Anyone who has spent any time in e-commerce knows that our world is bursting at the seams with fairy tales (“Ooh, look! This free webinar will teach me a killer funnel that will increase my sales by 500% overnight!”)
Those are nonsense, clearly. But there are plenty of traps on the path to a successful e-commerce store.
When it comes to paid marketing, there are key things you can rely on to truly help you.
Finding the right attribution model to apply to your advertising data, to determine where your sales are really coming from, is one of the true keys to the kingdom of profit.
With an effective model of your advertising funnel, you can jettison the tactics that aren't working and put more effort into the ones that are.
The following article outlines the main attribution models that are available to most people through Google Analytics or other attribution software and when to use them, with a little insight from our experiences developing attribution tools at Order Metrics
Additional help was provided by Hank Kronick,founder of Order Metrics. In some cases we worked with researchers to make sure we covered all angles. We have a combined 16 years of e-commerce experience and have personally the techniques described in this guide, and seen the results in practice.
The goal of attribution is to know the true value of each marketing touch point, by understanding how they work together.
Many marketers over-value the last click in their sales funnel because thats the one that delivered the sale.
Also, until recently the last-click attribution model was the only one available.
Consider a situation where the last click before purchasing was always from an email marketing campaign.
Last click analysis would suggest you should cancel all your other marketing, because the email marketing is the only one delivering paid conversions. But that would be wrong-headed.
You need to understand where that customer came from originally before they got on the email list, and to do that, you need to attribute a portion of each conversion value to that original marketing touch point as well as to your email marketing.
You need to know a little about these 6 attribution models that are standard in Google Analytics as well as many other attribution modeling tools. Then we can go about explaining which one to use and why.
In addition to the default models, there are a few other ways to structure a campaign if you want to go deeper into the digital weeds. There are other data-driven models that use algorithms to assign credit, which typically are developed by your own data science team. You can also use Google’s Custom Attribution Model Tool to set your own weight for the parts of the funnel that you believe are most effective.
Google Analytics has an Attribution Model Comparison Tool, which lets you see exactly how the credit distribution will be affected by up to three different models at once, letting you get a ton of data across models. You can get a sense from this of the different decisions each model can lead you to make.
We strongly believe that for small and medium sized e-commerce businesses who are running a few different ad campaigns, the position-based model makes the most sense.
Start with 40% of the value assigned to the first way the customer found you, whatever that is, often a Google Ad or Social Referral
Then you say, 40% of the value is assigned to the last click, the one which led to a sale.
But you still assign some value, the remaining 20% to any other marketing touch points the customer interacted with in between.
This multi-touch attribution model gives you a theoretical model of how much of your total Customer Acquisition Cost you can assign to each step on the customer purchase journey.
Google Analytics and other tools like the reporting inside Facebook Ads all default to last-click or last non-direct click. If you have never thought about changing it, you are going to be overvaluing the last click. All the data you are seeing in the last-click model is telling you that you need to double down on that final step of the flow. But that just doesn't make sense to you, the business owner(unless you are selling ad clicks!).
So if you are new to this, the biggest thing we believe you can do is to change your Google Analytics model to Position-Based and then see how many sales Google Analytics is telling you came from each channel. Chances are you'll see a whole lot of different numbers and can make far better choices about where to invest those precious ad dollars.
The Order Metrics Profit & Growth guide is designed to help you unlock the most profit for your e-commerce business.
This is not intended to be nonsense content marketing like you find on other company blogs.
These are real, tested techniques could help you grow your business and put some cash back in your pocket so you can invest in things that matter to you.
Check out the other articles we have written back at our profit guide index.
Check out Order Metrics - A profit management tool for growing ecommerce merchants. The best way to track and measure your e-commerce store performance across multiple storefronts , advertising providers and shipping providers. Customers report increasing their margin by 5-6 percentage points after using Order Metrics.