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We live in a data-driven world. Most marketers today could tell you which website pages get the most views, how much time the average visitor spends on their site, or even where their visitors are coming from most often. But how many marketers can tell you that the advertising campaign from Q1 drove 15% more customers than last year? (I'll give you a hint: not very many.)

With access to tons of analytics and data points, companies still struggle to close the loop between marketing efforts and real sales – which makes closed-loop marketing absolutely essential to the success of your business.

Before we jump into the why of closed-loop marketing, it's important to understand how it works.

Step One: The easiest way to implement closed loop marketing is to incorporate software into your campaigns.. At StoryTeller, we use Hubspot, but there are several different choices that will work just fine. When new visitors come to your website, browser cookies are set to track the referral source of each user.

The "referral source" is the action that a visitor takes to get to your website. Here are a few examples of referral sources:

Step Two: Using landing pages and lead capture forms, your software connects anonymous browser cookie data with lead capture tactics (like .pdf downloads, subscription forms, contact forms, and more). Offering free, high-quality resources like guides, checklists, and worksheets that connect with your audience and solve a specific problem is a great way to generate leads. But what do you get out of it?

In exchange for the right piece of content, a visitor offers their contact information (usually email), which gives you a name and contact information to associate with your website analytics – giving you insight as to each page they visit and website action they take.

Step Three: Create a system with your sales team to track and close customers in a CRM that integrates with your lead management system. This is the part that a lot of companies miss, but it's important that these two systems talk to each other so that you can start to understand what channels perform the best for you. You might have a landing page that's converted 500 new leads but has never resulted in a customer (not good). Or vice versa: you might have a landing page that has only converted 25 new leads but 20 of them have become customers (pretty great).

Now that you know WHAT closed-loop marketing is, here are 5 reasons why it should be an essential part of your marketing strategy:

1. Focus on What Works

By implementing a system that allows you to track your visitors from the original referral source all the way through to customer conversion, you can not only demonstrate the value of those marketing efforts to your boss or board, you also get a picture of which channels and offers are driving results and value. In other words, you can begin to hone in on the marketing tactics that REALLY drive the bottom line for your business. If you're spending $20,000 a year on PPC ads that aren't resulting in qualified customers, STOP spending that money!

2. Set Goals for Growth

With closed-loop marketing, you can set your goals and work backward to determine how to get to them. That's because you can rely on historical data and analytics, from your awareness strategy through to closed sales, to anticipate realistic outcomes and plan for them.

For example, if you've found that your webinars generate a higher rate of sales than other content or tactics, you might set a goal to get more registrants on your next webinar (or even create a whole campaign around it). The more specific your focus and the more targeted your audience, the more predictable your results can be.

3. Understand Your Cost Per Lead

Most companies understand the lifetime value of the average new customer, but do you know what it costs for you to acquire that lead? With closed-loop marketing, you can start to get a better sense on what money was spent to win that new lead. If you can make $2 million from writing a very targeted blog post, why would you spend hundreds of thousands on paid advertising that never converts to real business?

Calculating the cost per lead is as simple as taking the total amount spent on that campaign (including fees, resources, time, etc.) and dividing it by the total number of leads and customers generated by that campaign. Simple – if you have closed-loop marketing working for you, that is.

4. Show Tangible Results

For a long time, marketers weren't able to show the actual results of marketing/advertising. Talking about the success of marketing used to include a lot of phrases like "it generated a lot of buzz," or "it created a lot of engagement." What they were actually saying was they knew it got attention, but couldn't track results or outcomes – because marketers didn't have the right tools or approach to see the big picture.

Rather than finish a campaign by saying "it contributed to brand loyalty," wouldn't you rather walk into a wrap meeting and say, "Our Q4 promotion brought in 10 new qualified leads and we have already closed 2 new customers"? I know I would.

5. Prove the ROI of Marketing Efforts

Let's face it – a lot of executives think that marketing is a fluffy and untrackable department that spends time worrying about why the colors don't match and when they can do their next website redesign. But with today's software and technology supporting a closed-loop marketing setup, it's much easier to connect the dots between marketing and ROI.

An Example of How Closed-Loop Marketing Works

Here at StoryTeller, we strive to build closed-loop marketing strategies with all our clients. One of our favorite client success stories with closed-loop marketing is a private golf community in North Carolina. One of their main goals is to sell high-value homes within their community, so we partnered with a website developer to revamp their site with a focus on real estate, including new pages on available homes.

There are a variety of lead capture opportunities, including the ability to save a home as a favorite, schedule a walkthrough, talk to an agent, and more. Each of these pages features lead capture forms that sync with the client's CMS, arranging each converted visitor according to what they're interested in and how close they are to a purchasing decision.

These common sense integrations had a measurable impact on sales: Within six months of our relationship with the client, they had closed two (2!) new homes. More than that, we knew that both of these new homeowners had 1) found the community from organic search and 2) converted on one of the new real estate pages we helped create – all thanks to closed-loop reporting.

Without real estate-related conversion opportunities on the website, those new homeowners would've had no way to start the conversation. And without the technology to track the origin of those leads with a dynamic CMS and open communication with the sales team, we wouldn’t have been able to determine the value of our efforts. But with the data afforded by a closed-loop marketing system, we could literally measure the cost of marketing versus the client's revenue!

So, why doesn't every company use closed-loop marketing?

Implementing closed-loop marketing can be challenging. There are a lot of pieces that need to come together to get a clear picture about what's really driving conversions, but here are a few common pitfalls to be aware of:

  • Failing to get your company to commit fully to the process — without sales buy-in, your reporting will be incomplete
  • Forgetting to create standard language/stages to track the process of leads from visitor to customer
  • Not holding reps accountable to closed-loop marketing

Creating a system for tracking these types of marketing activities won't happen overnight, but it's an essential part of understanding the success of your efforts and using that data to make informed decisions about what pieces of your strategy warrant an investment of time and money.

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