product catalogs or greater sales complexity, a more nuanced multi-touch attribution model might be a better fit.
Time Decay Attribution
Time decay attribution is a model that assigns credit for a sale or conversion to all marketing touchpoints, with more weight given to the most recent interactions. The idea behind the time decay method is that the closer a prospect gets to making a purchase, the more influential each subsequent touchpoint becomes in driving the final decision.
Verticals with longer sales cycles, such as B2B manufacturing, benefit most from time decay attribution because prospects typically engage with multiple marketing channels and touchpoints over an extended period. However, companies that want to quantify lead or demand generation campaigns will have to do so differently.
How to Determine Which Revenue Attribution Model to Use
The right revenue attribution model for your business depends your sales process complexity, sales cycle length, and chosen marketing channels.
To make an informed decision, consider your company’s unique needs and objectives, as well as the resources available for tracking and analyzing your marketing efforts.
- First-touch attribution: Choose first-touch attribution if you want to focus on the impact of top-of-funnel marketing efforts in generating leads and initial engagement.
- Last-touch attribution: Opt for the last-touch method if you’re interested in evaluating the effectiveness of bottom-of-funnel marketing efforts in closing deals.
- Linear attribution: Select linear attribution if you believe each touchpoint plays an equally important role in driving prospects towards a purchase decision.
- U-shaped (position weighted) multi-touch attribution: Use U-shaped attribution if you want to measure the effectiveness of both top-of-funnel and bottom-of-funnel marketing efforts while recognizing the role of nurturing activities.
- W-shaped (score weighted) multi-touch attribution: Choose the W-shaped method if you’re looking to understand the effectiveness of your marketing campaigns in driving prospects through the entire sales funnel, from initial awareness to the decision-making stage.
- Time decay attribution: Go with time decay attribution if you have a longer sales cycle and want to analyze the impact of late-stage marketing efforts on conversions.
Revenue Attribution Technology Requirements
To effectively implement and use revenue attribution technology, companies need to meet specific prerequisites. These requirements ensure that businesses can accurately track and analyze their marketing efforts and gain valuable insights from their attribution models.
Having an omnichannel strategy is essential for revenue attribution, as it enables companies to track customer interactions across multiple channels and touchpoints.
Smaller companies without many data sources won’t benefit from revenue attribution technology because they could easily track it themselves at a lower cost.
Well-Defined Sales and Marketing Funnels
Revenue attribution generally works better for scaling companies that have well-defined sales and marketing funnels.
These businesses can more easily identify and track the various touchpoints throughout the buying cycle, allowing for a more accurate and insightful attribution analysis.
Lean companies (e.g., startups and businesses of one or a few people) can also benefit from revenue attribution if they have enough variation in their customer segments to separate them into different attribution models.
Clear Understanding of the Customer Journey
Companies that don’t clearly understand the entire buying experience won’t know which performance indicators to look for.
Customer journey mapping is the logical first step for companies that want to use technology to track and attribute revenue to the appropriate marketing efforts.
CRM or Customer Data Tool
A customer relationship management (CRM) or customer data tool is required to house and centralize all the data related to customer interactions, sales, and marketing campaigns.
That way, all relevant information is easily accessible and can be used for comprehensive revenue attribution analysis.
An analytics tool capable of tracking customer journeys across various channels, including website visits, form submissions, and email engagement, provide the necessary data for analyzing the impact of each marketing touchpoint on conversions and revenue.
Most marketing automation tools already have some kind of built-in analysis capabilities, so companies don’t need to purchase additional analytics software.
However, some businesses may find it beneficial to invest in more comprehensive intelligence tools specifically designed for revenue attribution.
Integrations with Sales and Marketing Platforms
Whatever software a company chooses for revenue attribution needs to integrate with the rest of the workflow. Otherwise, the data won’t be accurate and the analysis won’t yield useful insights. In the worst cases, it will be completely siloed.
Before implementing revenue attribution, it’s crucial to understand which metrics are the most important to measure. This clarity helps businesses focus on the most relevant metrics and align their attribution efforts with their overall marketing objectives.
Introducing revenue attribution to the entire company is vital for driving company-wide adoption and shifting the overall data culture. When all stakeholders understand the importance and benefits of revenue attribution, businesses can foster a data-driven approach to marketing and decision-making.
People Also Ask
What is the purpose of revenue attribution?
The main purpose of revenue attribution is to match the cost of lead acquisition with revenue generated from sales and marketing efforts. Conversion rates and lifetime value don’t paint the complete picture, so revenue attribution underscores the true return on investment of their marketing activities.
What would be an example of revenue attribution?
An example of revenue attribution would be a hypothetical company running an email marketing campaign and paid social ads. Email marketing seems to yield a better conversion rate and more responses. Through revenue attribution, the company may realize the leads coming from email are low-value compared to the ones from social, despite having better conversion rates.