Eight Signs Your Direct Mail Attribution Model is Stifling Your Growth
In today’s mixed media marketplace, a melody of offline and online advertising tactics deserve credit for nudging along each individual sale. But even though most every aspect of these tools is precisely measurable (and often in real time), painstakingly attributing varying degrees of credit to each “touch” is easier said than done. Honestly, it is enough to give any marketer an attribution model aneurysm.
Now add to this headache the fact that you will often have internal marketing teams and multiple siloed agencies clamoring for additional spend on their respective specializations. This can cause you to unwillingly allocate too much of your advertising budget to channels that are not delivering the ROI that you think they are — keeping you from investing in new growth channels because of seeming budgeting limitations. But it doesn’t have to be that way.
The gap between your current growth rate and the one you want to achieve gets a lot smaller once you have developed a sophisticated multi-touch attribution model. And a growing number of marketers are keenly aware of its importance. Industry research has found 63% of marketers agree the ideal state of attribution is being able to track customers throughout the full marketing funnel, yet 40% feel they lack insight into the effectiveness of their campaigns.
Before you can take critical steps to earnestly optimize your attribution strategies and the way you spend each marketing dollar, you need to be mindful of these eight telltale signs that your fundamental approach to attribution modeling might be flawed from the beginning. With awareness of these hidden inefficiencies, you can correct your attribution mindset and unshackle your growth restraints ASAP.
If this article leaves you hungry for more direct mail attribution modeling tips, check out this free e-book, Ultimate Guide to Direct Mail Attribution. This step-by-step guide shares insights on tracking direct mail performance, using holdouts to establish incrementality, analyze attribution reports, plus how to build the direct mail attribution model that is right for your brand.
1. You do not have an attribution model
We could not create this list of mistakes and not start with the most glaring one of them all. IAB research found 31% of marketers still do not use an attribution model. And in our experience, there is usually one recurring reason for it. Marketers today are expected to do more with less, and they are expected to do it fast.
CMOs always want more sales (or leads) than last year, and there is nothing inherently unfamiliar about this request. In response to these pressures, marketers often hit the ground running and try to beat competitors to the punch without first taking a critical pause to ask, 'Wait, what is this investment actually giving us?' Once marketers begin spreading funding across tactics and channels, the idea of pausing individual tactics to measure each one’s relative impact would temporarily hinder their growth and prevent them from meeting the boss’s expectations. Unsurprisingly, afterthought attribution modeling gets afterthought attribution results.
The moral of the story is, without an direct mail attribution model, testing is nearly pointless, because you are not calculating the relative impact that varying investments within each channel are having on your success. You are flying blind, and you cannot have real confidence in the budgetary dials you twist as a result – turning what could be a smart ensemble of hyper-measurable direct-response media into a de facto branding effort.
2. You are relying on last-click attribution
While last-click attribution is certainly much simpler and easier to measure than most other strategies, it presents some serious dangers for marketers. Assigning sole credit to the ad on which a new customer most recently clicked (or viewed) before converting means you are not looking at direct mail attribution holistically. Equally important as determining where that last click is taking place, is determining how consumers are getting to that last click.
In reality, some tactics are just designed to optimize performance at different points along a customer’s purchase path: awareness, interest, consideration, and finally, purchase.
For example, branded paid search is hugely effective on prospects who are already at the bottom of the sales funnel. But if you pull too much budget into branded search and away from other tactics that are more geared toward building awareness or interest, before you know it, your funnel will be dry as a bone.
For that reason, it is critical that you understand all the different touchpoints that contribute to a sale and grasp the integral role each channel plays along your customer’s path to a purchase.
3. You are trying to measure the unmeasurable
Let’s be honest. In some rare cases, your marketing investments are just pricey, faith-based initiatives. One good example of this was highlighted in a recent blog from author and digital marketing evangelist Avinash Kaushik.
The first takeaway is to stop wasting valuable resources trying to calculate the ROI these types of branding investments are producing. You have enough to worry about in measuring tactics that really are measurable — and those demand your undivided attention.
Second, we won’t always suggest that you axe these investments — sometimes they provide helpful air cover and brand recognition that can augment your more easily attributable efforts. But as true-blue direct response marketers, we certainly would not deter you from at least having those conversations.
4. You are relying only on directly attributable response vehicles
In the direct mail context, even though your letter might contain a campaign-specific 1-800-number, landing page URL and/or promo code, relying on those elements exclusively to attribute sales to that mailing effort would give you an overly restricted view of its true impact. There are several reasons for this direct mail attribution dilemma.
Oftentimes, the recipient won’t choose to call the phone number that appears on your letter, nor will they take the time to type in the URL that is listed. Instead, they will do a Google search for your brand or simply type in your brand’s homepage URL directly, navigate to your site and ideally, convert — perhaps even forgetting to enter the mail piece’s promo code on your shopping cart page. As a result, direct mail gets no credit for this sale.
In our experience, limiting your attribution to only directly attributable response vehicles will reduce a channel’s perceived impact by 50% to 70% compared with reality. In turn, marketers with this incomplete view will often stop investing in a channel like direct mail, cutting off what would soon become a potent acquisition tool — and severely throttling your scaling potential.
5. You are not running matchback analysis
One critical step beyond measuring directly attributable response mechanisms is running what is called a matchback analysis. During matchback, you take your file of new sales over a specific window of time, and then match them back to the list of people you mailed during a relevant period leading up to those sales. Oftentimes, a matchback analysis will reveal that your direct mail campaign’s real impact was significantly greater than what your directly attributable measurement vehicles had suggested. It's important your direct mail attribution model reflects this.
For example, let’s look at the initial direct mail test we ran for a large debt-settlement company.
A couple months after our letters hit mailboxes, the client expressed concern that the channel was not performing up to their expectations. This is a typical fear among first-time mailers. We explained to the client that they were seeing only the results from directly attributable response vehicles, and that after we ran a matchback, based on our experience in similar verticals, the client could expect to see mail’s impact as 2-3x greater than what the surface-level results were showing.
Sure enough, the matchback revealed just that. Today, the client uses direct mail to onboard over $1 billion in new debt every year.
6. Your lookback windows are too short (or too long)
The lookback window is a period of time during which the touch can have a lingering effect that leads to a purchase. In the digital marketing landscape, the lookback windows are relatively short, lasting no more than a few days. For direct mail however, things are different.
Mail is a physical, tangible form of marketing. It is not uncommon for a letter to remain on a kitchen counter (or for its affixed card to get pinned to a fridge with a magnet) for months before the prospect finally converts.
In our experience, the typical lookback window for a direct mail piece is generally between six and 16 weeks — again, depending on the nature of the product.
7. You are not running holdout tests
An even more precise way to measure the impact of a single touch is to run what are called holdout tests. With this strategy, you are taking a group of prospects and serving them a variety of ads across a variety of channels. At the same time, you are randomly selecting a portion of that audience and serving them those same ads across those same channels, only with this group, you are choosing one tactic to not employ in your engagement with these folks — we call them the “holdout” group.
By comparing the overall sales rate of the larger group with the sales rate of the smaller (but still statistically valid) holdout group, you can see the isolated incremental lift you enjoy by employing the tactic you did not use on the holdout audience.
In online environments, you are not starting with a completely positive, deterministic understanding of a prospect’s identity, so you cannot guarantee that the person you touched in one channel is the same person you touched in another channel.
You might never fully eliminate the debate over the degree to which each digital touch contributed to a sale, but with direct mail, the holdout is irrefutable. Employ all the other tactics you want, including direct mail, then select a portion of the audience to not mail, and the difference in performance is clear. You will see mail’s impact is truly incremental, and gain justification for future investments.
Also, in case you are doubting our suggested lookback window for direct mail, a holdout test is where you will really see concrete proof of mail’s uniquely long-lingering impact. Barring any unexpected external forces, the holdout group should, for a brief time after mailing, perform at a sales clip that is nearly identical to that of your mailed group. Then the mailed group will begin to show a noticeable relative spike in sales rate that will last typically up to 16 weeks.
Once the holdout group and the mailed group start performing at the same clip again, it is a pretty good indicator that your direct mail sales curve is wrapping up, and that will give you the best idea of what your direct mail lookback window should be moving forward.
8. You are not effectively onboarding offline data in online environments
Another way to make your digital attribution model even more precise is to start with rich, terrestrial direct mail data and onboard those offline identifiers into online environments. This way, you are not starting from a place of total anonymity in your online audience targeting. Instead, you can deliver consistent, synchronized messages to prospects across multiple media and isolate the incremental lift that each of your digital tactics is providing to your direct mail performance.
For example, some of your prospects would receive direct mail only, some might receive direct mail and email, some might receive direct mail and Facebook ads, some might receive direct mail and Instagram ads, some might receive direct mail and email and Facebook ads, some might receive direct mail and email and Instagram ads, some might receive direct mail and email and Facebook ads and Instagram ads, some might receive … you get the idea.
As you have learned, there are numerous ways a brand can commit costly direct mail attribution model errors. If you are not careful, you might wind up misdirecting huge segments of your marketing budget to channels that are not maximizing growth for your brand. You may also be unknowingly ignoring thousands of ideal customers every month, simply because your precious budget is tied up in bottom-of-funnel (and ultimately limited) marketing tactics.
We agree, at times, dialing in your attribution strategies might seem like much more of an art than a science. By avoiding the all-too-common pitfalls mentioned above (which can make your direct mail attribution model far more nebulous than it needs to be), you will be giving yourself a distinct advantage over marketers who still do not prioritize this most critical endeavor.