Closed Loop Marketing | Everything You Need to Know
In this article, I will explore 1) an introduction to closed loop marketing, 2) how closed loop marketing works, 3) getting started in closed loop marketing, 4) technology tools that can help your closed loop marketing efforts, and finishgin with a short 5) conclusion.
People who run big companies and other businesses are tasked with knowing how their company spends its money. A big part of any company’s budget is devoted to marketing and advertising; after all a business can’t make money if they don’t do something to acquire customers interested in their product and make them buy. With a high percentage of the marketing budget, executives want to see proof that those budgeted dollars are being well spent and contributing to the company’s bottom line. In order to do that there has to be a way to track how marketing strategies translate into dollars. One good way to see if a company’s marketing plan is working is through what is called “closed loop marketing”.
Closed loop marketing plays a critical role in the sales process because it opens up the lines of communication between the company’s sales force and their marketing team. After doing this, they are able to analyze how their current marketing strategies are working to help target their future marketing campaigns more successfully.
A. What is closed loop marketing?
In business jargon, closed loop marketing is often described as the process in which a company seeks to capture data and information on its marketing practices to establish what is effective (and what’s not) at attracting future customers; it takes a high degree of communication between the marketing staff and sales force to do it right. In Lehman’s terms closed loop marketing is simply the sales staff working with the marketing team to determine how customers arrived at their website and what they did after they got there.
B. Why do Businesses Need Closed Loop Marketing
For many years businesses had no idea why their marketing strategy did or did not work other than actual sales; even when sales are good there are still areas that could be considered wasteful spending in even the most successful marketing campaigns, but there was no way to identify them. This has all changed with the mainstream use of the internet and such advanced web tools as Google Analytics. These new analysis tools give businesses the chance to take a much more detailed look at their marketing methods.
Here are some specific reasons why companies need to make good use of closed loop marketing:
- It shows a company more specifically where to focus their future marketing efforts
- It helps them break down results to get a clearer picture of what happened in the marketing to sales process
- It helps narrows down their target audience
- If used right it has the potential to shorten the marketing to sale time
- A company that uses it is able to set more realistic goals with future marketing and sales strategies
If done right, closed loop marketing can help businesses cut costs and improve their profit at the same time.
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HOW CLOSED LOOP MARKETING WORKS
There are several key parts of any good closed loop marketing plan, and they are as follows:
1. Attracting Traffic to the Website
The first thing that must be done is to let potential customers know that a business is out there and what are the products and/or services they offer. This can be done by several different ways and most of the better ones target search engines by what is known as search engine optimization (SEO). Effective SEO is done by such things as placing keywords into web content on a site, designing URL’s to be product or service specific and by having relevant and informational content in web pages and blogs.
When a company has a properly optimized website, it will appear toward the front of a search engine’s rankings, and this usually will bring more traffic to a website.
2. Understanding Where the Traffic Originated From
Website analytical tools are advanced enough these days that they can tell a company what their web traffics source is. These are what is known as ‘referral paths’ and they are a very important part of any closed loop marketing system. All website analysis tools will have a section titles something like “Traffic Sources” that will tell a company exactly what originating source brought a visitor to their website.
From here a company can click on each source and see what referral path brought each customer to them; it will actually list specific webpages of the sites that brought a customer to a company.
3. Monitoring the Online Behavior of Consumers
Behavioral targeting seeks to create a profile for the types of customers that a company’s website is attracting the most. For instance, if the company is one that sells guns they may find a large amount of the traffic that visits their website originates from survivalist blogs or hunting sites. This type of information is critical in shaping future marketing and sales strategy. It is why marketing practices have been aimed at people’s behaviors long before the computer and internet came into mainstream use. Theoretically, if a company can identify what it is about their product or service that relates to a certain type of individuals life, they will then be able to design and target a marketing campaign that has a much higher than usual lead to sale ratio.
4. The Role of Submitting a Lead-Capture Form in the Process
A lead capture form is something that a business’s potential customers will supply to them that contains enough information about that customer so the sales team can follow-up. It can be done by placing something like an “if you want more information click here” button on a website or it can be something like a form that is physically filled out at a trade show. There are many different ways both on and off the internet that a business can take to establish leads for their product or service. The main component of any lead-capture form is that it be actionable enough for the sales team or the company’s website to turn it into a future sale or continue to work towards that end.
5. Lead turns into Sale and the Source is Credited
Businesses will take the data they gather on a customer and what led to a sale to prepare what is sometimes referred to as an ‘Attribution Model’. This model basically charts the referral path to the sale and gives the original source the credit; it can be broken down further into first touch and last touch attribution models to help more accurately identify a lead source.
This is an important part of any sales and marketing process because many times an originating source will get some type of financial compensation for bringing a lead to another business that turned into a sale; these are commonly referred to as ‘affiliate’ or ‘referral’ programs. Affiliate programs are a great way for a business to build their sales up quickly, but they will give up part of their profit in the process.
6. Analyzing the Results
As the closed loop marketing process goes along, the company will generate a very large amount of visitor data if SEO is done right and it resulted in driving a fair amount of traffic to their website. Once the data is gathered, members of the sales team and marketing department must break down and analyze the data to figure out what worked in the marketing campaign and what did not.
With the advantages that the modern analytical tools give them, the teams will then identify such things as the sources that brought the most leads to sale, the percentage of click-through’s (visitors who left immediately), the number of page views, and the time on page for visitors (this signifies the quality of web content on a particular page). All of this information is then put to good use designing the next marketing campaign with the intention of refocusing the next campaign on what worked best in the previous one.
7. Evaluating the Sales Funnel
A sales funnel takes analyzed data and builds a visual model of the steps that were done to sell a product. Just like a funnel that is used to help fill a container accurately with liquid, a sales funnel gets more specific as it gets to its narrow end. A typical sales funnel will look at the following areas from the top down:
- Web Content – What attracted visitors to the site and what did not. This typically consists of content on the page, blogs, press releases and more.
- Prospect Conversion – What it took to get a potential customer more interested. It usually consists of such things as product demo videos, insider tips, and detailed graphics.
- Lead Generation – This is what took the interested visitor from a raw prospect to an actual lead. This is usually done by something on the webpage that is actionable such as a “click here for more information” tab or using some sort of traceable coupon.
- Customer Acquisition – What closed the deal. It could be such things as a sales meeting, a mailed brochure or “buy one get one free” offer.
- Actual Sale – All the above then succeeded in making a sale of a company’s product or service.
8. Looking at Lead to Sale Percentage and ROI
Of course, what all the heads of all companies want to see is the return on investment (ROI) that they are getting from the dollars they spent on any marketing campaign.
The beauty of having all the analytical tools that are available today is that they make it very convenient to establish both an accurate ROI and to help provide detailed results which shape future marketing strategy.
GETTING STARTED IN CLOSED LOOP MARKETING
For those companies that currently do not use a closed loop marketing process for their business, here is what they would need to do to get started.
Establish Effective Data Management. This is by far one of the most critical processes of any marketing department when it comes to analyzing the effectiveness of a particular marketing strategy. A company has to be able to identify and use accurate data for analysis.
Determine Lead Scoring and Subsequent Ranking. Lead scoring is the ever changing method of establishing a scoring system for how good individual sales leads are perceived to be at attracting potential customers. The higher the lead score, the more attention that is given to that sales lead.
Ensuring lead movement. This phase of the marketing process ensures that there are no dead ends for leads, and they don’t just sit in one place without moving forward.
Establish Effective Sales and Marketing Communication. The very reason that closed loop marketing was established in the first place was the failure of sales and marketing teams to effectively communicate during marketing campaigns in the past. Businesses now realize that communication between the marketing and sales department is an essential part of designing any future marketing campaigns in order for them to be successful.
Determine ROI for the marketing campaign. As was mentioned in the previous section, those in charge of trying to make a company profitable want to see what type of sales return they have gotten on any of their marketing investments. ROI is what determines whether a particular marketing strategy was successful or not.
TECHNOLOGY TOOLS THAT CAN HELP CLOSED LOOP MARKETING EFFORTS
Here are some popular tools that will help a company collect marketing data and help with their future strategy planning too.
A. Marketing Software
- Hubspot: Hubspot was designed to help small and medium businesses that do not have the advantage of large sales and marketing teams working for them. It is cloud base so it can be accessed by any device which can connect to the internet. It can help with such marketing functions as email marketing, campaign management, tracking of social media and lead generation and tracking.
- Marketo: Marketo is one of the fastest growing programs that can be found anywhere when it comes to helping businesses with their marketing campaigns. It was originally designed for business to business marketing and has been the leading program for that since it came out in 2006. It is a web-based platform which caters to businesses of all sizes. It conveniently keeps track of marketing activities, analytics, data and even has a website design function.
- Outmarket (formally Vocus): This is one of the oldest software programs on the market, so its customers get the benefits of all the marketing input that has shaped the program over the years. It can handle everything from raising brand awareness on social media to helping with lead generation. It can be used by companies of all sizes. It also can help a company with their CRM, analytics and e-mail marketing needs. It is cloud based so it can be accessed by smart devices and mobile applications too.
B. Customer Relationship Management (CRM) Software
- Salesforce: This program is by far the clear leader of cloud-based CRM software services. It caters to a large variety of different size businesses. Because it is cloud-based, it can conveniently be accessed from anywhere a user can establish an internet connection. It has a large variety of CRM tools that can do such things as lead generation, contact management and different types of sales forecasting. It comes at an affordable price which makes it ideal for small businesses.
- Sugar CRM: This software is a great platform for integrating sales, marketing, and other individual employees into the sales and marketing functions of the business. It is another program that comes highly recommended for small business applications, although it can be used for other sized businesses too. It comes in both cloud based and downloadable forms depending on a business’s preference.
- SupportCenter Plus: This is another cloud-based system that enables those who use it to do much more than just enhancing their marketing strategy. It can do everything from handling customer tickets to establishing a customer data base. It also includes easy access to several real-time reports and dashboards.
- Microsoft Dynamics CRM: Microsoft is a reputable player in the CRM category with its Microsoft Dynamics CRM platform. This cloud-based CRM solution helps its users do such things as manage schedules, manage individually assigned tasks, track customer loyalty, and generate data which helps future marketing campaigns.
There is a reason why this process is called the “closed loop” method of marketing, and it’s because it takes the marketing process full circle with the inclusion of accurate feedback from the sales staff. This is something that rarely took place in companies in the past because of poor communication between the sales and marketing departments and the inability to obtain accurate data on specific areas of a marketing campaign.
Now that this detailed marketing data is available, it is something that modern day companies need to take full advantage of as advertising and marketing costs continue to skyrocket. Closed loop marketing helps to establish proven areas where future marketing dollars should go and also helps to save money by eliminating areas in the marketing process that were ineffective at attracting customers in the past. Closed loop marketing gives a company the ability to do all the things mentioned and more.