Revenue attribution delivers the metrics marketers need to build winning strategies and prove their impact on business goals. So why are so few marketing leaders using it?
"The interesting thing about an objective truth is that it's true no matter what."
- Neil DeGrasse Tyson
Marketers tend to be optimists, even in the face of a pandemic. In some ways, it's a job requirement: if we didn't perpetually underestimate the effort needed to reach our goals, we might never have the courage to get started. But we need to add a healthy dose of reality into the mix if we're going to convincingly prove (to ourselves and the broader organization) that our marketing efforts generate revenue and deliver ROI.
Most marketers can see the writing on the wall. We know we can't keep using wishful thinking and marketing metrics such as views, clicks, and form-fills as a substitute for what we really want to measure: marketing's impact on revenue. Yet, in DemandLab’s 2021 Revenue Attribution Insights Report, we found that nearly 50% of CMOs still struggle to prove their impact on revenue. In 2021, when generating revenue has never been more challenging or more critical, it's time for marketers to connect the dots and create a system capable of converting vanity metrics into numbers that truly matter to the organization.
The Attribution Disconnect
The way success is measured, and goals are defined for marketers is changing. We are increasingly being held accountable to revenue and rewarded based on revenue goals. Over three-quarters of marketers revealed their need to show marketing’s impact on pipeline and revenue in a recent Demand Gen Report survey. Similarly, the 2nd Annual State of Revenue Marketing & Compensation Report showed that 72% of marketers are held accountable for revenue, up 7% from last year.
Those expectations are starting to impact marketers' paychecks, too. A growing number of organizations are also compensating marketers based on revenue and/or closed business. The State of Revenue report also highlighted that marketers with pipeline and revenue responsibility are 3X more likely to have a portion of their compensation tied to those numbers.
Yet, marketers who can measure impact on revenue are still the outliers, not the norm. Recent data showed that only 36% of marketers have a measurable strategy in place and one-quarter admitted to having no plans for building an attribution strategy at all.
So, what's holding the majority of marketers back?
Inertia, Silos, and Stacks
If you struggle to connect your marketing activities to revenue, you're not alone. Simply put, revenue attribution is hard. Very few marketers can claim to have a reliable attribution model in place, and it's not because they don't see the value in it. It's because to create one they need to overcome three significant challenges:
It's always easier to keep doing what you're already doing than it is to change and re-align your marketing processes around organizational goals (revenue) rather than traditional marketing goals (clicks, views, etc.). It is a big change. And that change extends beyond the traditional marketing "domain" to encompass sales and finance, making it even harder. To generate the required momentum, marketing leaders need to make a deep commitment to leaving the status quo behind and become change champions within their organizations.
To create an effective attribution model, you have to break down silos that have existed in virtually every organization for... well, forever. Tracing the buyer journey and connecting all the dots requires organization-wide buy-in and coordination between marketing, sales, finance, and IT. If your efforts to build a system of attribution begin and end with marketing alone, they won't get off the ground. It's as important to bring PEOPLE together as it is to bring TECHNOLOGIES together, which is a topic we cover in-depth in our eBook, Change Agents: The Radical Role of Tomorrow's CMO.
Getting the different layers of the marketing stack to play nicely together can sometimes seem like a never-ending task, but revenue attribution requires stack coordination across departments. You'll need to build an underlying data architecture that enables the data to flow from your website (and other digital properties) to your marketing automation platform and your CRM to establish a sightline from one end of the customer journey to the other.
More Revenue, Insight, and Ownership
Revenue attribution may be hard, but it's worth it. Being able to attribute revenue to specific marketing activities has a transformative impact on marketing's ability to generate more revenue, gain more insight, and take greater ownership of the role they play in helping their organization grow:
Marketing is like quantum physics, where just observing a phenomenon is enough to change it fundamentally. When you're able to track how revenue is earned through end-to-end attribution, the amount of revenue earned actually increases. Forrester Research analyst Tina Moffett reported that implementing a closed-loop attribution system resulted in a 15-18% revenue lift because it enables marketers to optimize programs based on more sophisticated performance analysis.
Being able to identify the revenue earned by specific marketing activities delivers deeper insight into what works and what doesn't. A Forrester study found that revenue improved digital-media marketing efficiency between 15-30% by enabling marketers to identify and eliminate waste. When you know which channels and campaigns are responsible for the greatest revenue gains, you can reallocate funds to areas that generate not just views and clicks but actual dollars.
Marketing is responsible for a longer and longer stretch of the buyer journey: one Forrester estimate suggested that buyers are up to 90% of the way through their journey before reaching out to a salesperson. That means more marketing touches, more campaigns, more content production, and distribution. But without being able to track that activity and align it with a specific sales opportunity, marketing remains an unsung hero. Revenue attribution enables marketing to prove that without those intensive efforts to nurture and accelerate buyers through the largest part of their journey, sales wouldn't have those opportunities to close.
A Revenue Attribution Framework
What's the first step in the journey toward revenue attribution? It begins with a framework that collects marketing data throughout the customer journey, from first touch through closed-won revenue.
DemandLab's Architecture Framework
The foundation of that framework depends on a data architecture that defines how data needs to be collected, stored, distributed, and consumed to support business requirements reliably. Once that foundational layer is in place, you need tools capable of turning high volumes of data into analysis that examines how that buyer interacts with your brand at every step. That analysis, in turn, generates insight that informs the decisions you make about what to keep doing, what to stop doing, and which new opportunities to explore.
Building that foundational layer of data architecture requires both technical proficiency and broad-ranging business expertise. You'll want to choose your core team wisely to ensure that both marketing and business requirements are being translated effectively into technical capabilities. If you don't have the right expertise on your team, this is an area where the right agency partner with specific experience in building a revenue attribution model can make all the difference.
Getting the data architecture right is the hardest part of the process and the most important because it creates a source of truth in which the whole organization can believe.
The data foundation layer of DemandLab's Attribution Framework
An effective revenue attribution model puts people at its center. That means that your data architecture is capable of collecting three critical data sets and associating those types of data with each person your company interacts with (and the definition of a "person" includes unknown and known leads as well as opportunities):
Source attribution enables you to determine where a person came from and what channel brought them to you. Examples might include a clickthrough from a search ad or syndicated article, a webinar sign-up, or attendance at a tradeshow. It's also essential to track the channels that subsequently re-engage the person, such as email campaigns or retargeting ads.
Campaign attribution tells you what specific offer or content attracted the person to one of your digital properties. For example, you might promote a single white paper through multiple channels, including a paid LinkedIn ad, an email campaign, and a series of tweets. Tracking the campaign and the source enables you to measure the relative effectiveness of different channels and different types of content.
This is where the rubber hits the road. The data set for revenue attribution tells you which people end up generating revenue for your organization, which means connecting multiple people from a single organization to a specific sales opportunity in your CRM. This is important because if marketing has engaged, nurtured, and qualified five different people from Company Q, all five are likely to have influenced the buying decision, even if only one of them converts into a sales opportunity. If all of that firmographically linked activity isn't tracked against revenue, marketing's true impact will be underrepresented. (And as a side note: if the process isn't seamlessly embedded in the sales workflow, it won't get tracked at all, and the initiative will be doomed to failure.)
An Objective Source of Truth for Marketers
Views and visits and clicks are important to marketers, and they will always be part of a marketer's toolkit. But clicks are not a form of currency that the rest of the organization understands or cares about: revenue is. And until we, as marketers, prioritize the work of building attribution frameworks that objectively prove our impact on revenue, we can't achieve our potential as vital contributors to overall business success.
We're all tired of chasing trends. But revenue attribution is not a trend. It's the new reality for marketers, and the longer we avoid it, the harder it will be to adapt.
A few parting thoughts to speed you on your journey toward revenue attribution:
GET THE CONVERSATION STARTED.
Building a revenue attribution model requires organizational buy-in. It's a "people process" as much as a technical process. Start engaging organizational leaders now to sow the seeds. Download the Change Agents eBook for tips, or download the complete boxed set, which includes the eBook and a step-by-step playbook.
IT'S HARD, BUT DON'T GIVE UP.
It's not just you: revenue attribution is hard for everyone. Chances are, you won't achieve it flawlessly the first time you try, but you'll learn a lot from the experience and get that much closer to your goal.
START WITH THE DATA.
New technology won't solve your attribution challenges, so don't get distracted by new toys. Virtually every marketer already has the basic elements of the "attribution stack": a website, a marketing automation platform, and a CRM. Focus on creating a data architecture capable of connecting the dots between these three elements.
DON’T BE AFRAID TO OUTSOURCE.
Attribution is a significant undertaking, and it’s not one that all teams will have the time, budget, or resources to execute. Most marketers agree that this highly technical and strategic process requires outsourced expertise. Consider agency partners or solutions, like DemandLab’s Sightline™, that will give your internal team access to the tools and expertise they need to achieve attribution success.
About the AuthorFollow on Twitter Follow on Linkedin More Content by Eric Hollebone