Attribution is the Word of the Day

I’ve just returned from a few days in sunny Florida, attending the Direct Marketing Association’s Retail Marking Confernce 2010, and the main takeaway I received from it was that multichannel retailers today are struggling with attribution.

I’ve just returned from a few days in sunny Florida, attending the Direct Marketing Association’s Retail Marking Conference 2010 (RMC), and the main takeaway I have from the event is that today’s multichannel retailers are struggling with attribution.

Attribution is determining which of your marketing vehicles is reponsible for generating consumers’ purchases. And it doesn’t have to be all or nothing. For example, a catalog and search can share credit for a sale.

While attribution in the retail world is often viewed strictly as a way to figure out which online marketing programs — e.g., search, affiliate or display, social media — are responsible for the most sales, it also refers to figuring out which sales channel (online or off) are bringing in the most dough.

It’s a tricky thing: Old-line catalogers at the event claimed catalogs drive more online sales than websites or search efforts. E-commerce guys, on the other hand, said websites are where sales occur, so attribution should be credited to them. Email marketers were in the mix, too. They believe email messages received by opt-in consumers are the main driver of in-store and online sales.

Attribution is even more important these days, as corner offices are closely watching marketing teams, who are operating with tighter budgets, to see if spending is being accurately assigned.

The issue of attribution was discussed in several sessions at the RMC. A preconference intensive session led by Al Bessin, a partner at multichannel direct marketing firm LENSER, for example, discussed how customer and transactional information from multiple sources, such as website reports, email service providers and order management systems, can help marketers figure out which channels are working to ensure they’re spending their marketing budgets in the best ways possible.

Attribution was also discussed by Chad White, research director at Smith-Harmon, a Responsys company, in his his closing keynote.

White correctly identified attribution as the missing link, citing an Epsilon study that found 33 percent of permission-based email recipients said they usually visit a brand’s website directly after receiving an email about that brand, instead of clicking on an email link. So, he said, “online conversions attributed to email may be undercounted by as much as 50 percent.”

White also discussed an attribution experiment performed by REI, the outdoor gear merchant. In an effort to test email attribution, REI withheld emails from a certain group of customers while continuing to send them to another, and began monitoring sales. When the test was completed, REI discovered it was overstating the impact of email on online sales since a good portion of customers still bought even without receiving an email.

However, White said, “after determining email’s impact on store sales, which email previously got no credit for, REI discovered that email contribution to total sales was actually twice the level of cookied sales.”

So what’s the answer? Which channel drives the most sales? It’s really hard to tell, and it’s not an exact science. Whether you’re at a large company that has the resources to institute an attribution modeling system or a smaller company that performs witholding tests, it’s still a crapshoot, in my opinion. How can you really know why a customer decides to buy something?

How do you handle attribution? I’d love to hear from you.