During a brainstorming session with my colleagues about attribution between offline and online revenue, I couldn't help but notice how increasingly blurred the lines have become. For many offline-first brands, 80% of their revenue is still generated by physical stores. However, as companies strive to understand the impact of their online and in-store interactions on customer behavior, identifying the percentage increase of online attribution to offline sales has become crucial.
Given the significance of this topic, I've decided to share my insights and experiences on how e-commerce brands can effectively calculate O2O attribution, the essential metrics to consider, real-life O2O strategy examples from leading brands that they successfully navigating this space.
Understanding Online to Offline Attribution and Why it is important:
O2O attribution involves identifying and quantifying how online marketing efforts contribute to offline sales, and vice versa. It involves tracking consumer touchpoints across both physical and digital channels to gain insights into the customer journey and optimize marketing strategies accordingly.
What often goes unnoticed is how many offline-first brands limit their online marketing budget due to a lack of understanding of O2O attribution. Without clear visibility into how online activities drive in-store purchases, these brands risk missing valuable opportunities to engage customers and boost overall sales performance.
Key Metrics for Online to Offline Attribution:
When evaluating O2O attribution, it's important to consider key metrics such as foot traffic, conversion rate, geotargeting and offline sales influenced by online touchpoints. These metrics provide insights into customer behavior and the effectiveness of marketing initiatives across both online and offline channels.
Calculating Online to Offline Attribution in E-commerce:
Let’s consider an example: Zaya sees an Instagram ad promoting a Double Digit sale, submits her email, and shortly after, receives and opens a welcome email. Later, on her way home, she notices your ads at a metro station, and the next day, she makes a purchase at your physical store. In this case, the customer’s journey is complex, with multiple touchpoints across both online and offline channels. The touchpoint journey began online and ended with an offline purchase, making attribution challenging.
To tackle this complexity, several methods can be applied to calculate O2O attribution in e-commerce.
As mentioned earlier, some decision makers tend to reduce their online marketing budgets because they rely on simplistic attribution models, like the position-based model, which often gives more credit to the final touchpoint (e.g., in-store purchases). This can lead to a misconception that offline stores generate the most revenue, while website driving traffic but not converting as strongly. However, more nuanced attribution models and calculations can provide a clearer understanding based on the business type and product lifecycle. Common metrics such as multi-touch attribution or last-click attribution should be considered for a more accurate view of how both online and offline interactions contribute to conversions. Some example metrics and calculation you can consider:
Multi-touch attribution models:
How It Works: Multi-touch attribution model assigns credit to various touchpoints along the customer journey. This can help measure the extent to which online engagements contribute to offline sales. You can use models like Multi to assign credit for offline sales.
Calculation: Track customer touchpoints across their online journey (e.g., website visits, social media clicks, email opens) and then compare that data with in-store sales. Use your chosen attribution model to assign a percentage of the offline sale to the preceding online interactions.
Example: If a customer clicks on a Facebook ad, visits your website, and then goes to the store to buy an item worth $200, you can attribute a portion of that sale to the Facebook ad (e.g., 30%) based on your model.
Customer Loyalty / Membership Programs:
How It Works: Track customer purchases through loyalty programs that link both online and offline behaviors. When customers engage with online touchpoints (e.g., emails, social media ads) and later make in-store purchases using their loyalty account, you can attribute those sales back to the online touchpoint.
Calculation: Analyze the sales data of loyalty members who interacted with online channels and later made in-store purchases. This requires integrating your CRM or loyalty system across both online and offline channels.
Example: A customer who received a Black Friday sales email visits a store and uses their loyalty account to make a purchase. That sale is influenced by the email touchpoint.
Unique promo codes or QR codes:
How It Works: Distribute unique coupon codes, QR codes online (via email, social media, digital ads) that customers can redeem in-stores.
Calculation: Track the number of codes redeemed in-store and calculate the revenue generated from those redemptions. This provides a direct link between the online campaign and offline sales. Example: If 500 promo codes were redeemed in-store from an Instagram ad, and the total sales from those redemptions were $10,000, then $10,000 in offline sales were influenced by that online touchpoint.
Geo-targeting and geofencing:
How It Works: This approach applicable if you have your brand App. Use geo-targeting or geofencing technologies to send offers, push notifications, or ads to customers when they are near a physical store location. Measure foot traffic from customers who received the digital message and then visited the store.
Calculation: Track how many customers who were exposed to the geo-targeted ad visited the store and made a purchase, then measure the resulting offline sales.
Example: If you sent 1,000 push notifications to customers near a store and 100 of them made purchases totaling $15,000, then $15,000 of offline sales were influenced by the online geofencing campaign.
To make it easier, I have listed here few great strategies we can think of running O2O strategy and way you can track the revenues with these some of the strategies:
Seamless Omni-channel Experience:
Strategy: Offer a seamless shopping experience across all touchpoints, including online platforms and in-stores, to create a cohesive brand experience.
Example Tactic: Implement click-and-collect or buy online, pick up in-store (BOPIS) options to allow customers to purchase online and pick up their orders from nearby brick-and-mortar locations. Or scan QR code at the store to receive 10% discount at their first online purchase. This tactic not only drives foot traffic to physical stores but also encourages additional in-store purchases.
Personalized Promotions and Offers:
Strategy: Tailor promotions and offers based on customers' past interactions and preferences, leveraging data collected from both online and offline channels.
Example Tactic: Send personalized email or SMS offers to customers who have visited physical stores but haven't made a purchase, incentivizing them to complete their purchase online with a special discount or FREE shipping offer.
Location-Based Targeting:
Strategy: Utilize geolocation data to target customers with relevant promotions and messaging based on their proximity to physical store locations.
Example Tactic: Send push notifications or SMS alerts to customers who are near a store location, informing them of exclusive in-store events, product launches, or limited-time promotions to drive foot traffic and encourage immediate purchases.
In-Store Digital Engagement:
Strategy: Enhance the in-store shopping experience with digital engagement tools and technologies to bridge the gap between offline and online channels.
Example Tactic: Install interactive digital displays or kiosks in-store locations, allowing customers to browse and purchase products not available in-store, access customer reviews, or scan QR codes for additional product information. This tactic creates a seamless transition between offline and online shopping experiences while providing valuable product insights.
Loyalty Programs and Rewards:
Strategy: Implement a unified loyalty program that rewards customers for both online and offline purchases, encouraging repeat purchases and brand loyalty.
Example Tactic: Offer bonus loyalty points or exclusive rewards for customers who make purchases online and redeem them in-store, or vice versa. Additionally, provide incentives for customers to engage with both channels, such as double points for cross-channel purchases or exclusive access to in-store events for online loyalty program members.
One of the brands who is great at this strategy is Sephora. They ask you to review their store experience, review the products and send online receipt. Their Beauty Insider program seamlessly bridges offline and online shopping experiences by offering rewards, personalized recommendations, and exclusive perks to customers across both channels. And recently, I noticed Swarovski also adopted in same strategy in Singapore.
Another great example is Starbucks' mobile app, which seamlessly integrates the offline coffeehouse experience with online ordering and rewards. Customers can pre-order their favorite drinks through the app, earn rewards points for in-store and online purchases, and enjoy personalized offers based on their past transactions.
Lastly, can't skip mentioning Nike's SNKRS app. Their in-store sneaker releases with the convenience of online shopping, allowing members to reserve and purchase limited-edition sneakers through the app while leveraging augmented reality (AR) experiences.
And example strategies can't By implementing some of these strategies and tactics, you can definitely leverage the power of offline to online attribution to drive sales, enhance customer experiences, and strengthen brand loyalty in today's omnichannel retail landscape.
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