To Engage or Not to Engage: The Attribution Conundrum

John Wanamaker, a successful US merchant, once said: "Half the money I spend on advertising is wasted; the trouble is, I don't know which half." This phrase was coined over 100 years ago, but this problem is just as relevant today as it was a century ago.

Marketing has, of course, made leaps and bounds to become not just data-driven but data-obsessed. As a marketer, you regularly check your performance data, whether it’s analyzing your recent campaigns or reporting on your business KPIs. But with more data comes more problems. Do you really know whether your marketing is working?

Attribution Controversy

At Kognitiv, we have a long history of loyalty management (85 years, to be exact!). [Learn more about our loyalty system, Kognitiv Inspire]. One controversial question that often comes up in loyalty conversations is: Do your loyalty members spend more with you because of how successful your loyalty program is, or did they join the program because they were inherently buying more in the first place? This question doesn’t only apply to loyalty members, it’s a fundamental question that every marketer should be asking, whether they are looking at their paid media, loyalty program, or email campaign performance data. Are these efforts driving purchases, or did those customers already intend to buy?  

When we talk about marketing performance, we inevitably have to talk about everyone’s all-time favorite problem – Attribution. There are two issues worth highlighting when talking about attribution:  

1. As a rule of thumb, you need on average 8 touchpoints before a customer is ready to buy your product. With the increase in advertising spend, the emergence of more channels, and more brands communicating with their customers, this number is probably even higher now. How do you know which of those touchpoints led to the sale? [We could write a thesis on this question, but we’ll save that for another day.]

2. The second question that we want to dive deeper into in this article is whether your campaigns influenced the sale at all. What a lot of companies are not doing is looking at which conversions were not a result of their marketing activities.  

Conversion Inflation

It is tempting to attribute every sale to your marketing activities, but that’s not what you should be doing. “Wait,” you might say. “Are you asking me to tell my boss that my 15% conversion rate is not actually marketing’s accomplishment and that the customers would’ve bought anyway? No way!”  

Yes, but it’s for the greater good. Let us explain.  

Being discerning about which sales to attribute to a marketing activity can help brands be a lot more targeted and effective in their marketing tactics. Knowing exactly which activities are driving sales, and which of your customers require an incentive versus which ones will buy on their own allows brands to optimize their budget and invest in campaigns that drive additional revenue. Let’s look at what happens when you communicate with customers that you shouldn’t be engaging.

What happens when you Don’t know who Not to engage?

• Oversaturation of communication (“your customers leave”). We have all received thousands of emails from different brands; our mailboxes get flooded with promotional messages and reminders to buy yet another product we are not very interested in. When brands focus on the quantity of engagement, it results in customer fatigue which in turn negatively affects customer satisfaction and often forces them to simply unsubscribe from your communication and disengage from your brand.

• Wasted discounting (“you lose money”). Mass discounting is still one of the most used promotional tactics. While we believe there is a time and place for discounts, we know that you can optimize your offer budget and drive even more purchases by being strategic about when to offer discounts and when not to. When brands are constantly screaming “Sale!”, they drive loyalty to discounts, not their brand.  

• Poor conversion rate (“your performance suffers”). When you don't have a clear understanding of who to target, you end up wasting resources on marketing to individuals who have no interest in your products or services resulting in little to no conversions. This puts more pressure on marketers to stretch their budgets and prove ROI.  

Better off doing nothing

I have a dog and recently I went to buy his regular food that I buy every 10 days. And if you’re a dog parent, you know that you do not switch their food—you stick to one brand unless you have a compelling reason to switch. When I was at the check-out, the cashier told me I had a 15% coupon for this box of food! What a nice surprise… but did it influence my behavior? Definitely not. This 15% discount could’ve been used to get me to try new dog treats, maybe a supplement or a pack of vitamins for joint health for my German Shepherd. Or, the brand could have done nothing.

How do you know when to do nothing?

How do you know when not to engage your customers? There are several things that have to be in place:  

• Connect your tech. Disconnected martech and data silos are one of the main reasons why brands struggle to understand their customers and tailor their messages to the right audience. Different teams, whether it’s a paid media, loyalty, CRM, or CX team, need to work together on one connected customer engagement strategy and look at a holistic customer profile across channels and touchpoints not just the area they are responsible for.  
• Calculate customers’ individual purchase cycles. Marketers are so used to talking about averages: average order value, average engagement rate, average repurchase cycle - they forget that each of their customers is unique. It is critical to know your customers’ individual behavior patterns, so you can tailor your marketing efforts with precision.  
• Track your customers’ lifecycle stages. Tracking your customers' lifecycle stages is essential for building strong and lasting brand loyalty. If your customer is in a healthy steady relationship with your brand, don’t just send them another generic offer. You can instead use that budget on customers who are at risk of leaving or decreasing their engagement with your brand. And leave your “gone” customers behind, don’t clutter their inboxes.
• Use real-time data. Customers’ behavior can change at a whim, making real-time data table stakes for successful marketing. Two-week-old dashboard screenshots in a PowerPoint don’t help brands be more agile. Brands need to be able to respond to new data and new trends in the moment to deliver highly relevant content to customers who need it.
• Look into the future. It’s not only about knowing your customers’ past behavior, but also about predicting their future moves. Brands that predict their customers’ behavior can proactively meet their customers’ needs and enhance their overall experience by personalizing every brand interaction. And yes, it can also mean doing nothing.
• Employ marketing automation. By leveraging marketing automation, brands can take their customer engagement game to a new level. The amount of data you have is overwhelming; knowing which customers to engage and which customers not to engage, with what message, when, and on what channel becomes increasingly difficult as your customer base grows. Marketing automation makes it possible to activate on customer insights at scale.
• Prioritize customer lifetime value (CLV). Brands often focus on immediate sales, rather than driving customer lifetime value, which limits their growth potential. When brands track and invest in CLV, they can prioritize efforts to retain and nurture high-value customers, thereby maximizing their revenue potential.

With the help of AI and machine learning

Knowing which customers to engage is just as important as knowing which not to engage, so you can better optimize your budget, build stronger customer relationships, and ultimately grow your revenue. Thankfully, you don’t have to do all of this manually. With the help of AI and machine learning, you can gain a complete picture of your customers, you can predict their behavior and respond with relevant communication at scale.  

At Kognitiv, we’ve built a suite of products that enable brands to deliver relevant experiences to their customers in the moments that matter. At the core of our products is a proprietary Kognition AI/ML engine, that leverages hundreds of AI/ML models to deliver predictive and prescriptive intelligence you can easily act on. With always-on data-driven attribution, you can track your customers’ journeys across channels and touchpoints and understand exactly which of your marketing activities are driving incrementality.
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Find out more about how you can leverage AI and machine learning to win your customer engagement game. Let’s chat!  

Track and predict your customers’ lifecycles with Kognitiv Pulse. Learn more.

Enable 1:1 personalization at scale with Kognitiv Ignite. Learn more.

Launch and manage a successful loyalty program with Kognitiv Inspire. Learn more.

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