Technical attribution models are always a source of debate in sales and especially in ecommerce. How do you track the sales of a traffic source? How do you track the return on investment from each channel?
It can be very difficult to get the exact numbers, but the most important thing is this: simply agree the attribution model as a team and stick to the exact same model over the course of time.
By doing that, you will be able to measure your traffic channels in the same way on a consistent, ongoing basis.
The key elements of an ecommerce attribution model
If an attribution model is too complex it allows too much room for manoeuvre. So the key elements are:
- The costs and sales figures for each channel.
- The source of the information – for example, Google Analytics.
- The time periods for allocation – for example, ‘Last Click 30 Days’ – although it’s not quite a fair attribution, it’s simple, it’s easy to measure and it’s consistent.
- The person who is in charge of the channel – so that their contribution to profits can be calculated.
It is the last element in the attribution model that is the most complex area in ecommerce and if it is not set up correctly it acts as a block to progress – it is the part of the attribution model that answers the question: ‘how much value have people added to the ecommerce operation?’
This is a key area that companies need to think about in some detail.
Comparison of results and relative performance
The next challenge after attribution is to understand whether your results are good or bad. If you can compare your company results with your market results – when everyone is using the same attribution model – you can see your ‘relative performance’. Your relative performance is actually much more important than the numbers themselves.
Team alignment around sales growth at a target cost of sale
IRP Commerce has always had a very clear motive: to increase sales as much as possible at a target cost of sale.
This makes it very obvious what underpins the consulting and our business model follows on from that: if our customers make money then we make money. Success is joint – this is an alignment with the shareholders of the company.
For ecommerce teams it can be much more complex to understand motives. In a recent survey of customers running the IRP, the large majority of Ecommerce Trading Teams did not benefit in any significant way from sales going up. This fact alone takes away the North Star in ecommerce that needs to guide the operation – teams must want sales to go up.
If a team is not aligned collectively to increase sales and if contributions are not attributed in a clear way, then the elements are in place for a problem that is not obvious: people working in their own interests that may be not in the interests of the collective.
This is compounded in an environment where causes and correlations are complex and attribution is not clear.
A clear attribution model & team alignment form the foundation for ecommerce
The conclusion I have reached after many years of observation is that the combination of team alignment and a clear attribution model creates far more shareholder value than any technology.
This is because, when teams with strong reporting work together for a common sales goal and benefit from achieving the goal, they notice where sales are made and they go after them. ‘Chance favours the prepared mind’.
It is surprising how few teams get this right, but having that motivation and clear direction in ecommerce operations forms the foundation for success: sales growth at a target cost of sale.
For teams that get it right – and it is best to get it right from the start – the shared rewards will be reaped many times over by the shareholders and by the teams themselves.
