Few topics get a go-to-market leader’s heart racing like attribution. What might seem like an arcane exercise in accounting is actually the key to an effective GTM engine, but at the same time is also rife with challenges and pitfalls. In this blog, we take a deeper look into attribution, how to do it right, and how to screw it up.
The first thing you need to do when discussing attribution is define what you mean by attribution. Is it attribution by marketing channel? Is it attribution by campaign? Is it attribution between sales and marketing? Is it attribution by asset or touch-point? All of these are considered part of attribution but mean vastly different things.
I learned the hard way that the term “attribution” means different things to different people. I was interviewing for a CMO job and the interviews were going very well. In an interview with the president of the company, we were discussing how best to support the sales team, and he asked me what I thought about “attribution.” I assumed that he meant attribution between sales and marketing and I told him that this is an area not to spend too much time on because it was kind of a lose-lose topic (more on this later). He gave me a puzzled look but seemed to get it. Only later did I find out from the recruiter that he meant attribution across marketing channels and he was surprised I didn’t think it was more important (which it is). Needless to say, I did not get that job.
This was just one of many painful lessons learned about the importance of attribution. So why is attribution so important?
Attribution tells you what is working and not working. It tells you which channels or campaigns are generating the most inquiries and leads or MQLs, how those leads progress throughout the journey, and most critically, which leads turn into sales opportunities, and which opportunities close. It's a very simple concept, but incredibly complex to implement and track. But this tells you where to invest your funds going forward, and which areas need attention or fixing. Without attribution, you are literally flying blind and will have no idea which of your dozens of marketing channels, campaigns, or hundreds of other touch-points are actually working to help drive the business.
It’s All About Business
The first point to know about attribution is, it’s about closed business. Yes, it's nice to know how many inquiries, leads, or opportunities a channel or campaign created so you can tweak the tactics on your campaigns. But if they don’t close, then they are not helping the business. In fact, you could make a very strong argument that generating leads and opportunities that don’t close at a high rate are actually hurting the business because they waste resources that could be spent on opportunities with higher close rates.
So yes, you need to attribute through the entire customer journey and beyond that into the customer lifecycle to improve tactics throughout the journey, and optimize your spend. But what generates revenue or bookings is much more important than top-of-funnel production or even pipeline generation.
Who Cares About Attribution?
Part of the reason to focus on closed business for attribution is because the audience for attribution is not just the marketing team, but sales and sales leadership, the executive team, especially the CEO and CFO, and the Board. And these people don’t care about inquiries or top-of-funnel unless they move the needle of closed business. Attribution is the CMO’s fact-based scorecard on how marketing is contributing to the business. And that increases Marketing’s credibility, and it also tees it up for more spending to drive more business next quarter and beyond. Your CFO will understand this language, and you need friends when budget time rolls around.
Attribution by Channel
Attribution by channel is critical for marketing to track because you need to know which channels are producing for you. And within channels, you need to know which sub-channels are performing (ie within social, Facebook, LinkedIn, Instagram etc). Other execs might not care that much about each channel as they are focused on the overall picture, but as a marketing leader or demand generation expert you need to get into the details of channel performance. This tells you how well you are allocating your marketing spend, and where to spend money going forward. This is really Step #1 for your attribution strategy. Without strong attribution by channel from top-of-funnel to closure, you’ll never know what's working and not working, nor how to optimize the system.
But remember that some channels don’t attribute very well despite making significant contributions. Some things are just hard to measure. Display ads, advertising, retargeting, trade shows, and conferences do not attribute very well and if you just looked at attribution, you would never do any of them. But they do have an impact on all channels with increased visibility and awareness, which you can see if and when you stop doing them. Marketing has become a science but not everything can be measured, which requires some discretion when determining your channel budget allocations.
Attribution by Campaign
Campaign attribution typically across multiple channels is super important to track all the way through revenue so you can tell which campaigns are moving the needle for you. This can also help you ID problems further along in the journey where your SDRs or sales reps are involved. Some campaigns generate a tremendous amount of interest and leads only to result in no revenue impact. What happened? Were the SDRs not able to turn the SQLs into opportunities? Was the sales team unable to sell these opportunities the value proposition the campaigns promised? Many times it's a training issue with the teams downstream that are out of sync with the campaign. Or possibly the product can’t deliver what the campaign is promising. Either way, tracking attribution through closure is the key to optimizing performance. No one needs pipeline that never closes.
On the flip side, seeing which campaigns have really high SQL to close or opportunity to close rates can help you identify good GTM campaigns going forward. You’ll want to invest more in these campaigns that show good returns, and potentially understand why marketing can’t generate more of them.
Attribution by Asset
It's also important to track attribution down to a granular level. Which specific assets had the most impact on closing business? Which pieces of content were downloaded or viewed by a high % of closed deals? Which webinars or videos did closed deals watch? Which pages did they visit on your website? Which VIP events drove the most business? Which keywords from your SEM and SEO efforts drive the most closed deals? These things will tell you at a granular level what is working to drive business and obviously, you want to do more of these things. And they’ll also give you the somewhat painful data on which assets are having no impact at all. This can be a sobering and somewhat depressing view given all the time and effort that goes into creating these assets and events, but you learn from them and you get better going forward.
So given the above dimensions of attribution, all of which overlap with each other, you have this 3-dimensional attribution model by channel, campaign, and touch-point to track regularly, understand and optimize. This might seem complicated but it's really just getting started as you may want to add other attribution dimensions over time like distribution channel or partners, product line or service, and the most hotly contested, sales attribution.
Attribution between Sales and Marketing
Many marketing leaders start their attribution journey with the idea of rationalizing their existence and their budget by trying to determine marketing’s contribution to the business through attribution. This can be a dangerous game. Because when you say some amount of business is “marketing generated” or “marketing sourced”, you are also saying it was not “sales generated” or “sales sourced”. This can cause hard feelings among your sales teammates who may disagree with both your data and the fact that you are calling out your contribution at the expense of theirs. You have created a zero-sum game and unfortunately, it's not a win-lose game but more of a lose-lose game.
Arguing with sales over marketing’s attribution is like fighting with your spouse over whose fault it is when something goes wrong. Winning the argument is actually losing the game. And losing this game means losing big and won’t be forgotten anytime soon by your partners in sales.
There are just too many variables in play for marketing or sales to take complete credit for any part of the journey, whether it's sourcing, accelerating and progressing opportunities, and closing them. Marketing and sales both play a key part at every stage. You may think that something like sourcing should be straightforward because whoever finds the new lead or account should get credit for it. But many times sales have been doggedly calling into an account for months with no luck, and then the account downloads a piece of content from the website. Who gets credit? Both teams deserve some credit and that’s the attitude you should have.
Also, I've seen other terms used frequently like “marketing influenced” or “marketing contribution” and honestly they just sound kind of weak. Like you are trying to justify that you did your job and if the company didn’t hit targets, it wasn’t your fault. This is not a team attitude.
In the end, it’s really simple. There’s winning and losing. And you win as a team and lose as a team. How many times do you see a football QB blame the defense for losing a game? Or a baseball pitcher blame his hitters for not scoring more runs. These players know they play a team game and everyone must play well to win. Business and GTM are no different. And B2B SaaS is very much a team sport.
When working with sales, focus on top-level team goals like pipeline and bookings. When you hit the target, it means you are winning as a team, and not hitting them means you are losing as a team. You are not sales and marketing teams but more of one GTM team.
Having said all of that, sometimes a sales leader will want to know how much his/her sales team is prospecting and will want to track “sales generated” leads. In this situation, and working closely with sales leadership, I will track this number in the interest of improving sales performance. But I won’t share it widely and won’t publish it as one of our topline metrics lest it create hard feelings.
There are several attribution models, and much debate about which ones work best to attribute leads that turn into opportunities and closed deals. Single-touch is the most simple, attributing a deal to the one single touch that either created it (first touch) or the final touch before it closed (last touch). You can make valid arguments for either as being critical to the process. But in each case, you are ignoring everything else that happened along the journey. As a result, multi-touch attribution tries to give credit to all touch-points along the journey that influenced the deal. There are a variety of multi-touch models from U-shaped that overweight first and last touch, to W-shaped that also overweight middle touches, to algorithmic models that try to determine which touches are the most impactful. You’ll need to decide which model is best for your business. No matter which you choose, make sure you understand the benefits and limitations of each model and make allocation decisions accordingly.
Key Attribution Metrics
Finally you need to track and monitor all your attribution metrics on a regular basis to drive your decision-making on spending, channel allocation and campaign focus. Make sure you are tracking metrics are dollars based not unit based. In other words, marketing and sales pipeline should be measured as a dollar amount to calculate conversion, not as a number of leads or number of deals. Not all deals are the same size. And the end result is a bookings or revenue number in dollars, so the sooner in the journey you start measuring dollars the better. This might require making some assumptions on the value of deals at an early stage, before sales can qualify it in more detail.
In my opinion, customer acquisition cost (CAC) and lifetime value (LTV) are the two key metrics to track across all attribution dimensions. The ratio LTV/CAC will tell you exactly how much each channel, campaign or even keyword is adding to your business based on their relative spend. CAC and LTV are not trivial to calculate so this is a whole other area to focus on (and potentially another blog post). Within CAC and LTV, you have key conversions that you’ll also want to track along the journey. Key conversions for me are:
- $ Spend to Inquiry
- Inquiry to MQL
- MQL to SQL
- SQL to Opportunity
- Opportunity to Close
- MQL to Opportunity
- MQL to Close
- SQL to Close
Attribution is a process, not a destination. This is one area where you will never be “done” so allocate resources to it accordingly. It will be an on-going investment. It is best to start small and build from there. But as we have seen, attribution is essential for effective go-to-market strategies. It enables informed decision-making, optimal resource allocation, and if done right, can facilitate tight collaboration between sales and marketing. By accurately attributing efforts to closed business, your GTM team gains insight into what works and what needs improvement across many dimensions and functions. And with this info, you can continually optimize to get the most from your budget and GTM team.