Advertising is to companies what education is to economies: everybody knows that it’s a good idea, but finding out how one affects the other is trickier than you’d think.
Marketing managers have a problem – it is a challenge to figure out the precise impact of advertising on their revenues. Companies know that their advertising affects their revenues and vice versa, but they’re not able to “close the loop,” tracking how changes in one affect the other. Companies know how much the average cost lead costs, their CPA. CPA is Cost Per Acquisition, also known as the cost per conversion). However not all leads are created equally, Some are better quality, and some have a higher sales value. For understanding ROI, E-commerce companies have it much easier than lead generation/service companies. They can track cost vs sales revenue by marketing channel, as well as by individual campaign right down to the a single keyword and advert level.
For service companies the cost per lead is not enough – if only sales and cost reporting could be like e-commerce. How much extra money does the firm make, for instance, if it decides to put more budget into Google Ads, Facebook Ads, SEO, email marketing or any other channel? The chances are it doesn’t know anything beyond a cost per lead. This is where closed loop marketing can turn lead generation reporting into e-commerce style understanding of costs vs sales. This lets you measure your marketing more accurately and allocate efforts on the most profitable channels and individual campaigns.
How To Implement Closed-Loop Marketing
Lets discuss the steps involved to implement closed-loop marketing.
Step 1: Track Visitors With Cookies
“John Wanamaker (1838-1922) is a “pioneer in scientific marketing” and the inventor of the coupon (used for tracking marketing campaigns!)”. He is credited with coining the phrase “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”. So, he would be delighted with close-loop marketing potential of today!
You can close the loop by using tools like Google Analytics and CRM systems like HubSpot.com. The purpose of the tracking cookie is to tell you where your customer originated, also known as a source and medium. You want to know whether they came from your PPC advertising, social media, or randomly found your site through organic search. Having this information will provide you with the essential information you need to calculate the return on your investment from various digital marketing channels.
Step 2: The Visitor Browses Your Site
The next step is not only to find out what visitors are doing but track their actions while on your site. If the goal of your advertising is to get people to sign up to your email list, then you want to know whether that’s what they do when they arrive.
Tracking who is doing what can be a challenge. But there is ready-made software like HubSpot will do it all for you, telling you where people came from and what they decided to do while using your site.
Step 3: Get Personally Identifiable Information
Converting leads is the purpose of your advertising strategy. It’s the reason why you are going to so much effort to track people in the first place. So far, however, you don’t know anything about the users visiting your website; they’re completely anonymous.
You need a way of getting their information, like their name and email address. Most companies do this by redirecting prospects to a landing page with a form where they type in their name and email and get something in return. Ideally, you’ll send as much traffic as possible to the forms on your landing pages so that you can grow your customer base as rapidly as possible.
Step 4: Calculate Which Of These Visits Became Sales
The final step is to work out which of your leads turned into a sale. Who bought from you in the end? Once you know the answer to this, you can then track their path towards conversion through each of the preceding stages, providing you with a bounty of information in the process. The most likely outcome is that the people who buy from you come from a range of sources all over the internet, with some clicking on your PPC banners and others finding you organically (perhaps because they typed in a particular keyword or their friends told them about your products). Once you know who came from where, how much you spend on the advertising, and how much revenue you generated from each person from those advertising sources, you’re finally able to calculate the ROI.
Tools For Closed-Loop Marketing
If you tried to do all of the steps described above by hand, it’d be tough. You’d have to track each person by manually and then follow them back to the source, calculating the ROI using a spreadsheet. It’d be time-consuming, tedious, and, worst of all, counterproductive. The good news is that you can now do closed-loop marketing using CRM. Customer relationship management software can automate vast tracts of the process, freeing you up to evaluate the output and make a clear-headed decision about which digital marketing tools to use in your campaigns.
It’s not just about analytics either. While CRM solutions offer a variety of helpful tools, they also provide a bridge between your marketing and sales departments. Both can see where leads are coming from and which methods of advertising are the most effective. Sales teams can use CRM systems to provide bespoke support to customers from specific origins online.
All kinds of companies offer CRM tools. The most famous is Salesforce and HubSpot, but there are many others, such as SAP, Oracle, and SugarCRM. The trick is to get CRM software working in such a way that it loops back, providing sales reps with information about where their leads came from. The more information that they have about a customer’s origins, the more that they can tailor their interaction.
Hopefully, by now, the benefits of closed-loop marketing will be clear. It allows you to drill down into the nuts of bolts of your advertising campaign and find out whether you’re spending money wisely or not. It can also help you figure out whether you’re advertising to people in the right way by comparing different channels to one another. If one channel performs consistently better, then it could be an indication that you’re capturing intent. Alternatively, it could mean that you have a problem with the performance of your landing pages and so on.
Once you know a lot about a particular prospect and the probability that they will buy from you, you can start assigning customer lead scores. These scores tell you which customers are likely to be the most valuable going forward, boosting your ROI further.