Before launching into a discussion of closed loop demand generation and why it is a good strategy for businesses, it is important to understand the concept.
What is it?
Closed loop marketing connects sales to real-time lead flow and connects marketing to real-time sales response. This allows a closer relationship for marketing to produce more buyers and for sales to close more deals with both groups adding to the overall customer experience.
Companies that adopt a closed loop system potentially make a higher return on their marketing investment through sales. In 2011, SiriusDecisions co-founder, Richard Eldh, noted research that showed closed loop businesses grew revenues at an average of 7.5% from 2009 to 2010 while organizations with “worst-in-class” practices only grew an average of 1.4%. Furthermore, those worst-in-class businesses showed an average of -23.4% profit growth during that period of time while closed loop companies had an average 146.3% profit growth. These numbers clearly show that closed loop organizations have a significant competitive advantage over others.
Closed loop demand generation is characterized by lead tracking and capturing accurate sales activities, and feeding this valuable real-time data to marketing staff. This daily, real-time data is valuable to marketing staff in optimizing their processes to send more valuable leads to sales staff. Data that should be fed back to marketing includes contact rates, withdraws, bogus leads, and closings.
Contact rates, withdraws, and information about bad leads assists marketing in deciding which avenues to pursue in the future, while information about closings helps marketing identify their best channels. Upon receiving this actionable data, the marketing department can build forecasting models, develop benchmarks for successful campaigns, and concentrate on providing more quality leads, while discarding marketing channels with poor leads. This approach lowers marketing costs and increases revenue by focusing directly and immediately on the most valuable opportunities.
In a closed loop system you are essentially working with two factors within your control: lead quality and lead management. No salesperson wants to waste time following up on a bad lead. With real-time data being fed back to marketing, these bad leads can be decreased dramatically, especially with a system that rates the leads. This gives immediate feedback about quality leads. Tracking the highest-quality leads allows the marketing department to adjust their lead management to filter out the least-qualified leads and send higher-quality leads along to the eager, waiting sales force.
Companies with closed loop demand generation must create a very close relationship between their marketing and sales departments with constant information transfer between the two departments. While it can be difficult to centralize your marketing and sales departments enough to make closed loop demand generation effective, it is a worthwhile goal that can greatly increase the number of qualified leads and generate more sales while creating a more satisfactory customer experience.
Over the past twenty-five years, Alliance Group International has helped companies around the world develop successful closed loop demand generation processes that have significantly impacted profits in a very positive way. Let us help you create a profitable closed loop demand generation program for your sales and marketing departments. Give us a call or fill out the quick, easy to use Contact Us form in the right column.