Sure, at first glance it makes sense. Attributing revenue to all the marketing channels that you spend money on seems to make sense if you are trying to calculate ROI. It will also eliminate the issue of double-counting sales across marketing channels. However, this methodology ignores all of the other important factors that drove a customer’s purchase and only gets you part of the way there. It doesn’t answer the question of: What's the incremental portion of sales that marketing drove and what were the other revenue drivers?
Non-marketing Treatments that Drive a Purchase
Marketing treatments are fairly easy to identify – Catalog, Email, Display Advertising, Affiliates, Search – but what are non-marketing treatments?
- Customer driven – This is important. For established brands that have spent millions of dollars on advertising for many years, brand equity may account for a large portion of sales. Customer driven sales can be seen in everything from repeat purchases to trademarked/branded natural search, and direct load to the website. One way to think about it is that if you were to turn off all of your marketing today, you would continue to see a portion of your sales tomorrow, next week, and next month. This is your brand equity and loyal customer base.
- Calendar effects – Retailers, for example, are fully aware that the holiday season has a huge effect on sales. Black Friday and Cyber Monday are what analysts benchmark against every year. Marketing clearly has an impact on the success of sales during the holidays, but the holidays themselves – knowing that Santa must deliver gifts on Christmas morning – should also take credit for a portion of the sales.
- Store/Trade area – Simply having a store in a convenient, close proximity accounts for a portion of sales. If a customer purchases from your store every Thursday after eating lunch across the street and receives an email from you, is her purchase this Thursday because she received an email from you or because she is a loyal customer and your store is convenient?
- Promotional effect – Separate the impact of a promotion from the marketing treatment. The 50% off promotion and the postcard to advertise it are both likely drivers; measure the impact of each portion.
- Customer events – Inviting a customer to a VIP event in a store with wine and cheese, resulting in a large purchase at the event – again, the credit is likely shared between the marketing to promote the event, customer loyalty, and the event itself.
Measuring the impact of each revenue driver is complex, but necessary, to fully attribute revenue and to know what’s working. Click here to learn more.
Time and time again we’ve heard companies use the terms “matchback” and “attribution” synonymously. They are simply not the same thing.
Marketing effectiveness was easier to see when we only tracked explicit (ie. customer self-identifies with a promotion code) response sales in one or two channels. Explicit response feels reliable because the marketer is rather confident that the customer was seeing that piece of media when they purchased. Matchback, a.k.a. implicit response, attempts to capture the remaining effect of marketing when an explicit response wasn’t tracked. The online equivalents are simply clicks (explicit) and impressions (implicit).
Experian Channel Match℠ and Abacus ChannelView® are matchback programs, which are processes for understanding who received various marketing treatments across multiple marketing channels. A multi-channel matchback is helpful in creating a “customer event history” – a cornerstone for revenue attribution. In other words, a matchback only provides a piece of the data needed to start an attribution study.
To be clear, matchbacks are important. They can help identify external prospects (list rentals) that purchased without using a promotional code and were previously untrackable. However, only using matchback and not attribution will result in double-counting sales. For example, a matchback process may link a person who was mailed a catalog with their behavior in some other marketing channels, but it won’t accurately account for all revenue. Hence, the sales double-counting. In addition, attributing revenue only to marketing treatments doesn’t account for the impact of the trade area, brand equity, or calendar effects (more on this topic in an upcoming post).
To learn more, click here.
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UpStream Team was in our office for a meeting, and we captured the day with a picture. Our team is headquartered in San Francisco, with team members in Los Angeles, Seattle, Portland, and Hyderabad. Great seeing everyone!
Marketers face the challenge of understanding how spending on marketing affects conversion.
Techniques for attributing revenue, such as marketing mix models, came from the CPG world as a way to measure marketing effectiveness. As the number of marketing channels increases, traditional methodologies no longer work. The blockbuster limitation: they are built on aggregate data.
Why is aggregate data a problem for attributing revenue?
By definition, using event data (ie. opening an email, receiving a catalog, purchase, browsing the website) requires the ability to capture all of the events that occur for each person. By aggregating the data, you can’t see who received which marketing treatments.
For example, let’s assume that these events occurred last month:
2 million catalogs
1.3 million emails
600K paid searches
100K display impressions
50K affiliate clicks
By aggregating the data, you won’t know that John received a catalog, 2 emails, 3 display impressions and then made a purchase, while Jennifer went directly to the website and purchased without any marketing touches. Aggregate data would assume an average of the marketing treatments for John and Jennifer. Conclusions drawn from aggregate data can be incorrect.
What are the benefits for using customer-level data for revenue attribution?
Two main benefits:
1 - Customer-level revenue attribution is accurate
A holistic view of a customer incorporates each customer’s previous purchase behavior, each marketing treatment a person is exposed to, the decay of a treatment’s impact over time, the person’s digital footprint, and the customer’s proximity to the trade area. By creating this view, you can quantify the value of a single treatment among multiple marketing campaigns.
2 – Customer-level revenue attribution is actionable
Identifying and attributing the revenue drivers is helpful, but applying that information and making it actionable is what marketers crave. Customer-level data allows for response models which predict each customer’s likelihood to purchase as well as the sensitivity of a customer to the next marketing treatment. Does this customer need the catalog to purchase? Optimizing each customer in this way – identifying the most profitable channels for each customer and the most profitable customers for each channel – can revolutionize how marketers think about planning and ROI.
Take the next step and learn more.
Over the years marketers have attributed revenue using a variety of methods – last or first click, weighted or cascading attribution, complex heuristic rules, marketing mix models – but none of these methods were accurate or actionable. For some companies, the inability to integrate disparate data sources, including offline and brick & mortar data, limits the multi-channel view. Others struggle with the age-old question of what to do with attributed sales regardless of the accuracy.
Outlined below are five benefits of attributing revenue accurately and what to do with that information:
1. Understand revenue drivers using ALL of the data
Developing a comprehensive database of all of a marketer’s data is complex and one of the most time-consuming parts of the process. Many top retailers capture rich information that should be included such as:
- Catalog mail file
- Email sends/clicks/opens
- Retargeting clicks/impressions
- Targeted Display
- Comparative shopping site history
- Affiliate behavior
- Paid search
- Natural search
- Social media behavior
- Brand Equity (purchases driven by previous marketing)
- Store area
- Calendar Effect
By including all of the data – online and offline – a marketer can understand the revenue drivers for each channel, as well as what is not driven by marketing at all. For established brands with a loyal customer base, large portions of sales may be attributed to brand equity and prior marketing. Why let an ad take full credit for a purchase if we know the customer was near a birthday and more likely to purchase anyway?
The icing on the cake is that there’s now a database with everything – which can be leveraged for other analyses or for creating triggered marketing programs!
2. Quantifies the value of a single marketing treatment among multiple marketing campaigns at the customer level
Inspired by biostatistics, UpStream’s revenue attribution methodology uses time-to-event modeling which incorporates the decay of a treatment’s impact over time. In other words, the timing, order, and combination of marketing treatments will impact how much of each individual’s purchase is attributed to each marketing treatment. Understanding the value of each marketing treatment is the first step in creating a customer contact strategy for each customer.
3. Determine the value of a single marketing channel in a multi-channel setting
Zoom out of the detail of the value of each marketing treatment and understand what each marketing channel contributes to the big picture. Come budgeting time, each channel will need to have spend and sales targets based on the value of each channel. Does the Affiliate channel really drive a large portion of sales or is the channel overly allocated? If Paid Search accounts for 2% of my attributed sales instead of 5%, and is 4%of my overall spend, should I continue to invest or cut back?
4. Understand what motivates individuals to buy
With customer-level revenue attribution, each customer’s shopping and purchase behavior is rigorously evaluated. The result is a view of the customer that shows insights such as:
- CustomerA buys every year in November for holiday gifts, and is more likely to purchase from a catalog than any other channel. Send catalog.
- CustomerB isn’t moved by catalog, but responds to email as well as display ads. Send email and serve retargeted ads to customer.
- CustomerC is just as likely to purchase after receiving a catalog or email, purchasing in the retail store. Send email.
Each company will have different goals – optimize for best ROI, invest deeper for new customer acquisition, send best customers a catalog for branding even if they will purchase through email – so understanding the motivators will help marketers determine the strategy that works for their customers.
5. Know where the next marketing dollar should be spent
Now that it’s clear what each marketing treatment and channel is contributing, and what motivates individuals to buy, the next step is to determine where to spend the next marketing dollar. Having the ability to identify the most profitable customers for each channel and the most profitable channels for each customer at the same time enables marketers to determine what the optimal spend should be.
Using the yield curve below, a marketer would know that $20M in marketing spend would generate $120M in revenue, and that the next $1K spent would = $1K in revenue. Spending to break-even allows the company to invest in growth while not over or under spending.
Learn more about Advanced Revenue Attribution or sign up for a demo.
UpStream is a suite of cloud-based software to manage big data problems: customer level revenue attribution and multi-channel optimization, event-triggered marketing, and planning and reporting. But what does that really mean? It means that there is finally a comprehensive set of tools for direct marketers to manage their businesses and make decisions using the whole picture!
Customer Level Revenue Attribution
Most marketers find themselves with messy data. They have multiple marketing and order channels, disparate databases, and various execution platforms. One retailer’s method: manually attribute weekly sales to the marketing channels using metrics from various tools (web analytics, ad server, affiliate portal, search and email providers, and internal customer database) and any remaining sales go to catalog. This appeared to work – until they ended up with a week of negative sales using this method!
UpStream uses a patent-pending time-to-event methodology borrowed from biostatistics that accurately attributes all of a marketer’s sales to the appropriate marketing channel. In addition to all of the typical marketing channels, UpStream measures the impact of Customer Driven (loyalty), Calendar Effects (seasonality), and Store Area.
Multi-Channel Optimization
Great. Attributed revenue is interesting, but what do I do with it? Marketing mix models and other attribution tools provide an analysis that is not actionable and out of date as soon as it’s released. UpStream’s Revenue Attribution goes beyond that by feeding its Optimization module – it simultaneously identifies the most profitable channels for every customer and the most profitable customers for every channel. The marketer inputs a few variables such as upper spend limits for each marketing channel and frequency of marketing treatments, and UpStream identifies which customers to market to and generates a customer list for the marketer.
Event-Triggered Marketing
Automated marketing programs are a great way to build top line revenue with minimal IT support. Using the same data used for Revenue Attribution, marketers can create Event-Triggered Marketing campaigns. These campaigns target the right customers at the right time with the right message, using flexible triggers based on customer behavior online and offline (web activity, customer purchases, etc.).
Triggers can be used to encourage purchases, engage repeat purchases, nurture prospects, drive to store, and support customer service. Read more about Event-Triggered Marketing: Real World Examples.
Planning and Reporting
Most marketers create marketing plans and reports in Excel. Version control, importing result data from multiple platforms, and the complexity of multiple channels are just a few issues they run into.
UpStream’s Planning and Reporting solution replaces the spreadsheet nightmare with an intelligent and useful planning database. The tools effectively plan and track numerous campaigns across multiple platforms, link campaign performance, control costs, and ensure marketing treatments are executed to maximize results. From predicting response rates based on historical data to easily running custom reports to read the results – it’s never been easier than now using UpStream’s integrated planning and results database.
Using the right tools can make all the difference. Learn more about UpStream’s integrated marketing performance management system.
Smart businesses can use Event-Triggered Marketing in many ways – to encourage a purchase, engage repeat purchasers, nurture a prospect, drive store traffic, and support customer service. Finding the best triggers to drive your business will depend greatly on who your customer is, how you engage with them, and your diligence in testing different triggers, audiences, and messaging.
Encourage a purchase
Customers appreciate emails that are helpful and relevant. Here are a few examples of how to encourage purchasing behavior:
- Suggest items to users who browse specific items and didn’t purchase. Offer an incentive or similar item (or category of items).
- Complete the Collection emails inform buyers who only purchased some items from a collection about the other items that they did not purchase.
- Educate users with content about products they browsed. This is especially useful for technical purchases such as water proofing, UV protection, or easy-clean fabric.
- Accessories are the icing on the cake! Offer highly engaged users a coupon or incentive to purchase add-ons or accessories
- Reduce abandonment by sending users who abandon items in their shopping cart a reminder or coupon/incentive to complete the purchase. An alternate message could be to educate the user about similar items.
- Highlight a limited-time sale. Identify users that have browsed one of the sale items in a specified timeframe but did not purchase and notify them that the sale is about to end.
Engage Repeat Purchasers
Repeat purchasers are ideal for Event-Triggered Marketing since they are familiar with your brand and have established a behavioral pattern.
- Reminder to replenish consumable products, such as make-up, just before the end of the average expected life span.
- Alert for new arrivals to purchasers of similar products in the past.
- Seasonal alert for holiday or seasonal purchasers that the next season’s items are available
- Notify Bargain Hunters who purchased sale items in the last 180 days and inform them of new products that are now on sale from the same category
Prospects
Nurture your prospects with content that familiarizes them with your brand and products.
- Welcome and introduce the company in a nurturing series. For example, send three emails over the next three weeks with content about their top three browsed brands and a fourth email highlighting sale items.
- Incent the prospect to purchase with a first purchase discount coupon.
Drive to Store
Support the retail channel by creating persistent store traffic drivers.
- Invite customers who have purchased certain items or have spent a minimum threshold to a special event or customer experience. For example, a kitchenware company can host a cooking class or wine and cheese pairing for top customers; a clothing retailer could offer a preview night of the next season’s apparel.
- Reactivate customers that have not shopped in a specified period of time and invite them back with a personalized Store Manager message.
Customer Service
Find ways to surprise and delight your customers, or preempt customer service issues before they unfold.
- Preempt customer service issues by identifying and contacting customers that browse product reviews after they purchased an item
- Identify browsers of out of stock items and inform them when the item is back in stock
- Thank customers who shopped in store, purchased above a specific $ amount, are long-time customers, or frequent shoppers.
With a little creativity, effort to understand customer behavior, and the right tools, developing a triggered marketing program can have a huge impact on your bottom line.
Interested in learning more? Sign up for a free customized demo.
Marketers spend much of their time planning. To save you time, here are six quick tips to think
about when planning your Event-Triggered Marketing campaigns.
1 – Create Triggers that span the entire sales life cycle
For top of the funnel browsers, create triggers that educate them on your products. For bottom of the funnel browsers, close the deal and incent purchase with an exciting offer.
2 - Create Triggers that attract both new and repeat buyers
Help new buyers find the right products or entice their first purchase. Reward your loyal, long term customers.
3 – Be Helpful
Help users explore and find products, as well as promptly addressing deficiencies (out of stocks). Suggest complete the collection items or products that are similar to items they browsed but didn’t purchase.
4 – Automate
Develop rules that help automate repeating scenarios such as holidays or seasonal events. Other examples are abandoned cart, welcome, or back-in-stock emails.
5 – Personalize
Create messages relevant to the event. A/B test copy, creative, and rules for triggers.
6 – Measure
Monitor and evaluate the size of the audience in each event. Measure the effectiveness (click-through, response rate, opt-out) and modify or remove the triggers that don’t work.
Read more about Event-Triggered Marketing, or sign up for a free demo.
This is the first article in a series about Event-Triggered Marketing.
Sometimes referred to as marketing automation, event-triggered marketing is a customizable marketing action (email, direct mail, or outbound phone call) “triggered” by an event, multiple events, or even the lack of an event.
The triggers are marketing actions are highly customizable by marketing channel, prioritization/hierarchy among events, cadence and priority of trigger(s), creative templates, and offers/incentives.
Here are a couple examples:
Example 1
- Anyone who browses boots with a price of $250+ at least 3x in the same week but did not purchase
- Send an email 24 hours later, pre-empt all other offers
- Use email template 234 with image of boot and offer for free shipping
Example 2
- Anyone who purchased $1,000+ in the past 6 months in the retail store or online
- Send an email, but do not pre-empt any other offers. Limit to one send per quarter
- Use email template 567 with an offer for 10% off next purchase
What information is used in Event-Triggered Marketing?
Actually, just about everything you have available! UpStream typically uses a combination of the following:
- Web traffic (Coremetrics or Omniture)
- Email (sends and unsubscribes)
- Transactions (web, mobile, call center, and store purchases)
- Products (hierarchy and description)
- Users (mapping information such as user id, cookie id, email)
Obviously, the more information that is available, the more powerful the triggers are.
Interested in learning more? Sign up for a free demo.
Bella Pictures, a national wedding photography company, uses UpStream’s Expense Tracker to calculate Cost Per Lead (CPL) and Customer Acquisition Costs (CAC) for all marketing campaigns – by brand, marketing channel, vendor, and market. This visibility helped increase efficiency by over 60% by driving business decisions such as investing deeper into specific markets and cutting programs that were not effective.
Associating costs with meaningful attributes (time, vendor, market, brand, and channel) was the first step for Bella. As the complexity of the business increased, tracking the costs and ROI in Excel was no longer feasible, so Bella turned to UpStream for a solution.
UpStream’s Expense Tracker has an Excel front end and sits on a SQL database. UpStream pulls in Bella’s lead and customer data from SalesForce and applies business rules to calculate the ROI, as well as other important metrics. A simple report refresh – replacing what used to take hours of cutting and pasting a multitude of reports in Excel – updates in mere seconds!
Elizabeth McBain, Marketing Manager for Bella Pictures, says, “Before we started using UpStream’s Expense Tracker, I would cringe when it came time for reporting on marketing costs. UpStream is so effective while being almost effortless - I can’t believe we ever used to work without it!”
Bella Pictures ®is the first and only national wedding photography and video company to provide a trusted brand name and award winning service to style-conscious couples seeking premium wedding photography. Bella Pictures has the largest and most selective photography network in the country, with fewer than 5% of applicants certified. Using a proprietary matching process, Bella Pictures has delivered nearly 20,000 weddings at a 99% customer satisfaction rate. Find out more at www.bellapictures.com.