This content was originally published in the Elevate Your Marketing newsletter and has been repurposed and republished here with the author’s permission.
Revenue attribution in the B2B world has always been a challenge for CROs (Chief Revenue Officers) and CMOs (Chief Marketing Officers). With the economic downturn and budget cuts, marketing and revenue leaders are forced to double down on a few channels that work.
But the truth is that a vast majority of companies are doing it the wrong way. So, in this article, I attempt to explain why the traditional revenue attribution model in B2B is broken, and what are some of the practical ways to fix it.
What is revenue attribution and why is it important?
Revenue attribution is nothing but the exercise of figuring out which channels or activities contribute to the topline of your business. And in the B2B marketing and RevOps world, when we say attribution, it refers to attributing a share of your revenue to specific marketing channels (channel revenue attribution) or sometimes ads (ad revenue attribution).
Now, why is this such a buzzword?
The reason is quite straightforward. When you spend money on marketing, you want every dollar to count. You want to put each and every single dollar in the right channel, in the right campaign, at the right time. And especially when you are tight on budget, you need to finetune your marketing strategy to get the biggest bang for your buck.
5 reasons why B2B revenue attribution is broken
1. Focus on demand capture alone and not demand creation/generation
One of the key drawbacks of today’s broken revenue attribution system is taking into consideration only the demand capture channels. When I say demand capture, I am referring to using channels and tactics like SEO, paid ads, email marketing, LinkedIn outreach, etc., where you attract users who are in-market to buy your products or services.
The challenge with attributing revenue to these channels alone is that we are completely ignoring what is actually creating the demand.
How did people really get to hear about you? Was it that organic social post? Was it your CEO’s podcast appearance? Did one of your leaders’ online talks bring your company into your prospects’ radar?
A marketing attribution software is incapable of capturing information like the above. A user organically or directly landing on your website might have heard about you elsewhere. And going purely by demand capture channels makes you blind to the impact of these.
2. Single touch attribution is flawed
Of the many attribution models, the first touch and last touch attribution models are two of the most popular among marketers. But in both these single-touch attribution models, you completely ignore the effect of the intermediate channels.
For instance, consider a user who first landed on your site using organic search. He then sees a paid ad a week later and visits your website again and subscribes to your email newsletter. A few weeks later, he receives the newsletter with the promotion of one of your products. He clicks on the link to the product page and purchases the product.
Now, if you go by the first touch or last touch attribution model, only organic or email gets the credit while the paid ad also had a positive impact on the purchase.
3. Multi-touch/full path attribution is unfair
The multi-touch or full path attribution model solves the problem of not giving credit to all the channels that led to a conversion. At the same time, it can often make the process of revenue attribution unfair.
Let me try to explain this using an example.
Assume a user purchased a product worth $1000 from your website after being ‘influenced’ by 3 channels. If we go by the multi-touch attribution model assigning an aggregate 90% weightage to the 3 main channels, each will carry a 30% credit (which is $300 in revenue). Now, if you have 2 other secondary channels which would each carry 5% (half of the remaining 10%), their revenue contribution would be $50 each.
This makes revenue attribution complex and unfair. Complex because of having to split up the revenue of a single transaction into many. Unfair because it is difficult to say with 100% confidence that a particular channel is primary while another is secondary.
4. Inability to track everything
Whatever technology or tool you are using, not everything can be tracked. Whether you are using the HubSpot attribution software or any other specialized marketing attribution tool that can give you end-to-end account journeys, they still attribute many leads to ‘offline sources’. This leads to incomplete and broken data.
5. Attribution won’t tell you the whole story
One of the biggest challenges with a software-driven attribution methodology is that you will miss a lot of pieces of the puzzle.
Let me explain.
Imagine that a prospect heard first about your company from a podcast he listened to where the host recommended your product for a specific use case. Impressed and intrigued with it, he goes and checks the company out using organic search and fills up a product demo request.
In this scenario, the attribution tool is going to mark it as an organic lead. But you miss two things here:
- The podcast mention of your brand/product.
- The valuable recommendation made by the podcast host.
In short, you miss the complete STORY.
How to fix the broken B2B revenue attribution model?
What I would like to propose to have a balanced revenue attribution process is called the ‘Mixed Attribution Model’.
The core principle of this model is to look at demand generation and demand capture channels separately. The objective is to attribute revenue among these channels in such a way that you are able to come up with the right budget allocation for future marketing activities.
The model has two components to it:
- The hybrid attribution method.
- The influencer attribution method.
Let us understand both in detail.
1. The hybrid attribution method
We have discussed in detail so far why completely relying on software-based attribution is outdated. Instead, the hybrid attribution model focuses on a combination of self-reported attribution and software-based attribution where the prospect/lead himself/herself shares details on how he/she came to know about your company.
This would involve adding a field in the website forms that says something like “how did you hear about us?”
Here, the best practice is to give the user the option to enter a description instead of choosing from a drop-down since it will:
- Prevent any bias.
- Will give you details on how the user became a lead (details of the complete customer journey sometimes).
This self-reported attribution data is read alongside the info from your attribution tool. Wherever the same channel is identified as the source in both, you can almost always confirm that the data is right. In cases, where there is a difference, you could go with the self-reported attribution data since the information you get directly from the customer is likely to be more accurate than what a tool tells you.
This method makes sure that you identify the source right at the moment of demand generation. Secondly, you get to hear the info from people who matter the most – customers and prospects.
2. The influencer attribution method
This is where you look at the contribution of the demand capture channels as well. And consider this an extension of the full path/multi-touch attribution method, where you attribute revenue in the same manner as we discussed in the example stated before. But the only difference here is that you separate out the demand generation and demand capture channels.
For instance, if we take the same example of the $1000 product, you can attribute $300 to demand generation and $700 to demand capture (assuming that the secondary channels are all demand capture in nature).
Now, there could be cases where more than one channel leads to generating demand, in which case you can split the total equally among them.
Making revenue attribution complete with budget allocation
One of the main objectives (if not the main objective) of revenue attribution is to validate your bets on future marketing spends. You would want to know how many dollars to invest in each channel.
As I mentioned earlier, the key is to look at demand generation and demand capture channels separately. The same applies when it comes to budget allocation.
Again for this, let us take the $1000 product example.
Imagine you sold 100 of these.
The first step is to decide the allocation between demand generation and demand capture. Assuming that the same pattern continues across all the 100 items sold, you can safely say that demand generation channels contributed to 30% of the revenue ($300 out of $1000). Given this, if your total marketing budget for demand gen and capture combined is $1 million, $300K can be allocated to demand gen, and the rest to demand capture.
The next step is to divide the total budget for both among the different channels under each.
To do this for demand gen, look at how many purchases did each demand gen channel contribute to, and distribute the total budget (in this case $300K) based on the percentage values of each channel.
Similarly for demand capture, estimate how many times each channel influenced a purchase (in % of total). Accordingly, you can distribute $700K among them. For instance, if every purchase was influenced by 3 demand capture channels (making it a total of 300 for all 100 purchases put together), and email appeared 60 times in total across all the purchases, it deserves a 20% credit.
You can apply this method to not just purchases or deals, but to leads as well. Also, a B2B purchase process might not be as simple as the example I took here. You need to adapt the model based on the buying cycle you have.
In the Mixed Attribution Model, you are essentially taking the best of all methods and trying to create an optimized working model for revenue attribution. If you find it too complex to implement, you can have a simplified version of it where you consider only the hybrid attribution method and ignore the influencer method.
Hope this article shed some light on how to ‘fix’ the broken B2B revenue attribution methodologies most of us have been using for ages. If you have any questions on the topic, please feel free to write to us at firstname.lastname@example.org.
Skalegrow – reimagining the way B2B marketing services are delivered
Skalegrow is a B2B marketing agency aimed at making life better for marketing leaders and founders in the B2B space. It was founded to address two key challenges in the B2B world:
- The lack of quality of services offered by marketing agencies
- The misalignment of marketing activities with organizational level goals
By introducing a consultative approach to offering marketing services, Skalegrow strives to make growth simpler and predictable for B2B companies. From SEO-led content and video marketing to LinkedIn organic marketing and email marketing, we offer a complete suite of marketing services to the IT, SaaS, tech, and embedded systems industries. If you are looking for help in implementing marketing tactics that work, please write to us at email@example.com.
About the author
Naseef KPO is the Founder and CEO of Skalegrow. He comes with rich experience across multiple areas of B2B marketing including content marketing, demand generation, SEO, account based marketing, marketing analytics, revenue attribution, marketing technology, etc. He writes thought-provoking and relevant articles on The Skalegrow Blog and his weekly LinkedIn newsletter Elevate Your Marketing.
Prior to starting Skalegrow, Naseef led large marketing teams in multi-million dollar B2B organizations where he made significant contributions to the topline growth of the business. He has also appeared on numerous podcasts where he shared his thoughts on trending marketing topics such as the application of AI in marketing, startup marketing, ABM, and B2B content marketing, just to name a few. Being the founder of Skalegrow, he is currently focusing on helping its clients stay ahead of their competition by using innovative yet practical marketing tactics.
You can connect with Naseef KPO on LinkedIn.