Capitalize on Multi-Channel Shopperswith Better Attributionwith examples from PoolSupplyWorld

Roy Steves, Chief Marketing Officer

Where’d this guy come from?

Currently Chief Marketing Officer for PoolSupplyWorld.Started at PoolSupplyWorld as Sr. Software Engineer. Built the engineering team, and started the marketing team, becoming Director of Tactics.

Software & Automation Engineer at L-3 Electron Devices Devision, working on ERP stuff and robots that make vacuum tubes.

Web Programmer for Build.com, a home improvement retailer, currently the second largest in that market, smaller only than HomeDepot.com.

Studied Computer Animation, doing a combination of programming and art.

As you’ll see, it’s critical to map your revenue model to the economic motives--of your customers, your business, and your team.I also hope to show you the value of discovering new ways to interconnect and cross-pollenate your channels’ efforts and resources.

Goal

•Why is Multi-Touch important?

•How does it affect the business?

•What cool stuff can you do with it?

IT’S NOT MAGIC.THIS IS SOMETHING YOU HAVE TO SOLVE, IF YOU WANT TO CONTINUE GROWING.

People are worried about multi-device shoppers, but I don’t think we’ve fully figured out multi-session.

Let’s get this done.

Only so many Atomic Variables

When I started to pick apart basic online marketing, it came down to these four atomic components. You have impressions, clicks, conversions, and the costs associated with all three.

...produce most common Metrics

And most of your other fundamental metrics are derived from those atomic variables. More important than just identifying these new units is their use to be able to translate from one system of measures to another. If you’re going to weight the relative success of shopping touch points throughout a customer’s shopping session, then you’re going to need to use these to compare apples-to-apples between all of these kinds of KPIs.

Everyone is Special, Dash

...which becomes all the more complex when every partner you might work with is going to be operating on their own special flavor of metric.

Remember, it’s not about what partners you pick (entirely), but what you DO with them that defines your strategic advantage.

This obviously doesn’t work...

First assist assist Last

These bars represent the steps a customer takes to finally making a purchase, in chronological order. The first touch is where they first encounter your brand at all. As they shop around, they will come back across your site, and eventually convert at the last touch. If you aren’t doing any overall attribution modeling, you effectively get double-vision. If you asked the channels (say these are an affiliate blog, then Nextag, then AdWords, then a Facebook coupon) how much revenue they produced, they might all report $100, for a total of $400, when you only have $100 to take to the bank.

Or even worse...

First assist assist Last

This effect can be made even worse if you have more than one CPA or commissioned network. For example, if you’re on both CJ and Google Affiliate Network, this might be the final total apparent revenue. It will look like you did six times the revenue you actually did, and you’ll have paid for six orders’ worth. Obviously, this isn’t sustainable.

Better, I guess, but totally incomplete...

First assist assist Last

Many organizations, once they realize the duplicity of no attribution system at all, move to Last-Touch, where only the channel that closes the deal, and is the last to interact with the customer, gets credit. This helps accounting massively, as all the dollars add up, and there’s something very satisfying about suddenly being able to measure a direct ROI on advertising dollars. But that’s an illusion--you’re actually choking out all those earlier touches that might be driving new customer acquisition. It also puts the channels against each other, in a race to the bottom of the funnel.

...to paraphrase

This is a summary of a conversation I actually had with my Affiliate manager. His claim was that most of my AdWords ads were for specific SKUs, so the customer had already done a bunch of research, including on his affiliate partners’ blogs, and PPC was swooping in to steal the last touch. I countered that the other half of his network was coupon sites, which are all about sniping the last touch. Last Touch attribution lasted less than 60 days at our organization, as it was immediately apparent that it made our channels cannibalistic, eating each other alive.

so... on Shifting to Multi-Touch...

First assist assist Last

So that’s was the final straw on Last Touch for us. We did some research, and designed a Multi-Touch model that we felt reflected our customers’ shopping behavior most accurately.

Pretty drastic on Last Touch, though...

First assist assist Last

Which looked something like this. This “U-shaped” attribution is fairly common, but you probably won’t (and I hypothesize, never will) find an “industry standard” curve, as customers don’t shop for pool supplies the same way they shop for cosmetics, the same way they shop for insurance. Nevertheless, first touch is usually rewarded for customer acquisition and filling the funnel, and last touch is rewarded for closing the deal at the end. This has nothing to do with what channels are what--it’s not like PPC gets 30%, and Affiliates get 25%. Rather, just to be clear, the share of the revenue is attributed based on where in the shopping process a given touchpoint fits. Last touch gets 30% (let’s say) regardless of what that touch was.

This is some major sticker shock to channels used to getting Last Touch credit, however, as it look like they are earning half the revenue (or less) than they were the day before.

Difference between best and worst case is massive

First assist assist Last

...but this is the same kind of sticker-shock that happened during the transition from no-attribution to Last Touch, as you recall. It’s important to take a breath at this point and remember that your business was alive and profitable yesterday, and is probably going to be so tomorrow.

Attributed Revenue / All Touched Revenue

Nevertheless, these were some example channels and their share of orders they touched when we first moved to Multi-Touch attribution. We knew there was going to be some overlap. Display, for example, we figured would be around 50%, as our primary display channel is a remarketer, and that traffic had to get to us originally, somehow. Still, we figured it was going to be something like 15% overlap, or 85% share of touched orders. When it turned out to be much lower share than that...

...step away from the spreadsheet, sir. Huge realization: our shoppers are FUNDAMENTALLY multi-channel.

...well, it made me a little nervous. I had massive sticker shock, I’m not going to lie. Luckily, my team got over that quickly, and something interesting happened.

...meanwhile, among the team... an economy is born

They started to haggle! There was suddenly a system of arbitrage that maximized the value of each lead, or visitor. If one channel had leads, and could derive $10 from them, and another could derive $15, there was a $5 value that could be negotiated in the middle. We started to get all kinds of new cross-channel strategies out of the blue. It was amazing.

Customer looks for a coupon...

Now, to examples! This was the first cross-channel arbitrage we executed. Imagine a customer is ready to buy, but wants to find a coupon to save a couple bucks. They’ll often go to Google and search for my brand plus ‘coupons’, and find any number of sites that they can get that coupon from. That’s all well and good, and they’ll probably convert, but there’s something I don’t like about trusting strangers with leads that are so close to converting that I can taste it.

...and I pay a commission

Worse, most of these are affiliates! I’m going to pay a small commission IN ADDITION to giving away that discount. My margin is evaporating before my eyes.

High Quality Score, at least!

So, I decided to try something. I bought ads for these keywords, and directed them to my coupons page. My Quality Score for my own trademark is very good, so the clicks cost me almost nothing, and it worked. It was much cheaper than affiliates, and conversion rates went up. Our coupons page wasn’t very attractive, though, so I tested auto-applying the coupon, and landing them back in their own cart, and that worked a little better.

When it comes down to it, what am I getting for that coupon? Customers are going to coupon shop, that’s not going to change, but it seemed like there had to be some way for me to get more value out of the exchange with the customer than I was getting. There are really only a couple of ways that I could think of. First, go for a higher AOV, but we were already doing up-sells on our site and in our cart. Second, was target Lifetime Value, and try to find a way to market to these customers again in the future.

What else can I get for that coupon?

Our email channel was still in its infancy, but we had another Lifetime Value-focused channel already online--Facebook. We pointed those ads at a Like-Gated coupon tab on our Facebook Page, and an interesting thing happened. Despite the third party, and the additional clicks, it crushed our previous coupon strategies. For what ever reason (exclusivity? a feeling of fair exchange?), customers liked this more than either of the previous systems, and they converted like crazy, and I was able to keep my brand in front of them in the future. We use Facebook to tackle the fact that no one drives by my storefront every day on the way to work, like they do my brick-and-mortar competitors.

...and Like they did

0

20,000

40,000

60,000

80,000

Q1Q2 Q3 Q4 Q1

It worked like crazy, and we even won an award, booming from 37 to 75,000 fans in a little under a year.

...or even better...

...but you know what’s worth more than a Like? An email address. Once we were ready, we redirected a portion of that coupon traffic to an email signup that would deliver the coupon to their email address. Once again, an interesting thing happened. Despite the additional clicks AND personal information, customers liked this even more. Every metric improved. We had a higher CTR, higher conversion rate, lower bounce rate, even a higher AOV! We now redirect about 85% of coupon traffic to email, with 15% still going to social.

A lot of work went into these:

Now, think about what resources you might have that would carry value in such an arbitrage system. As email marketers, you have lists and segments that other channels would KILL to have. Think of all the work that you put into those, that you might be able to save someone.

...so let’s target those folks elsewhere!

One example is Facebook custom audiences. You can download your segments, upload those to Facebook, and all FB does is compare those emails versus the email address they have registered. If they match, you can target those people with display advertising! We got PPC-like CTRs on a promoted post (as opposed to the display in the above example) that we targeted to recent customers. As you’re not sending emails, you can target any type of segment, too! What about unsubscribers? One-time customers not opted-in? ...more?

...but that’s a lot of Coupons...

Revenue

Now, a lot of the strategies I’ve talked about are coupon-driven, and while coupons are a necessary evil, they eat into your margins and profitability. Arithmetically, channel managers’ performance evaluation techniques have a lot in common with sales commissions. (This is better described in a Real Estate context in the book, Freakonomics). Basically, if you’re measuring success based on revenue, then a 5% discount is a relatively small dent in an overall commission. What happens when you adjust individual performance evaluation metrics to more closely resemble the actual business realities in which you operate?

So operate on a narrower % (GM or analog, for example)

Revenue

But if you evaluate performance based on a percent of a percent (say, margin), then a 5% discount might look a lot more like a 20% dent to commission. The same is true for marketing channel strategies, especially if they rely heavily on discounting. We actually did this--we made this change in strategy to our commissioned salespeople. Want to see what happened?

Does it work?

These are the relative % discount averages for our salespeople for the past seven months. At that fifth month, we implemented the new margin-focused evaluation system. They got a larger percent of a smaller portion of the order, and behavior changed overnight. We didn’t retrain anyone. We didn’t reprimand anyone. We didn’t beg. All we did was change how we were measuring success.

...it did for us.

65% lower averagediscount

And by refining success, we lowered discounts by 65%. Our conversion rate didn’t change at all. That means that while some customers will always want to use a coupon, we were giving away money we didn’t need to. Our revenue stayed exactly the same, but our profitability went up.

There’s a ton of business to be earned

Now, most of those cross-channel strategies use obvious link-points, mostly data feeds and APIs. Here’s one that’s a little less obvious.

Why would a customer buy from me when there’s a pool store just around the corner, or down the street, or (more likely) both?

This is why we exist:

• They are terrible. They messed our pool up more than I can tell you...

• Apparently this is their policy: If it’s been over 7 days since you...• The lady that works there was rude and unhelpful so I left and

went...• Arrogant, over process and high pressure sales• I have lost faith in their ability to perform accurate water analysis...• Horrible customer service at this [franchise name]. The woman

that...• We just had our pool resurfaced. Received no info on how to

balance the...• (no reviews)• (no reviews)• (no reviews)

Here are the reviews for all 10 Leslie’s on that previous slide. I didn’t omit any of them. Customers are not getting what they want or need currently, and it’s my job to try to provide that for them.

Quick! To the Internet!

And those are what you see if you mouse-over any of these map indicators in this mini-map we built.

How do you make a page for every city?

And we embedded that mini-map into a custom landing page, and drove searches for “Rocklin pool supplies” to it, directly calling out our price advantages and free shipping. Ok, so this is all well and good for Rocklin, CA, but what about the rest of the country? How does THAT scale?

You don’t need to.

PPC CLP

But this scaled because of the combination of a couple of features in AdWords and our platform’s custom landing page tool. On AdWords, I used exact-match keywords to target the top 1000 cities in the US by revenue, coupled with “pool store”, “pool supplies”, “pool supply store”, etc. I then used Dynamic Keyword Insertion to add the keyword that triggered the ad to the destination URL. The custom landing page gets that URL parameter, strips out the city name, figures out the most likely state for that city name, and passes that to the embedded Google Map (along with Leslie’s name), and I suddenly have custom local content for each of my most important cities. The Quality Score on these keywords is great, because each version of the landing page is highly relevant to the search, such as “Houston pool store”. In theory, I could even swap out the example products for products that are popular in that region, if I had the competitive data for them.

Once, IT requests were a challenge... for IT

So, those are all examples where there were advantages to the collaboration of channels. There was another--before we started using our attribution system to our advantage, Marketing requests to IT were chaos--they were done in order dictated by who shouted the loudest. The best case scenario, the team leads would have to sort through dozens of redundant and overlapping requests, and try to accommodate everyone.

IT requests are fewer, and better coordinated

However, once the channels were working together, those redundant requests almost vanished. Now, report requests and new tools were pre-packaged for cross-channel efficiency, and we get a LOT more out of IT by asking for LESS.

Once you understand the link-points...

If you have a Multi-Touch attribution system, somewhere, whether internal or 3rd party, there is a record of all of those interactions.

Ours was an internal system, called Grinder, that was originally set up as a session recorder. Think of it like a poor man’s Tealeaf.

But as channels coordinated their efforts, there were expansions made to Grinder--where the DATA lived.

You can start to hook them all together

Grinder became part session replay, part CRM, part datamart.

You have the same opportunity, and it doesn’t take as much tech as you think.

You don’t need a data scientist to pull this off.

You could do a more distributed version, like a web, with individual data pools.

Look at Bronto’s custom fields, or the Received API Event trigger node in Workflows.

In his Keynote yesterday, Joe described the goal of making the Marketing Database more and more sophisticated, as that’s where the interactions are stored. That’s Grinder.

Remember

1. Your customers are telling you more than you realize.

2. Your customers are fundamentally multi-channel shoppers.

3. You can do more with the tools and resources you already have.

Questions?I love this stuff, try me.

There were! One was how were we accounting for phone orders. Two ways: first, we have a help-code on the site that is tied directly to a customer’s CartID and cookie. When they call, we ask for the help-code, and use that to hijack their cart, and that ties the CSR’s browsing session to the customer’s original session. It doesn’t carry cookies over for third-party trackers, but that doesn’t stop us from being able to track those. The other is that if the customer fills out a lead card (call back request, or similar, too), we store that Help Code in that form as a hidden field, so we capture 100% of those help-codes.

Another question was how did we come up with the attribution percentages we chose. We experimented, basically. We learned as much as we could using our first draft about how our customers shopped, and then modified our model to reflect the best case scenario at each of those steps. We don’t tie together a literal single customer profile across all associated touches, like Knotice does (not a client), but we emulate the result of such a system by optimizing the levels of the funnel as individual black boxes.

The last question was “Do you have a blog?” First, that was the most flattering thing I’ve ever been asked, and really appreciated how great the audience was. Second, I do: Roysteves.com, and there’s even a Perl pixel tracker article on there, which you could use as the very first step in building an attribution system from scratch, if you wanted to. :)

Thank you very much.

Roy StevesCMO, PoolSupplyWorldroy@poolsupplyworld.com

Seriously, thanks!