Channels Are Half the Story of Attribution. The Other Half? Attributes.
In the New Year, many marketers hope to define a solution for calculating Multichannel Attribution – their objective being to weigh the ROI of each channel along the winding, multi-touch path to conversion that their customers tend to follow. This is likely top of mind for your business as you enter into 2016, and you’re certainly not alone. Earlier this year, eMarketer reported that the #1 greatest challenge marketers identify when surveyed is “Analyzing campaign results across channels.” That challenge was closely followed by “Coordinating strategy of our campaigns across channels.”
Further down the list was “Lack of consolidated customer data”. For retailers, I think that should be first. But, more on that in a minute.
Some will tackle the aforementioned challenges successfully by leveraging one of the pure play Multichannel Attribution platforms that have proliferated over the last few years. In my experience, these platforms tend to be most actionable to businesses that focus marketing efforts toward a singular event, such as lead generation, service enrollment or the acquisition of a new customer. This is largely because the first transaction a customer has with your offering marks a defined point in time, and so the channels and campaigns that led up to that first, unique moment become the focus.
Representative verticals in this attribution scenario include Insurance, Higher Education and Professional Services, to name a few. For example, a consumer buys auto insurance once in a great while, and that event represents a single point in time for which the steps and path to conversion are more easily identified, tallied up and mapped. And since the consumer’s intent in these verticals (buy insurance, pursue a degree) is more focused on one offering or service, the mix of channels and the sequence of their interactions tend to be a more predictive part of the complex behaviors and touch points leading up to conversion. Sure, there are many auto insurance providers with different rates to choose from, but there are not thousands of options and tens of thousands of SKUs. The marketing touch points and channels engaged with by the consumer comprise a larger factor in the consumer’s decision making, leading up to a point-in-time conversion.
For retailers, however, channel is a smaller share of a much more complex story. Ecommerce retailers typically drive the majority of transactions from repeat, returning customers, who in turn make up an even greater share of revenue. And these customers return to the site heavily through a mix of retention and navigational channels such as direct traffic, email traffic, organic, branded paid search and remarketing. For repeat customers, the more predictive aspects of how they behave are segment-based. Recency, Frequency and Monetary segments are paired with the demographic and psychographic attributes that tend to co-relate with higher or lower Customer Lifetime Value. New customer acquisition can be an ideal retailer focus area for Multichannel Attribution platform technology, but the performance of marketing campaigns and channels to new customer acquisition, or performance within various customer segments, is only recognizable when tightly linked with solid CRM data.
To make a simple analogy, focusing on digital navigational channels that repeat customers return to is like focusing on which department store entrance at a mall a returning customer used. Those entering via the parking lot entrance are somewhat more loyal and pathing quickly to purchase; those coming in via the mall entrance are somewhat more in a comparative shopping mindset and there is a higher mix of first-time purchasers. But the differences are slight and not necessarily actionable. Yes, all the store entrances need to be convenient, inviting and always open, just as your branded paid search program should remain always on. But the real challenge lies in activating new or lapsed customers, and consequently, this is where marketing expense is dearest. To reach the most likely customers with direct mail and catalogs or via prospecting in real time bidding environments in display requires good customer data: RFM Segments, Seasonal Need, Family Composition, Product Affinity, Interests.
For a successful attribution program, a retailer needs to:
- First be able to differentiate the paths to conversion that are leading to purchases by new customers separately from those of repeat customers.
- Secondly, understand the sequence of touch points that lead to incremental revenue from higher LTV segments, as you cultivate those customers over time.
This is all possible with technology available to most retailers today. But for many, there is an implementation and tech enablement gap to configuring this vital analytical infrastructure. (We can help by the way).
So, in 2016, if you represent an established ecommerce retailer with a strong customer base seeking to grow with improved attribution understanding, ensure that you also have a solid foundation, strong customer data and defined segments built into your approach. Having a firm understanding of attributes like your best customer segments, their purchasing behaviors and their digital content engagement preferences can help guide more actionable strategies.