Ever look at your bank account and wonder where all your money went? It’s a desperate, sick feeling to know that your money’s gone and you have nothing to show for it.
But businesses do it ALL. THE. TIME.
I did some work once upon a time for a client who spent tens of thousands of dollars every month in advertising and marketing and genuinely had no idea what was working.
They had a website and had no idea how many visitors they attracted. They advertised on multiple channels constantly, and didn’t know where their leads came from. They used the spaghetti-on-the-wall approach, but they never bothered to see which strands of pasta stuck.
To a digital marketer, this is the kind of thing that can cause an embolism.
What is Closed-Loop Marketing?
In a nutshell, closed-loop marketing is about tracking your site visitors and leads through the entire sales cycle, then using data from sales to find out which leads are working, and fine-tuning the marketing approach with that data.
This seems like a very common sense approach, but many companies either put too much faith in best-guess judgment and not enough in empirical data, or they find it hard to allocate the resources to close the loop properly.
Why It’s Important
Some businesses — like the client I mentioned before — accidentally succeed without being more disciplined in their marketing approaches. Even a blind hog can find an acorn now and then.
But not every company can be so fortunate. And how much more successful do you think those companies would be if they could manage their marketing dollars more efficiently?
If you’re a small or medium-sized business, you certainly increase your odds of success by using every advantage you can.
So How Does This Work with Digital Marketing?
I’m a little biased but I believe digital marketing (SEO, PPC, email, and such) is the apex of marketing. And the primary reasons are attribution and measurability, the two things that make closed-loop marketing work.
In the old days of print and broadcast advertising, the only way to know how a customer came to you was to ask them directly. And if your salesperson, customer service rep, or receptionist forgot to ask them, you lost that data point.
With digital, everything is trackable. Cookies can give you granular data about visitors to your site, where they came from, how long they were there, and what they did while they were there.
When they fill out a lead form on your site or even make a phone call through a tracked number, you have a complete path from that first sign of interest until the first contact. With that data, a good digital marketer will revise messaging and user experience to remove as much friction as possible and convert those visitors more quickly and easily.
The Role of Sales
Knowing where they came from is only half the battle. For ecommerce businesses, it can even be the whole battle, if their customers can make purchases without ever having to contact them directly.
For the rest, they need to know what Sales is doing with these leads and how they’re panning out. This is the part that often trips companies up.
I have talked to any number of clients who didn’t know their closing rates at all, much less by channel. Ditto for revenues per transaction. Again, this was often because they just weren’t making it a priority, and maybe didn’t see the value in it.
But it does have value. So much value.
Here are some numbers to illustrate:
Advertising Channel A brings in 100 leads per month. Sales closes Channel A leads at a rate of 18%. Each sale is worth $275.
Total Value of Channel A: $4,950 per month.
Channel B brings in only 80 leads per month. But closing rate is 25% and each sale is worth $325.
Total Value of Channel B: $6,500 per month.
Advertising costs being equal, Channel B is hands down the way to go. Heck, you could pay up to 25% more for Channel B leads and still break even with Channel A.
Implementing a process to track how Sales works those leads and getting that information back to Marketing is how you make things like this happen.
In the end, your marketing is only as good as the data you get out of it and put back into it. Great digital marketing companies know this, and they know how to work with you to get the data you need and close that loop. It makes our job more fun and makes your company more money.