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Probability of Purchase: The Measurement Attribution Tools Miss

May 16, 2023

As a marketer, you should be using every reliable tool within your reach as you strive to maximize the effectiveness of your marketing campaigns. Many software and marketing tools purport to give you all the information you need when it comes to mapping the customer journey and identifying the touchpoints and channels that are most effective in driving conversions. However, most measurement tools miss a critical metric that makes all the difference: probability of purchase. Without factoring in the probability of purchase when analyzing your marketing strategies, you’re not seeing the big picture — how the behavior of individual customers using individual marketing channels comes together to inform where you should focus your energy and resources moving forward.

Let’s explore the shortcomings of most attribution tools and how probability of purchase can help e-commerce companies optimize their marketing efforts.

How marketing attribution tools fall short

Most attribution tools focus on measuring the results and success of a campaign, such as revenue and return on ad spend (ROAS). They’re programmed to identify the touchpoints that led a user to a purchase, using attribution models that are heuristic, oftentimes weighing all these touchpoints equally. But this doesn’t reflect what is actually happening on an e-commerce site. 

It’s one thing for an attribution tool to analyze past performance, evaluating how much each channel influenced a conversion using multi-touch attribution models such as linear or position-based that today are functionally obsolete. 

It’s another — and far more useful for guiding future marketing spend — for the attribution tool you’re using to analyze the influence of the channels you’re using and the nuances of user behavior based on the channels from which they come to your site. 

Understanding user behavior has many benefits, one of which is providing the groundwork to tell you how much additional revenue you could make by bringing new visitors to your site via one channel versus another.

What is probability of purchase?

Probability of purchase measures the likelihood that a customer will make a purchase using a given channel on your site. By analyzing the behavior of users on a site based on the channels they used and the purchase outcomes for these visitors, AdAmplify’s Dimensions Attribution can calculate the probability that visitors using a certain channel will complete a purchase.

In other words, along with assessing how much you spent on a specific aspect of your ad campaign, you can use probability of purchase to forecast future revenue.

This metric is crucial because probability of purchase allows reliable forecasting at the channel and campaign levels. Once the behavior of users is understood at these levels, probability of purchase allows potential revenue to be forecast by initial and subsequent purchases.

Combining an analysis of the actual weight or influence of a channel with its probability of purchase leads to more actionable insights. 

One benefit is understanding the impact of each channel on initial and subsequent purchases (for instance, paid search may have a high probability of conversion for initial purchases but less so for subsequent purchases, whereas email is what is bringing the bulk of your subsequent purchases). Strategies can be crafted for each with priority given to those that have a higher probability of purchase.

Another benefit is finding “hidden nuggets”: channels that have low weighting because little marketing effort is going into them (therefore few visitors come to the site from these channels) but have a very high probability of purchase. Once you understand that these channels have high potential in spite of low spend, you can test them to see if their high probability of purchase bears out. 

Probability of purchase can help in more ways than one

Here are some of the perks of applying probability of purchase to your e-commerce site through Dimensions Attribution:

  1. Reliably forecast and scale future revenue opportunities

    By accounting for user behavior and probability of purchase patterns, Dimensions provides insights into which marketing channels and campaigns are most effective at driving initial and subsequent purchases.

    This information can be used to optimize ad spend and maximize ROI, allowing e-commerce stores to forecast and scale their revenue opportunities with confidence.

  2. Determine customer return rate

    Analyzing user behavior after an initial  purchase allows you to identify factors that contribute to repeat purchases and customer loyalty.

    Dimensions enables you to refine marketing strategies and retention efforts, ensuring that your business is targeting its most valuable customers with personalized and relevant messaging.

  3. Understand subsequent orders

    Many e-commerce companies make little profit on first purchases, as customer acquisition cost (CAC) can seriously eat into the gross margin of a customer’s initial purchase.

    By understanding user behavior after the first purchase, Dimensions can identify opportunities that contribute to repeat purchases, better helping you ensure customer loyalty and effectively reducing your CAC

  4. Optimize channel allocation

    Understanding which channels brought customers who are most likely to return, allows you to focus on those channels.

    This allows you to Increase long-term profitability, as in most cases you should have covered CAC from the revenue received from the initial purchase.

If probability of purchase is so useful, why don’t more attribution tools use it?

Most attribution tools don’t have the technical ability to calculate probability of purchase. In order to be understood and applied successfully, probability of purchase requires access to hard-to-obtain data. Further, it requires that the marketing team have expertise in advanced statistical analysis and modeling using machine learning.

Breaking down initial and subsequent purchases for channels and campaigns also allows probability of purchase to be calculated for each, so you have a better understanding of which channels and campaigns most effectively influence either first or repeat purchases. Most attribution tools don’t break purchases down in this way, but Dimensions does.

Take advantage of Dimensions’ predictive analytics

Book a call with us today to learn how probability of purchase can boost the efficacy of your marketing program, and the efficiency of your marketing team. 

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