By In a perfect world, you'd know precisely what marketing activity led to the lead generation for your B2B technology company. But in the real world of B2B marketing, where a visitor may experience multiple touchpoints before becoming a contact, it's not always clear cut.
With that said, to optimize business for success, we must: A) identify the touchpoint(s) that led to a sale and B) decide how much weight each receives. And the good news is with most of the buyer's journey online, you can do this efficiently by tracking each marketing KPI through attribution modeling.
Types of Attribution Modeling
Single Touch Attribution: A simple way to attribute that credits either the first or last interaction with the lead. It's straightforward and may be "good enough" for some marketers. But it doesn't represent the complexity of the buyer's journey. You may end up cutting a critical lead-driver out of the middle because it's not getting any credit.
Linear Attribution: Multi-touch attribution modeling is on the "simpler side" as well and gives equal weight to all touchpoints over a given period. It does try to capture all touchpoints, which isn't always possible. But it may give too much weight to something that only plays a minor role, hindering optimization.
Time-Decay Attribution: A multi-touch model gives slightly less value to a touchpoint further away from the conversion. This one is common sense. The visitor finally saw something that made them act now, but what came before got them to this point. However, proximity doesn't always equal importance, so it's still "just good enough".
Dynamic Attribution Modeling: In this model, your B2B marketing software uses algorithms and AI to understand the buyer's journey over time better. It can juggle more data points to paint a 3D picture of customer behavior along the Buyer's Journey.
For example, how long people looked at certain content, where they looked on the page, and what they did next on multiple levels vertically and horizontally (individual, persona, channel, etc.) is what would be included in that. So, this method delivers the most accurate picture of your customer and how they interact with you. This also allows you to personalize the sales funnel.
But it's complex and tedious to set up each marketing KPI for the B2B technology buyer, can be inaccurate if not set up correctly, and can be more expensive overall. However, there are some ways to make it less cost-prohibitive.
Attribution Modeling & Marketing KPIs
Let's look at how this method can help you more effectively measure some of your most telling marketing KPIs that happen also to be the hardest to calculate without B2B marketing automation:
- CLV - Customer Lifetime Value
- ROMI or MROI - Return on Marketing Investment
CLV
CLV needs to take into account several metrics within a given period to truly represent CLV:
- ARPU - Average revenue person customer (that's fairly easy)
- WACC - Weighted average cost of capital (includes all debt and equity)
- Cost - Customer support costs
- CAC - Customer acquisition costs (all costs in marketing and sales that went into acquiring the customer across channels and touchpoints. This is where attribution modeling is critical.)
To calculate your CLV:
- CLV = ARPU - Costs / 1 + WACC
- Then, subtract CAC from that total.
This is a true representation of your CLV that many B2B technology companies rarely see. Getting to this accurate number gives you a clearer picture of your company's financial health and growth potential. Yet figuring out this number is hard without some marketing automation tools that can automatically gather and properly attribute data points across platforms.
MROI or ROMI
MROI is vital because it tells you if your brand building and inbound marketing efforts are working to bring marketing costs down while increasing revenues in a given period. Failing to use attribution modeling when calculating this number could cause you to cut a campaign that is increasing your ROI, and ultimately making you a stronger B2B technology brand.
To find out your B2B marketing ROI within a given time period, you need to:
- Multiply Revenues by Gross Margin (Gross margin is net sales: COGS.)
- Divide by cost of marketing (Once again, you need attribution strategy to accurately understand this number.)
- Divide the above by Cost of Marketing (again)
Increasing MROI is the long game in B2B marketing. Activities that may not seem to directly generate leads in the short-term, such as increasing your social media following, can pay off big time down the road.
But they also could do nothing. You could be focusing on the wrong platform or attracting the wrong audience.
When tracking your marketing KPI through dynamic attribution modeling, this is never in question. You can see how your social media presence correlates to lead generation. Use that knowledge to budget wisely and optimize to maximize MROI.
