Suppose YOU own a small old-school electronics warehouse carrying an inventory of PC parts, laptops and electronics components.
So far you have hired 3 Sales Assistants to work 9/5 at your store.
One day first of the Assistants sees a potential customer staring at a new laptop model at the warehouse’s front showcase. Not losing a minute, the salesman starts his presentation describing the laptop’s features and technical specs. But unfortunately the guy doesn’t have any cash right away, so he leaves his phone number and e-mail address and decides to return to the warehouse later.
A few days later a second Sales Assistant is looking through his colleague’s sheets and finds a note with the potential customer’s phone number. So he calls the guy and after a short intro offers him a 15% OFF till the end of the week. The potential customer feels very excited but still has no money for purchase. “Well. At least I tried.” – the 2nd salesman thinks and gets back to his work.
On Sunday, right before closing time the future client runs into warehouse and asks if he still got the 15% OFF on this brand-new laptop from the showcase. It’s the 3rd Salesman’s shift, and he is pretty surprised that someone is willing to buy this laptop so eagerly. He doesn’t know anything about his colleagues’ previous experiences with this guy, so he approaches him as a new customer.
“Yeah! Of course! Have a seat and let me issue the papers for the discount” he says.
That evening the guy receives his desired laptop and the 3rd salesman closes a new purchase entry at the CRM.
At the end of month YOU check this sale and decide to give a bonus to a Sales Assistant.
So who was the best of them and should get the bonus?
The first Salesman who ran the presentation of the brand-new laptop and got the potential client’s phone number?
Or the second Salesman who offered a 15% discount so that the future client became highly motivated for this purchase?
Or maybe the 3rd one who actually sold the laptop?
Looking at this scenario, the warehouse is YOUR current business, the Sales Assistants are traffic channels and the sale itself is a conversion.
Attribution model then is a way of distributing bonus points among traffic channels.
100% bonus points given to 3rd Salesman (the last one who did the sale).
100% bonus points to 1st Salesman who demonstrated the product.
We split the sale process into components:
- potential customer visits local store = 15% (actual percentage will vary depending on your current state and business model)
- customer reveals his interest in a particular product = 14%
- potential customer provides his phone number = 16%
- potential customer accepts a discount = 8%
- a phone call to the customer = 10%
- customer buys the product with cash = 40%
then distribute bonus points depending on every Salesman activity.
So First Salesman will get 15%+14%+16%=45%
Second – 10%+8%=18%
Third will receive 40% of bonus points by having a sale.
Based on this example, do you realize how many mistakes and delusions may occur if you do not take attribution modelling into your account? Ask yourself: have I ever checked the attribution model at my business? What if ROI figures on my media channels are false?
In this case we used just 3 Attribution Models: First-Click, Last-Click and Data-Driven Attribution Model but there are even more specific and complicated ones to mention: Position Based (U-shaped), W-shaped, Full Path (Z-shaped), Time Decay, Linear, Markov, Algorithmic Attribution.
93% of e-commerce projects we have analyzed recently were losing up to 45% in ROI and nearly 30% in orders quantity due to improper model attribution.
Let us give you a hand in deciding which Attribution Model suits best for your business and why! Don’t waste your time drilling down into this algorithmic and nerdy mathematical hassle.
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