Closed Loop Reporting: Setting Goals to Get Sales and Marketing on the Same Team

Sales Manager: “We didn’t achieve our revenue goals this quarter, let’s talk about what needs to change for us to hit our numbers next quarter.”

Sales Team:

• “We aren’t getting enough leads.”
• “The leads we’re receiving are garbage and unqualified.”
• “The marketing team doesn’t understand what we’re looking for”

Marketing Manager: “We didn’t achieve our revenue goals this quarter, let’s talk about what needs to change for us to hit our numbers next quarter.”

Marketing Team:

• “The sales reps never close any leads.”
• “The sales reps don’t take the time to record any information in our CRM.”
• “We don’t have any information to understand what makes a lead qualified.”

Does this sound familiar? I know I’ve had experiences in meetings like these and I’m sure you have, too. They tend to be focused on excuses and negativity – two of my least favorite things. I’m here to tell you that there is a better way. Some people refer to the ‘better way’ as closed-loop reporting, but I prefer to call it ‘heaven on earth.’

So what is closed-loop reporting, why is it so useful, and how can you pull it off at your organization? Keep reading to learn more about the tactics and technology you’ll need to pull it off. You may even get some goal setting tips to align your sales and marketing teams even further!

What is Closed-Loop Reporting?

Most people are familiar, so no need to get too deep in the weeds. Closed-loop reporting is simply the practice of recording information about leads after they’re passed along to the sales team. Therefore, “closing the loop” refers to the sales team reporting on what happened to the leads that they received. Make sense? If not, check out this article.

What are the Benefits

The easy-to-see benefit is that closed-loop reporting helps the marketing team understand their best and worst lead sources (based on lead-to-customer conversion rates). Once loops are closed on particular contact records, the marketing team can see what efforts and activities had the most success moving leads down the sales funnel closer to a sales-ready mentality.

This is a monumental benefit to the marketing team; without that data, they are just throwing leads, who may or may not be qualified, over the wall to the sales team, never knowing what the outcomes of those sales conversations are. This makes it very difficult for the marketing team to make strategic, data-driven decisions for the future.

With closed-loop reporting, the marketing team may notice that 50% of customers closed this month have all read a specific blog post or landed on a specific page at some point during their buyer journey. With that information, the marketing team can refine certain campaigns to include that blog post or web page to get that content in front of more eyeballs in an effort to qualify more leads for the sales team and eventually shorten the overall sales cycle.

“But Kevin, this just seems like extra work for the sales team. What’s their benefit?” Good question!

After analyzing what is working and what isn’t, the marketing team should be able to, in theory, provide the sales team with more qualified leads. After enough data is collected, the marketing team will know what makes a lead qualified and ready for sales touch points vs. leads that may need more educational email nurturing or simply more time before they’re ready to be passed along.

With the right technology (see below), the marketing team may have the ability to set up lead scoring to automate the qualification process based on actions such as form submissions, email opens, email clicks, webpage visits, videos watched, etc. With these processes in place, the sales reps are able to intelligently prioritize their owned leads like never before with very little work on their end.

Not only that, but they won’t have to spend their time working on unqualified leads because the marketing team is busy getting those leads buttered up for the sales team before passing them along.

While this process is taking shape, I can guarantee that the alignment and comradery between your sales and marketing departments will get stronger and more aligned by the day.

The benefits do not end there. This ‘heaven on earth’ model better allows employees to get credit for their work and cultivates a sense of purpose.

Closed-loop metrics is one vehicle that creates a sense of transparency into our contribution, and that is both empowering and rewarding. Jeremy Boudinet of Ambition says it like this:

“The teams that get an edge in sales-marketing alignment will be those who maintain commitment to overarching strategy and continuously seek ways to further improve alignment.”

How to Accomplish Closed-Loop Reporting (The Technology)

So, how is it accomplished? Well, before we get into the technology, the non-negotiable piece in this puzzle is the commitment from your teams. The marketing team and sales team need to commit to each other and to their aligned goals. I’ll provide some tips below for goal alignment; let’s talk technology!

Marketing Automation Software keeps a record of your marketing data on multiple levels — campaign level, individual tool level (email, landing page, CTA, lead sources, etc.), individual contact record level, and an overall dashboard. This software allows the marketing team to make strategic, results-driven decisions and serves as a one-stop-shop for tool utilization.

Customer Relationship Management Software (CRM) can be used to support your business in numerous ways, from storing large amounts of information, to logging notes and contact properties on a contact record level, to rewarding loyal customers. In general, CRMs are mostly used by sales teams as a way of organizing their pipeline(s) and prioritizing their leads.

In order to automate the closed-loop reporting process, you’ll want to either find a tool that has both a marketing software and CRM (like HubSpot) or identify/build an API integration between the two tools.

How to Set and Align Goals

I promised a couple tips on goal setting and alignment, and that, my friends, is what you shall receive. I encourage you to navigate through the example below and insert numbers specific to your business. First, I’m going to have our example company start with their monthly revenue goal.

ABC Company (for this example, assume every time I say “lead” I actually mean “qualified lead”)

Monthly Revenue Goal = $500,000

• What percentage of your monthly revenue goal do you want to generate online?
• Let’s say 20%.

• $500,000 X 20% = $100,000

Online Monthly Revenue Goal = $100,000

• What is your average revenue per customer?
• Let’s say it’s $1,000/customer on average.

• $100,000 / $1,000 = 100

Monthly Number of Customers Needed to Close = 100

• Currently, how many monthly [online] leads do you generate on average? Let’s say 400.
• How many of those 400 leads close as customers each month? Let’s say 80.

• 400 / 80 = .20 = 20%

Average Online Lead-to-Customer Conversion Rate = 20%

Now, let’s put it all together. If we now we need 100 customers to achieve our online monthly revenue goal AND we know that we convert 20% of our online leads to customers, then we can figure out how many online monthly leads we need to achieve our online monthly revenue goal.

100 / 20% = 500
Online Monthly Leads Needed = 500

Therefore, the marketing team needs to generate 100 more leads than they currently are and the sales team needs to keep the same rate of lead-to-customer conversion. Either that or marketing needs to continue generating 400 leads/month and the sales team needs to increase their customer conversion rate from 20% to 25% (100 customers / 400 leads = 25% customer conversion rate). Does that make sense?

Now the topic of commitment. For these aligned goals to work, marketing needs to make a commitment to the sales team, and vice versa. This can be done in the form of a Service Level Agreement (SLA). Here’s how it works.

Marketing commits to deliver a specific number of qualified leads to the sales team on a monthly basis. I’d encourage the marketing team to track their progress towards the monthly goal on a weekly basis to stay true to their commitment. If the leads are trending down, the marketing team needs to make adjustments to ensure they meet their goals and stay aligned with the sales team.

Sales commits to being accountable for a certain customer conversion rate. Similar to the marketing team’s commitment, I suggest tracking the sales team’s progress towards their commitment on a weekly basis.

In the end, you’ve generated two different goals for the two teams, however, both goals are in an effort to achieve a cooperative goal together. That’s alignment at it’s finest! To find success through this goal setting model, it’s imperative to close loops. Without that step, marketing won’t know what makes a lead qualified vs unqualified and sales will be frustrated and pass the blame for missed conversion rate goals along to the marketing team. Make sense?

If nothing else, walk away with this: Closed-loop reporting and goal alignment will make your organization smarter and more efficient because it makes the people at your organization smarter and more efficient. Mic drop.