Advertising is often seen as an art, relying on creativity to spark emotional resonance in marketing campaigns across traditional and social media channels. However, any savvy marketer knows marketing is just as much a science, where success depends on data and analytics. This is especially true in revenue attribution, an increasingly popular tool that measures the financial results of marketing activities with mathematical precision.
Today, many corporate marketing teams use some kind of attribution tracking. Here’s a breakdown of common revenue attribution models, their benefits, and best practices.
What is revenue attribution?
Revenue attribution, also known as marketing attribution, is the process of organizing marketing touchpoints—such as email campaigns, social media interactions, or paid advertisements—and assigning value to them based on how effectively they drive sales.
In the process, you gain a better understanding of how effective multiple channels are and hold marketers to clear accountability and performance standards. Because revenue attribution yields data-driven insights, marketing teams are better equipped to understand and predict which strategies work and how to improve or discard them.
Revenue attribution tracks an array of key performance indicators (KPIs) and essential business metrics, including:
- Customer lifetime value (CLV)
- Customer acquisition cost (CAC)
- Number of leads generated
- Revenue per lead (RPL)
- Length of sales cycle
- Average deal size
- Engagement rate
When attributing revenue, marketers analyze these metrics for each campaign and give the sales team a general indicator of performance.
Revenue attribution vs. conversion tracking
Revenue attribution is sometimes compared to conversion tracking. Both measure customer interactions, but their main differences lie in scope and goals:
- Conversion tracking. This monitors specific consumer actions—such as online shopping cart additions, email newsletter subscriptions, form submissions, and link clicks—to determine engagement levels at different points in the sales funnel.
- Revenue attribution. Revenue attribution focuses on tracking the entire customer journey across multiple channels—including interactions with landing pages, apps, salespeople, and display advertising—to determine how effective marketing activities are at generating revenue.
Benefits of revenue attribution
- Better sales reporting
- Optimized resources
- Improved customer profiles
- Informed marketing channel auditing
- Sales and marketing alignment
The benefits of using revenue attribution to gauge your marketing strategy performance include:
Better sales reporting
By implementing revenue attribution, you can precisely track the sales generated by individual marketing channels. For example, revenue attribution might show an email marketing campaign produced a high customer conversion rate. It might also show an Instagram-sponsored post with a lower conversion rate resulted in higher revenue per transaction or average deal size.
Optimized resources
By understanding which marketing channels are producing the highest revenue and return on investment (ROI), you’re better equipped to adjust your marketing budget.
Improved customer profiles
By looking at revenue attribution, you get granular data on where and how potential customers interact with your content, products, and services. This data gives you a wealth of insights you can use to craft more targeted, personalized marketing.
Informed marketing channel auditing
Many businesses today use omnichannel marketing, which includes email marketing, social media, paid media, search engine optimization (SEO), and in-store campaigns. With so many channels to track, it can be difficult to cut through the noise. Revenue attribution helps you understand the tangible performance of these touchpoints and quantify sales.
Sales and marketing alignment
As many as 90% of US sales and marketing teams report seeing a disconnect between their departments. Because revenue attribution relies heavily on data provided by both marketing and sales efforts, collecting this information can open up invaluable lines of communication and cooperation between these two essential teams.
Revenue attribution models
Revenue attribution is typically broken down into two distinct approaches:
Single-touch attribution
As the name suggests, the single-touch revenue attribution model allocates all of the revenue credit from a sale to a single touchpoint or channel. The final conversion is usually assigned to either the first touchpoint (first-touch attribution) or the last (last-touch attribution) that a customer interacted with before making a purchase.
- First-touch attribution. This attributes revenue to the first point of engagement from a lead; if the customer’s first interaction with your brand was clicking on a third-party website ad, all revenue made from that customer’s purchase is attributed to the ad.
- Last-touch attribution. If a customer finds your website through a Google search, signs up for your email newsletter, and then purchases something via a link in the newsletter, the email link is considered the last touchpoint and receives credit for the sale.
Multi-touch attribution
Multi-touch attribution models (MTA) assign credit to multiple touchpoints contributing to a conversion. MTA provides a deeper understanding of attribution, offering you more precise data to use in targeted marketing efforts. Common MTA models include:
- Linear attribution. In a linear model, revenue is distributed evenly across all touchpoints in the customer journey; so, if a customer clicks on your ad, signs up for emails, and then makes a purchase through an email link, the revenue is apportioned equally to each touchpoint.
- Time-decay attribution. In a time-decay model, revenue credit is distributed to all marketing touchpoints as with a linear attribution model, but with greater weight given to those closer to the time of sale.
- U-shaped attribution. In a U-shaped model, most credit is assigned to the first point of and last points of engagement, with the rest divided between the touchpoints in between. For example, 40% of the credit might be attributed to the first touchpoint, 40% to the lead creation, and the remaining 20% divided among other marketing touchpoints.
- W-shaped attribution. A W-shaped model is similar to the U-shaped attribution model but with a third touchpoint between initial contact and lead creation called the opportunity creation touchpoint (where customers know about your brand and want more information). In this attribution model, these three main touchpoints might each receive 30% of the credit while the remaining 10% is distributed evenly among any other touchpoints.
Best practices for revenue attribution
Although revenue attribution is a shrewd business practice in and of itself, you can harness its full potential by adopting these best practices:
Set clear revenue goals
Revenue attribution tells you how to attribute revenue to various marketing channels, but offers little insight into whether the channels are successful unless you set individual goals for each.
Use customer journey tracking
Track leads and individuals on their customer journey, from brand awareness to final purchase. Shopify integrates with platforms like Google Analytics precisely for this purpose, helping you identify potential improvements for websites, apps, and other sales channels.
Create a one-stop data hub
Capture marketing data and store it in a customer relationship management (CRM) platform, a single repository for all your data. Having a CRM ensures both your marketing and sales teams have access to critical revenue attribution data at their fingertips.
Revenue attribution FAQ
What is attributed revenue?
Attributed revenue is the percentage of revenue from a sale that can be credited to a particular marketing channel. Some revenue attribution models attribute 100% of the credit to one channel (like first-touch attribution) while other attribution models credit revenue to multiple marketing channels.
How do you calculate marketing revenue attribution?
Calculate revenue attribution first by tracking all the customer touchpoints that contributed to a sale by using a platform like Google Analytics. Once you’ve selected the appropriate revenue attribution model, divide the revenue from a given sale according to the apportionment schedule of that model.
How do you get started with revenue attribution?
Research and select a platform (such as Google Analytics) that can track the customer journey. Amass a financial quarter’s worth of revenue data before you have enough for accurate attribution reporting to adjust your marketing and sales strategies.
