What Is Closed-Loop Marketing?

The success of most companies depends on their knowledge of their consumer base. To create a successful advertising campaign, a business first has to gather and analyze data about the clients it plans to win over with its goods or services.

On the top of all information collecting methods, resides closed-loop marketing. This approach has proven to be the most efficient way to divide clients into interrelated groups that allow an enterprise to generate content aimed specifically at them. In its purest form, this method represents a never-ending process of gathering data about a client base and adjusting the company’s selling tactics accordingly. However, before we explain this approach any further, let’s first figure out what it stands for.

Definition of Closed-Loop Marketing

According to the technical definition of this term, it is a method that uses various consumer data retrieved from closed-loop reports that contain information about all leads directed to a company’s website. This approach is employed to examine lead data and make appropriate changes to the organization’s strategies to appeal to a broader audience on a more relatable level.

Enterprises that employ closed-loop marketing strategies perform data research to determine which distinguishing features are shared by which consumers so that the latter could be divided into classes based on their preferences and needs. Leads can be acquired from a wide set of sources, including a company’s:

  • website
  • social media pages
  • blog
  • SEO activities
  • email newsletter
  • contextual adverts

The received results are later used for planning the company’s online and email advertising activities. The end goal of this approach is to increase the enterprises’ visitor-to-buyer conversion rate.

Drip Marketing or Closed-Loop Marketing

Even though this approach has proven to be extremely useful, a lot of companies opt to implement drip marketing strategies instead. Those rely on providing small amounts of promotional materials to a company’s clients over a pre-defined timeframe. To make the process of choosing the better option for your enterprise easier, let’s look at a breakdown of their defining characteristics:

Drip marketing

  • uses a pre-determined schedule;
  • voluntary subscription model;
  • heavily email based;
  • limited opportunities for results analysis.

CLM

  • uses several sales channels;
  • perpetual analysis process;
  • improvements are made based on verified information;
  • uses separate databases and content for different customer groups.

As evident from both lists, the advantage of closed-loop marketing is undeniable. However, CLM has one significant drawback: if an enterprise can’t allocate a sufficient amount of resources to this marketing type, then the results will be inconsistent and unreliable, making drip marketing a more rational choice.

The 4 Steps of Closed-Loop Marketing

Understanding all the ins and outs of this marketing type can be a daunting task for beginning entrepreneurs. That’s why marketing experts have broken down this process into a set of 4 basic steps:

  • Step 1: Visitor Entrance-Point Tracking

Involves documenting the source that the website’s visitors have been directed from.

  • Step 2: Visitor Action Recording

Consists of detecting and recording any actions a visitor takes while on the company’s website.

  • Step 3: Visitor-to-Lead Conversion

Deals with directing visitors to points that serve to document sales lead data (mainly various registration, subscription, and check-out forms).

  • Step 4: Lead-to-Buyer Conversion

Once a lead makes a purchase, the source he was directed from is recorded, and this result affects the company’s next advertising campaign.

Benefits of Closed-Loop Marketing

Granted an enterprise has sufficient resources and has hired a closed-loop marketing professional, the implementation of this strategy allows it to:

  • focus selling efforts on those channels that show the best results;
  • set cognizant objectives;
  • lower the resources-per-lead expenses;
  • reduce the overall sales cycle;
  • find out more about the enterprises’ customer base.

In conclusion, closed-loop marketing is a powerful information-based technique that allows an organization to gather and analyze data about where the website’s visitors come from, how they behave, and what steps they take before making a purchase. The collected knowledge allows the business to make informed changes to its advertising strategies and spend its resources more efficiently.

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