By Katy Katz
Of all of the things that were taught during my undergraduate business program, there was one concept that was repeated ad nauseum: the number-one goal of a corporation is to make a profit for shareholders. Class after class, we learned that this goal trumps everything else.
That was a few years ago. In fact, I’m probably dating myself a bit by sharing that story. It was actually that type of thinking that led to some of the darker examples in our capitalistic history.
Companies now boast proudly to their public about more Millennial-approved visions. Google touts its mission of “do no evil” and Southwest Airlines’ primary objective is to deliver “a feeling of warmth and friendliness.” These are a far cry from the cold, bottom-line-obsessed companies they used to teach about in business school.
But no matter what a company or a boss or a client says that its “true” mission is, at the end of the day, they all still want to make a buck. And the clearest way to align marketing efforts to that goal is through closed-loop marketing and reporting.
What Exactly Is Closed-Loop Marketing?
Closed-loop marketing is the systematic attribution of customers back to their first source of entry to your website. It’s the process that allows you to tie specific results back to your marketing initiatives and get a better understanding of what’s working and how.
Most digital marketers enter into a love affair with data—especially if you came from a traditional marketing background that forces the use of assumptions about billboard drive-bys and average peak television views (I still have nightmares).
Website data are clean. You drop a cookie on a visitor, follow him or her around the journey, and get a pretty picture of the process of becoming a customer. Sure, there are catches. It’s hard to track a visitor who switches between devices, and there are ways to block nosy marketers. But, for the most part, closed-loop reporting provides clear, measurable results to report back to your boss or client.
Source: Hubspot, How to use the sources report to measure your marketing campaigns
How Does It Work?
The magic ingredient of closed-loop reporting is the tracking code. Tracking codes, such as UTM parameters, are added to the end of your URL to identify the visitor’s source of origin. You end up with something like this:
That little string of characters on the end of the URL allows you to track your visitors throughout their journey through Google Analytics or the marketing software of your choice.
HubSpot put out a great visual on exactly how this works in four steps:
Source: Hubspot, How Closed Loop Marketing Works
- Identify a visitor’s original source at the point he or she lands on your website. This will show you whether he or she came in through social media, email, as a referral from another website, or any of the many other varieties of digital gateways.
- Track what the visitor does once he or she arrives there. Tracking parameters allows you to play close attention to what visitors are actually doing on your site and the process they follow to go from A to Z. Pay close attention to this part for future optimizations.
- Grab that visitor’s information when he or she fills out a form. Now you have a lead and can start monetizing your efforts!
- Ding—customer! Close the loop and attribute the purchase back to that original source.
If you’ve been following along, you’ve probably surmised that it’s pretty tricky to do closed-loop reporting without a website. Your website is the hub that will collect all of this information and is a key ingredient to the process.
However, no matter how much data you collect, the data won’t do much for you if you don’t know the right questions to ask. There are literally billions of ways to tie digital traffic data together in an effort to measure marketing strategies. Make sure you know which questions are the most important to answer to demonstrate revenue, progress, and the other metrics that matter to the decision-makers at your company.
The “Why”: Those Juicy Metrics
That brings us to our “why” of closed-loop reporting in marketing. As mentioned above, there are a ton of different ways to analyze closed-loop marketing data. It’s important to know the right questions to ask at the beginning so that you can glean the best answers from the data in the end. Here are just a few metrics to give you an idea of all of the juicy insight available with closed-loop marketing:
What: The most popular customer acquisition source. The first thing you will see once you drop a UTM code on your website visitors is how they arrived there in the first place:
- Metrics: Percent of visitors from social media versus search versus paid, etc.
- Uses: Acquisition data can provide evidence for budget allocation, drive strategic direction, and set definitions for where to most efficiently focus your time.
How: Cost allocation of acquisition sources. Once a person becomes a customer, you can start building out more robust calculations about how much it cost to get him or her to that stage:
- Metrics: The least (or most) expensive acquisition source.
- Uses: Allocating budget and getting a handle on that pesky customer acquisition cost. This can also be very helpful in proving ROI of the various channels you pursue as well as the time invested.
When: User behavior on your website. You will be able to track exactly what pages a user visits and the actions that he or she takes on those pages:
- Metrics: The average number of pages/emails/downloads a visitor needs to see before becoming a customer.
- Uses: The development of an effective content and lead-nurturing strategy.
Where: The buyer’s journey for your ideal customer. Visitor-tracking data will allow you to measure the average amount of time that people take to go from visitor to lead to customer:
- Metrics: Average time for lead-nurturing efforts, when and where to send campaigns, etc.
- Uses: Proper goal-setting and timelines for strategic planning.
Who: Customer demographics. By utilizing forms, you can start to grow your information database about these visitors as they become leads:
- Metrics: Ratio of your ideal customer in your traffic, sources, and attribution.
- Uses: Persona development and insight into the interests and needs of your customers.
Start Loving Your Data!
A data set is truly a marketer’s best friend. Well-presented metrics can help you get that next job promotion, close a sale, or show the board that your strategies are working. If you only walk (or click) away with one insight from this post, remember to focus on what story you want to tell with those data points and how you’re going to do it.
Closed-loop marketing is sort of a given for any successful business, but sometimes it’s easier said than done. What is clear is that a concise picture of your best marketing channels will help you gain:
- Better metrics for reporting
- Insight into your target audience
- Realistic goals and strategic direction
There is a ton of insight to be had once you start tracking website visitors at a granular level. The story within those data points that’s right for your business is yours to discover!