What is Z-shaped Attribution?

This post was originally published on this site

Just like W-shaped and U-shaped models, Z-shaped attribution models are named so due to the shape that they make when you take an overall graphical-level view of how each channel receives credit.

As you might’ve guessed, Z-shaped attribution is a multi-touch model that gives credit to all touchpoints in the customer journey. It’s also a position-based model, meaning that it decides how much credit to apportion each touchpoint depending on its particular position in the sales cycle/buyer’s funnel.

How does Z-shaped attribution work?

Z-shaped attribution is pretty easy to understand. The four most important touchpoints in the consumer journey are given 22.5% of the credit, with the remaining 10% of credit split equally amongst the rest of the touchpoints. But which are the touchpoints that receive 22.5%?

First touch = 22.5%

The first one, perhaps obviously, is the first touch. This is as simple as it sounds–the first time that a prospect interacts with your brand (be it through organic search, coming to your stand at an event, or coming across an online ad), is given 22.5% of the total credit for the sale. After all, if a customer never even knew about your brand in the first place, they would never have converted.

Lead-generation touch = 22.5%

The second key interaction to receive 22.5% of the credit is the lead-generation touchpoint. Lead generation on the surface might seem slightly complex to understand. After all, how do you know when a prospect is a lead (or vice-versa)?

Lead generation always involves a quid pro quo–that’s to say, a prospect exchanges something of theirs (usually their contact details) in return for something else (such as a thought-leadership eBook). Once this process has taken place, and a prospect has agreed to be contacted by your company, they then qualify as a lead. Needless to say, this is also a very important step: if you can’t get prospects to voluntarily agree to be contacted by your company, and receive marketing materials, it’ll be very difficult to lead them down the funnel and convert them into paying customers.

Opportunity-creation touch = 22.5%

The third touchpoint to receive 22.5% of the total credit is the opportunity-creation touch. But what exactly does opportunity-creation mean?

Let’s imagine that you’re an L&D provider offering management courses. You decide to send out a newsletter promotion offering a free class to all those on your newsletter promotional list (in other words, all your viable leads). One of your leads sees this email and decides to sign up for the free course. This–or something similar like signing up for a demo–counts as the opportunity-creation touch.

Customer close = 22.5%

Lastly, the final touchpoint in any one consumer’s journey (that is, the last time they interact with your brand before becoming a customer of yours) also counts for 22.5% of the total credit.

And this makes sense, right? After all, there’s little point in leading prospects all the way down the funnel if they never actually convert–so the final touchpoint, while it may appear to be a formality, is still incredibly important.

So there you have it. In total, four critical touchpoints will receive the lion’s share of the credit (90%), with the rest equally splitting the remaining 10%.

What does this mean for your marketing strategy?

The overall goal of attribution is to guide future marketing investment: allowing you to pinpoint which strategies work and therefore are worth continuing. Over time, a Z-shaped model will begin to highlight certain strategies and channels as being particularly effective. This obviously means that they’re worth prioritizing going forward, but you need to remember to compare revenue brought in with any outgoings incurred.

It’s easy to look at the amount of revenue that your expensive new series of Youtube guides brought in and think they’re the be-all and end-all of your marketing strategy. However, if you don’t balance out the fact that they cost so much to make, you’ll begin to have a skewed perception over how effective they really are. It seems like an obvious thing to say, but some marketers are so focused on the end result (on what actually brings in customers) that they forget to compare this with what it initially cost them in the first place.

How do you set up Z-shaped attribution?

In order to set up a Z-shaped model, you first need to ensure that your current attribution provider is tracking all relevant touchpoints. This might sound obvious, but if you’re currently using a single-touch provider then there’s no possible way that you can tweak it into a Z-shaped model. Once you’ve set your attribution parameters to multi-touch, you then need to ensure that your software/provider has the correct math to get it going.

As mentioned above, this follows a strict protocol: 22.5% to the first touch (this is easily identified), 22.5% to the lead-generation touch (essentially the first time a prospect exchanges their details with you), 22.5% to the opportunity-creation touch (there are a few options here, such as signing up for a demo or calling your company to find out more), and then 22.5% to the final touchpoint. Last but not least, the final 10% then needs to be shared amongst all other touchpoints.

It’s worth noting though that you might not necessarily see results from a Z-shaped model for a little while yet–especially if you have typically long sales cycles or are a smaller company with relatively few customer conversions.

For example, let’s say you’ve transitioned attribution provider to go from using a very basic single-touch model to a Z-shaped model. In this case, you might not be able to retroactively assign credit to previous touchpoints that occurred under the old attribution model. What does this mean? Well, it means that one of your customers is going to have to go through all stages of the funnel (from initial brand awareness all the way through to becoming a customer) until you even begin to see the full benefits of the model.

The benefits of using a Z-shaped attribution model

In short, a Z-shaped attribution ticks many key boxes. It’s multi-touch, meaning all touchpoints in the customer journey are considered to have had at least some impact on a lead’s decision to convert. This is key, because many attribution models only cherry-pick one single interaction and assign it 100% of the credit (which therefore skews your entire perception of your marketing strategy). Instead, Z-shaped attribution takes into account every single interaction a customer has with your brand prior to conversion.

In reality, this is the only way to make sure that you’ve got an eye on how all your strategies work in tandem–how you initially pique a prospect’s interest, the key touchpoints which lead them down the funnel, where they pass from being simply another lead to a viable opportunity, and why they decide to convert.

A Z-shaped model is also highly effective in terms of the way it distributes the total credit for any one sale. It’s always hard for marketers to know precisely which touchpoints had the most influence over a customer, and it’s not an exact science by any stretch of the imagination. This model largely takes the guesswork out of this process. The math follows a simple formula designed to highlight the key touchpoints and put all others in the back burner, while still recognizing them to a certain extent.

If you lack in-house data scientists who can pour significant time and energy into working out precisely how much influence each touchpoint has, Z-shaped attribution is a great way to go. After all, what are the core stages of the funnel that all prospects need to pass through? They’re brand awareness, becoming a lead, becoming an opportunity, and converting into a customer.

If they don’t ever go through the brand awareness stage then you can’t even begin to effectively market to them–it’s as simple as that. You can’t offer them a personalized experience based on what they’ve demonstrated they like, or make any substantial attempt to lead them down the funnel.

And if they never become a lead or an opportunity (in other words, if they never demonstrate significant interest in your products or services), then you’re also going to be hindered in terms of how you market to them. Sure, you can still make a sale–there’s a very small chance they jump all the stages and just purchase from you outright–but it’s going to be a lot harder to lead them down the funnel and appropriately nurture them into a viable prospect.

You won’t have any idea of what they’re looking for and which pain points they want to solve. After all, this is the crux of marketing: especially in the B2B realm.

B2C is a little simpler (especially if you’re selling low-value goods). Sometimes, people like what they see and buy there and then. There might not be a funnel so much as an immediate jump from brand awareness to becoming a customer. With B2B, however, people are a lot more cautious with spending their company’s money–so they need to make sure that they’re making the right choice.

The shortfalls of using a Z-shaped model

Despite singing its praises, there are still some areas where a Z-shaped attribution model is slightly lacking. That’s not to say that it’s necessarily bad–in fact, it’s one of the best models out there–but it’s not perfect, either.

Firstly, the way that it apportions the overall credit for a sale isn’t very nuanced. A customer journey is rarely a linear, easy-to-follow path. Many times, a prospect might come across your company for the first time (the much-sought-after first touch), only to browse your website and be thoroughly unimpressed. Only a while later, once you’ve brought out a new range of products, tweaked your messaging, and updated your website, do they actually start to like the idea of what they see.

That first interaction was less than positive, but a series of adverts featuring your updated products and brand messaging was what drove them back to your website. However, with a Z-shaped model, this first touch would wrongly receive 22.5% of the credit and all other touchpoints–those which actually brought the prospects back into the fray–would just share 10% of the credit between them.

Just because the customer’s first touch is the first touch, doesn’t mean that it’s necessarily all that effective. For example, let’s say that you pour money into a series of social ads designed to lead first-time visitors onto your website. These ads, when clicked on, lead prospects onto your blog page so that they can browse through your content marketing efforts. However, the blogs are irrelevant, contain spelling and grammar errors, and aren’t formatted in a very user-friendly way. As a result, the prospect leaves your site wishing they hadn’t clicked through on the ad in the first place.

But say that this prospect does somehow eventually end up converting and becoming a customer (through a wide range of marketing efforts). A Z-shaped attribution model would look at the overall customer journey and give 22.5% of the credit to the first touch–even though this first touch played no significant role and was actually fairly detrimental.

The key message here is that we, as marketers, can never make general assumptions about how important any one touchpoint is.

Liking an infographic might seem like such a small and insignificant interaction with your brand–but not if the person then showed it to several other members of their team, all of whom were very impressed with it and decided to themselves further research your brand.

Therefore, does it seem entirely correct that this touchpoint would only receive 10% or less of the final credit for the sale? Its importance would be diluted amongst all other touchpoints in the customer journey–even those which didn’t have a positive impact in the slightest, like the blog posts that we previously mentioned.

In defense of the Z-shaped model, it’s almost impossible to know just how much influence each touchpoint had on the customer’s decision to purchase. But it’s still a flaw of this model–the way credit is apportioned is too formulaic, lacking personalization according to the individual customer and their buying journey.

When should you use a Z-shaped attribution model–and when should it be avoided?

Z-shaped attribution models are ideally suited to companies with long and complex sales cycles where customers have to be effectively nurtured and guided down the funnel. On the flip side, if you find that customers usually buy from you the first time that they come into contact with your company (or only after a few interactions), then a Z-shaped model might not really work.

At its core, a Z-shaped model assumes that there’ll be at least five touchpoints in the customer journey. Therefore, if your customers usually convert after one or two touchpoints, the benefits of this model are basically null and void.


Looking for more information on attribution models? Follow along in our attribution models guide as we break down each model.

The post What is Z-shaped Attribution? appeared first on CallRail.