As a dropshipper, your ability to understand where your sales are coming from and which marketing efforts are driving those sales can make or break your business. This is where marketing attribution comes into play.
By properly attributing your sales to the right marketing channels, you can optimize your ad spend, improve your customer acquisition strategy, and ultimately boost your bottom line.
In this guide, we’ll delve into the intricacies of marketing attribution, explore the best models for dropshipping, and show you how to set up a robust attribution framework.
When it comes to attribution, it’s important to select the proper attribution model. But before we get there, it’s important to explain what marketing attribution is.
Marketing attribution is the process of identifying and assigning credit to the marketing touchpoints that lead to a conversion or sale. For dropshippers, this is vital because it helps you understand which channels are driving your business. Without proper attribution, you might end up investing in the wrong channels and wasting valuable resources.
First-touch attribution assigns all the credit for a sale to the first interaction a customer has with your brand. For example, if a customer first discovers your product through generated content on social media, but then opens several email newsletters before returning to your site to purchase, the initial social media interaction receives all the credit.
The advantage of first-touch attribution is that it’s simple to implement and great for understanding which channels are good at generating awareness. On the downside, it ignores all subsequent interactions and thus can be misleading for longer sales cycles.
Last-touch attribution gives all the credit to the final interaction before a purchase.
For example, if a customer first discovers your product through social media but then makes a purchase through an email link, the email gets all the credit.
The advantage of last-touch attribution is that it’s easy to set up and focuses on the touchpoint that closes the sale. The disadvantage is that it can overlook the importance of earlier touchpoints.
Linear attribution assigns equal credit to all touchpoints leading up to a sale.
For example, if a customer interacts with your brand through a Google ad, email, and social media before purchasing, each touchpoint gets an equal share of the credit.
The advantage of linear attribution is that it provides a more balanced view of the customer journey. The disadvantage is that it can be overly simplistic in that not all touchpoints are equally influential.
Other models like U-shaped or time-decay attribution also exist, but they are often more complex to implement and not supported by many broad-based analytics tools.
For dropshipping, the choice of attribution model largely depends on your sales cycle. If you’re selling impulse-buy items, last-touch attribution is generally the most effective because it focuses on the touchpoint that directly led to the sale.
However, for products that require more consideration and education, a multi-touch model like linear attribution might be more appropriate.
Of course, you can also take multiple attribution models into consideration for an even more holistic view of your business.
For dropshippers, you’re certainly going to focus on sales and total revenue generated from your store. However, you must also pay attention to customer acquisition cost (CAC), customer lifetime value (CLV) and return on ad spend (ROAS).
At the end of the day, you want to figure out which marketing channels result in the highest customer lifetime value at the lowest amount of cost.
To start tracking KPIs and the success of your marketing channels, you’ll need the following tooling in place.
When it comes to attribution, web analytics is an essential tool for your business.
And despite some of the criticisms of GA4, Google Analytics remains one of the most popular and robust tools for tracking ecommerce metrics. Ensure that whatever analytics platform you use, your tracking script is installed as soon as possible so you can begin collecting valuable traffic data.
Once your web analytics tool is set up, you’re likely going to start running ads to your store. And if that’s the case, you’ll want to install the Meta Ads pixel on your site to help track conversions from your Facebook and Instagram ads.
If you’re using Google Analytics, then you may want to also consider using Google Tag Manager. By doing so, you’ll be able to manage all your website tags without editing your website’s code. This can be very beneficial if you’re using multiple ad platforms that all require tracking scripts to be installed on your site.
Once your Meta Ads pixel is installed (or whichever platform you’re using), then you’ll want to configure it to track key events like add-to-cart and purchases.
Once all your tracking scripts are installed on your site, you may want to fine-tune your attribution windows. Attribution windows define the time frame in which a conversion can be attributed to a particular touchpoint.
In Google Analytics, you can adjust the attribution window in the Admin settings. Meta Ads allows you to set different attribution windows for clicks and views, typically ranging from 1 to 28 days.
If you’re just starting out, I’d generally recommend you leave the default settings as-is. However, if you have a specific reason for doing so, then feel free to adjust the attribution windows to better suit your business.
Now that all of your tracking is setup, ensure that all your tools work seamlessly together. Google Analytics and Meta Ads can both track conversions, but you need to make sure the data flows correctly between them and ensure consistent use of UTM parameters.
UTM parameters are tags you add to your URLs to track the performance of your marketing campaigns. They are crucial for accurate marketing attribution because they help you identify which campaigns are driving traffic and sales.
When creating Meta ads, you’ll want to append UTM parameters to your URLs to track the source, medium, campaign, term, and content.
By doing so, Google Analytics or whichever analytics tool you’re using will automatically recognize these parameters and provide detailed reports on the performance of your campaigns.
To simplify the process, we highly recommend using a UTM builder for consistency and accuracy. For example, this UTM builder from GoodMetrics helps marketers create precise UTM links, which are essential for effective attribution tracking.
Once your campaigns are underway, you’ll want to continuously monitor your data.
Regularly review your attribution reports to identify the most effective channels and adjust your budget accordingly.
Tools like Google Analytics provide detailed insights into user behavior and conversion paths, allowing you to make data-driven decisions. Again, you’ll want to focus on the marketing channels that provide the highest return on ad spend.
Marketing attribution is crucial for dropshippers looking to optimize their marketing efforts and grow their business. By choosing the right attribution model, setting up a robust framework, and continuously monitoring and optimizing your data, you can make informed decisions that drive sales and increase profitability.
By implementing these steps, you’ll be well on your way to mastering marketing attribution and driving success in your dropshipping business.
