How OWOX BI Created And Tested An Attribution Model For SaaS Businesses
OWOX BI faced exactly the same challenges that prompted us to create our own funnel-based attribution model for B2B SaaS companies.
What's the deal with attribution in B2B SaaS businesses
But it's vital to record every phone call and a meeting in a CRM system, track and evaluate every step of the user journey so that you could get measurable results.
Similar to many other B2B Saas companies, our customers interact with us outside the website as well. We actually developed quite a complicated system for that purpose:
If your business is subscription-based, not only the first but also the following payments matter to you. So the value of the acquired customer should be measured by the first payment along with the customer LTV. Moreover, businesses normally use multiple tools to attract and retain customers, with different teams involved, and it's important to know their contribution.
That's why we decided to combine two approaches: first payment and the predictive LTV after considering possible ways to distribute value among the funnel steps. We suggested that the value of the first payment should decrease with the following months. Due to this, the customer value gets measured and then redistributed after getting every next payment, depending on how many efforts every team spends on each of the use steps.
To calculate the marketing attribution model, we use the value of the predictive LTV and deduct the value of the payments we already got. For example, if the money obtained from a customer's predictive LTV is $1,500, and he or she pays $100 each month 3 times in a row, the value of the first payment will be $1,200, which is $1500 - (3x$100). In case we talk about 6 months instead of 3, the value of the first payment will be $900, which is $1,500 - (6 x $100).
Which and how funnel steps should get value
Moreover, the sessions that lead a customer through more difficult steps should get more value, and the value should increase with the step complexity. The attributed revenue should match the real revenue obtained by a business.
What we accomplished thanks to our efforts
The first one below demonstrates how actual and predictive revenue, as well as the actual and planned costs, are attributed to each of the departments. Due to the long user journey, we have at OWOX BI, it's important to take note of the predictive revenue. This allows us to measure the contribution of all the efforts that lead the customers along the funnel.
The second report is based on the same data, but it demonstrates ROI for each of the departments.
The third one visualizes the actual and predictive value of our efforts and contains metrics from previous reports. You can see the metrics of the first report by months on the top graph, while the circle diagrams show how revenue is distributed among departments. The bar chart allows you to see the ROI by departments.
Having evaluated the performance of every department, you can realize how efficient is each of the marketing channels and understand how to make more of the channels that pay off.
Don't hesitate to share your experience of building attribution models, or share your ideas and ask questions in the comment section ;)
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