Closed Loop Marketing: Making a Match Between Sales and Marketing

Sales

Closed Loop Marketing: Making a Match Between Sales and Marketing
June 28, 2007

By Greg Anderson

When it comes to customers and sales leads, marketing and sales often have very different perspectives on what data is valuable.

Sales tracks information such as ordering history, results of the last meeting, and credit status. Marketing tracks outreach and promotions, competitor activity, what is selling and in what quantities, pricing variations, and regional or market segment trends. Marketing has business intelligence data that should indicate where the low-hanging fruit is and where sales should be concentrating its efforts.

The trouble is that while all this great information may be housed in servers that sit side-by-side, they may as well be halfway around the world because sales and marketing aren't sharing a common view. As a result, both sales and marketing have an incomplete picture of not only the current customers but the attributes that make up a good customer. This, in turn, makes it harder to sell the right customer at the right time.

The solution is a concept called "closed loop marketing." In this system, data can easily be exchanged between sales and marketing, and customers can be tracked through the suspect-to-sale continuum. With the right technology in place there is a free flow of information that reveals who the customers are and how they like to be sold.

What is a Sales Lead?

One of the continuing areas of contention between sales and marketing executives is what constitutes a sales lead. From marketing's point of view, a lead is anyone that responds to its outreach efforts (media advertising, e-mail, Web inquiry, etc.). Once those prospects have been identified and passed to the sales team, marketing considers its job done.

Sales, however, has a different point of view. They have only so many hours in the day, and often a sobering sales goal to reach, so they will tend to look for the low-hanging fruit, the ones where the prospect is ready to buy.

By marketing's accounting, they may say they provided 1000 leads during the current month. In sales' view, they may feel they only received 50 "legitimate" leads based on what the prospects want. The rest they consider to be noise.

Really, both parties are right. What's lacking is the broad view of customer purchasing patterns, demographics, and a sense of what has worked in the past that can help identify the next batch of qualified prospects.

Effective Targeting

If the organization doesn't have the right kind of information about who its customers are, marketing will take its best guess. While they may get lucky, that's a lot to put in the hands of fate.

Suppose the organization is a software company that is coming out with a new version of its current software. They want to do a direct mail campaign to announce availability. Logic would seem to dictate that the first prospects they should target are current customers.

Of course, the contact information for the buyers is the sales system. If marketing doesn't already have access to this database through a closed loop system it is unlikely they will be able to obtain it. So marketing often goes outside to purchase mailing lists. Both sides lose out. Marketing will waste a portion of its budget targeting users may or may not have any interest. In the meantime, sales will lose out on an opportunity to take a quick, powerful swipe at the low-hanging fruit.

With a closed-loop marketing system in place not only would sales be assured that its prime prospects are on the first mailing list, but marketing would have greater insight as to what those prospects look like to help them find more. They'd be able to select by SIC codes, annual revenue, number of employees, etc., creating a very specific list of high-probability prospects that will match both sales’ and marketing’s definition of what a lead is.

Longer Sales Cycles

Another area where closed loop marketing is important is with products or services that have long sales cycles.

As mentioned earlier, marketing considers its job to be to get the prospects to make an inquiry. Sales looks at the inquiry, determines the prospect is a long way from making a purchasing decision, and moves on to find one that’s closer. As a result, prospects that are just becoming interested can fall through the cracks.

This is an area where marketing can have a huge impact. Rather than settling for generating an initial inquiry, marketing can look at the factors that have led to a sale in the past and begin designing campaigns that help keep the prospect engaged until they’re ready to make a purchasing decision.

A closed loop marketing system makes that possible. Assuming that sales is using contact management software to log each contact that leads to a sale, marketing will have the ability to pull that information to look for patterns that indicate which actions follow one another and how quickly.

For example, suppose a typical close from initial inquiry to purchase order takes nine months. When the information is reviewed marketing identifies a group of prospects that closed in six months instead. By looking at the steps they went through, marketing may be able to design a campaign that moves other prospects to this six-month time frame.

What if the information on how customers want to be sold isn't readily available? With a closed-loop system marketing will have the ability to go directly to the customers and ask them, again helping the organization gain a better understanding of its customers—and what motivates them to buy.

Feedback and Marketing Focus

Often it's difficult to determine the ROI of a marketing campaign because once a lead passes over from marketing to sales the connection seems to disappear in the shuffle.

Closed-loop marketing overcomes that issue by allowing the progress of the lead to be tracked throughout the entire sales cycle. The connection between an initial inquiry and a final sale becomes transparent, helping marketing assign more of a hard dollar value to the specific program that generated the lead.

Marketing can now fine-tune its campaigns so they're smarter each time they reach out. The organization can also look to drive more value out of each customer by identifying patterns of add-on purchases.

Seeing the Same Picture

It's all about a common point of reference. Closed loop marketing allows both sides to step back in order to see the big picture, and turn sales and marketing from daily antagonists to close allies.

Greg Anderson steers the development direction of GoldMine CRM software in his role as senior director of product for FrontRange Solutions. He welcomes questions at Greg.Anderson@frontrange.com , or visit www.GoldMine.com for more information about closed-loop marketing.

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