It can be a challenge when it comes to defining incrementality is and what it means to your business. For some marketers, incrementality means net new customers, for others, it is purely an uplift in sales, and for others, it is repeat purchases and lifetime value. No matter your interpretation of it, one of the most common things I hear when it comes to incrementality within the partner/affiliate channel is “we would have driven that sale anyway.”
This viewpoint opens the door to a wider conversation around attribution and where credit should be awarded in the customer lifecycle. Are all channels invited to the attribution party? Does partner marketing make the guest list? To understand this, let’s take a deeper look at the concept of incrementality and how it fits into your wider growth and customer acquisition strategy.
Defining Incrementality for Your Business
It’s important to define your growth goals and more specifically what role incrementality plays in that. Ask yourself what incrementality means in your business and set objectives around that. For example, you might prioritize completely new-to-file customers from the channel, or you might want to focus on utilizing partners to bring back old customers.
The good news is that testing and measuring against these objectives has become much easier over the past few years with the advent of better tracking, data, and analytics.
Incrementality: New versus Existing Customers
Once you’ve defined incremental for your business, there are many ways you can test for whether results can be credited to the affiliate channel. We’ve seen some customers take an all-in testing approach by turning off the channel, with the aim of seeing its effect on organic behavior. Interestingly, when brands do this, they don’t see those sales reappear in their other channels, but rather disappear altogether. Likely these customers have instead shopped with competitors who are operating in the channel, which resulted in competitor’s wallets increasing. And it makes sense. Many partners are large brands in their own right and often have millions of loyal customers. These results can be a stark reminder of the value of partnership.
If we know that partnerships can deliver incrementality on a variety of KPIs, how do we ensure we reward partners accurately for the role they play in delivering that value? This is where attribution comes into play, going hand in hand with incrementality measurement to leverage data to give credit where credit is due.
One of the great things about the partner channel is that you can capture so much rich data to help your decision making. Essentially, all of this data means you can more easily understand the value your partners bring to every customer touchpoint and transaction. This isn’t just the typical metric-specific data around a purchase but more about the behavior. Are they purchasing goods across a variety of high-margin specific products? Is the customer now a member of your loyalty program? Have they referred a friend?
So how do you use this data to improve your attribution? Think about each partner’s behavior – who introduced the customer to your products and which partner got the customer through to conversion? Once you understand it at a channel-level, you can expand further out and look at cross-channel attribution. It’s not the easiest task to model this out but once you start looking more closely at the data you realize where the true incremental value is coming from – without having to turn anything off.
Ultimately, we’re taking the time to understand incrementality and attribution so that we validate investment in the channel which in turn leads to growth. No matter your business goals, you can structure your program uniquely to help you achieve incremental growth. For example, you can set commissions higher for new customers, if that’s your KPI. Or you can incentivize partners to drive customers that have high lifetime value.
Once you’ve defined those measurable objectives, it’s time to set up your attribution strategy. Take the time to understand all of the touchpoints of your typical customer’s journey, both within the channel and across your wider digital landscape, and then work out the best ways for you to use that data to incentivize partners across these touchpoints.
By taking a deeper dive into incrementality, you’ll begin to realize that the partner/affiliate channel can drive those much-needed uplifts across your KPIs to display richer results. Devising specific incrementality targets, setting up attribution effectively, and aligning it all to growth can both transform your program and also dramatically increase the perceived value of the channel internally. The notion that “We would have driven that sale anyway” will become obsolete.