What is closed-loop marketing? Closed-loop marketing is the steps you take from first connecting with your potential customer to securing them as a sale.
Information is power, especially for businesses. By gathering data and insights about customers — the background, shopping habits, and more — a company can better meet their needs, ultimately making for a happier, more efficient experience for everyone involved.
It all comes back to sales, though: In closed-loop marketing, companies rely on data to inform their marketing efforts, focusing their time and money on what’s working while getting rid of what’s not.
Some companies may not view sales as their end goal, but the truth is that profitability is essential for any (and every) business to survive. Closed-loop marketing is one the most effective ways to make that happen.
What is closed-loop marketing?
Closed-loop marketing is a form of marketing that relies heavily on data and insights. The term itself is a helpful visual: To close the loop, marketers analyze customers throughout their journey, from their very first interaction with the brand all the way to final sale.
This allows a marketer to connect with customers at every stage of their journey while also gaining a better understanding of which campaigns were the most effective: website, blog, SEO, email, social media and so forth.
Other definitions of closed-loop marketing to consider, according to marketing leaders
- “Closed-loop marketing is the use of analytics and insights to build better marketing campaigns that lead to ROI. To ‘close the loop,’ marketers must track and analyze their efforts from the first touchpoint all the way through to the customer’s interactions with sales. Closed-loop marketing allows a marketer to connect every lead, opportunity, and customer to the initial marketing campaign that brought them to the company. More importantly, it tells you which marketing campaigns, including your website, content offers, blogs, SEO tactics, email campaigns and much more, lead to the best ROI.” — Amber Kemmis from SmartBug.
- “Closed-loop marketing allows sales and marketing teams to collaborate on conversion and revenue data to determine which specific marketing activities are most effective in driving sales. For this article (‘What is Closed-Loop Marketing and Why is it Important?‘), we take a closer look at how closed-loop marketing works and show you how to successfully connect data from your marketing analytics and CRM platform.” — Katie Holmes from Ruler Analytics.
- “Closed-loop marketing uses data and insights to connect sales team reporting to marketing activities and assets. By examining where the leads came from, how they engaged, and the nature of the closed sales, marketing can better understand what’s working and what’s not. To do closed-loop marketing effectively, companies must connect each lead, customer, and sales amount to the marketing initiative that created them. Marketing teams can not only use this information to show how they contribute to revenue, but it also arms them with valuable intel on the behaviors of customers along the buyer’s journey to use when designing future campaigns. Sales teams can also use this data to see what kind of messages attracted leads, helping them refine their approach.” — Beth LaMontagne Hall from Raka Creative.
What closed-loop marketing is not:
Closed-loop marketing is not an end-all-be-all solution to your marketing campaign. It should be a tool you use to make a sale or convert a customer, but you still need to focus on other aspects of your strategy to remain successful. These include close attention to copy, tracking and analytics, and other measures.
Other mistakes to avoid with closed-loop marketing strategies:
- Don’t overlook the importance of each stage of the journey — from the first touchpoint to the conversion and all retention efforts.
- Pay attention to your data collection to ensure it’s accurate, updated regularly, and takes into consideration every step of the customer journey.
- Have some patience with closed-loop marketing, since it takes time and often requires many iterations before determining what the ideal customer is seeking.
Stages of closed-loop marketing
The steps of closed-loop marketing have many variables (such as the number of campaigns using the brand’s overall goal), but all of them follow this general format:
- The potential customer clicks to your websites from a referral source, like email marketing or organic search. Software like Hubspot enables you to track the referral source of each visitor.
- With landing pages and lead capture forms, you can collect even more data from the user. A call-to-action — a discount code that requires an email, for example — also catches their eye if the initial information input wasn’t enough. This information will give you insight into every page they visit and the action they take on your website.
- The customer follows through with a sale, which is tracked through a CRM. If they don’t automatically do so, the brand will follow up with the user until they can properly close the loop. At this point, the loop is closed because each touchpoint can be tracked and analyzed.
Benefits of closed-loop marketing
In the end, closed-loop marketing is beneficial to both the user and the company. The wealth of knowledge gives the company a better look at who their customer is, allowing them to provide a unique experience that’ll lead to a sale.
This, of course, is more enjoyable for the customer since they are getting ample attention. The benefits are endless, but here are some of the most crucial selling points of closed-loop marketing.
- Users get a more personalized experience: Because a company is pulling data at the different stages of the customer experience, they can better understand what they want and give it to them. Ultimately, this will help your company figure out the most efficient inbound marketing tactics, helping all company branches in the long run.
- Closed-loop marketing increases conversion rates: Once the loop is closed, you’ll have a better idea of the marketing tools and channels that generate the most sales. Here, take a look at which channels are the most efficient in delivering conversations and which are the most relevant to your company. Use this information to guide future decisions if high conversion rates are your end goal.
- It will reduce overall marketing costs, ultimately improving the company’s profit margins: Now that you know which channels drive better conversion rates, your company can cut those that don’t. Over time, this will save you money since you can focus your efforts on a few effective channels rather than many ineffective ones. Because you’ll be able to cut marketing costs that don’t drive results and allocate budgets for effective campaigns, you’ll increase your company’s overall profit margins.
- It gives the company a full view of the customer beyond just who they are and what they want: Since you are analyzing your customer every step of the way, you’ll discover everything there is to know about them: how they landed on your website, which pages they viewed, when they became a lead, how long it took them to convert to a sale and so on. This process, often referred to as a sales funnel, should be analyzed from start to finish: Take a look at the customer’s actions during the awareness stage, consideration stage, and decision stage. Key in on any trouble areas where the customer clicks away from the site or takes a long pause since it may be an indicator of a bigger problem.
- You are able to set attainable goals with this information: On the flipside, closed-loop marketing also gives a better view of its wants, needs and goals. Once the company has a considerable amount of data, it will be able to determine the right goals and benchmarks — aspirational but still achievable.
3 closed-loop marketing do’s
- Do focus on what’s working for your company — or, more importantly, what’s not: Closed-loop marketing is an opportunity to gain better insights into your company and the customer it serves. Use the data and insights to your advantage by pivoting your efforts into what’s driving sales and customer retention. ROI is always the goal, so be sure to keep that in mind as you parse through the data to figure out your company’s next steps.
- Do invest in analytics tools: To really benefit from closed-loop marketing, you need to pay upfront for tracking tools (Hubspot, Google Analytics, and Salesforce are popular) and a customer relationship management system. Together, these tools will give you a complete picture of what’s drawing your customers in, how they’re interacting with your site, and the length of time and number of steps it takes for them to convert to a sale.
- Do change your benchmarks over time: The longer you analyze data, the more accurate your information will be. Over time, change your company’s goals — not losing sight of ROI — to meet the insights you’ve gathered. No matter what type of sales tactic you use or marketing innovation you use, the customer should be at the heart of your progress. This means paying attention to what’s working and what’s not so you can adjust your measures of success.
3 closed-loop marketing don’ts
- Don’t commit halfway: For closed-loop marketing to be beneficial, you need to track data at each and every step of the process, from the moment a user visits your website to the sale. That means it’s up to you to make sure that you have the proper tracking and CRM tools in place to gather information about your customer’s habits, everything from the products they click on to the time it takes for them to complete a sale. If you fail to gather data at one of the touchpoints, you won’t get a 360-view of the customer.
- Don’t lose time or patience: All good things take time — and this is especially true when it comes to closed-loop marketing. You’ll need to collect information over a long period to get the most accurate view of your customer, so be patient. Sometimes it might happen right away, other times it could take months or years, but the investment is vital for your inbound marketing strategy.
- Don’t forget to implement standard language and tracking metrics: Put a system in place to ensure that everyone at your company tracks and analyzes the data in the same way. This uniformity will make it easier for everyone to work through the information and find ways to use it in everyday business.
An example of a closed-loop marketing tactic:
The best way to illustrate closed-loop marketing is through a series of steps:
- A potential customer is in the market for a new dining room table. They begin searching for options online.
- They end up on your website, which sells dining room tables. Thanks to search engine optimization, this is considered organic traffic.
- While on your website, they end up on a landing page with a promotion, information or another effective marketing tool that makes them buy a dining room table from you.
- Because they searched, they found you, they followed your guidance and became a customer, and you closed the loop.