The Top Five Metrics for Closed Loop Marketing You Need to Know NOW!

Measuring metrics for Closed Loop Marketing allows you to really understand where your business is succeeding and where it needs work.

Business decisions are made successful after looking to the data to gain understanding of performance in specific areas.

Closed loop marketing metrics relies on analytic reporting, as a continual process it relies on monitoring and constant optimization in order to achieve success.

Closing the loop refers to an existing customer making further purchases as well as an existing customer becoming a promoter and referring a friend.

Closed Loop Marketing focuses on the lasting relationship with a customer. That customer can purchase further products that you offer and promote your products/ services to their social circles.

Units Per Transaction (UPT)

Assessing the formula of how many units are purchased per transaction is one of the understated metrics for Closed Loop Marketing but is an important indicator of the effectiveness of your Closed Loop Marketing efforts.

When a customer purchases multiple items per transaction you can gain an understanding of their purchase behaviour and how the shopping experience you provide supports that or can be improved.

Furthermore, it requires no additional effort to market to a customer purchasing a single item or multiple items in the same transaction. When the basket (or trolley) contains more than a single item - BONUS!

While this formula is usually measured daily, you can also select your own timeframe to do it.

Purchase Frequency (PF)

The Purchase Frequency formula looks at the average amount of orders a customer makes within a given time period (usually measured as a yearly period).

This can be used to see how receptive existing customers are to your marketing communications, nurture campaign (email marketing), and website.

Customer Retention Rate (CRR)

The Customer Retention Rate refers to the amount of customers you have at the end of a specific timeframe, compared to the customers you had at the beginning. It allows you to assess if your business is successful in keeping customers around.

As it costs more to obtain new leads rather than retain existing customers, the CRR is a very important metric for long term Closed Loop Marketing success. It helps you determine the importance of customer retention and allows you to consider how you can improve it

E = Number of customers at the end of period
N = Number of new customers acquired during period
S = Number of customers at the start of period

Discount Rate

The concept of the Discount Rate refers to the idea that money up front is more valuable than money later. For further perspective on what the Discount Rate encompasses, look into the Time Value of Money.

Whatever you choose as your Discount Rate, know that it increases in importance depending on how long you expect your customer lifetime to be (the longer the life time, the more important it is that you are accurate with your Discount Rate).

“[The Discount Rate] is the minimum level of return that a firm is willing to accept for its investment/expansions as this is what it would make if it reinvested in its own business.” – CLV Calculator

Customer Lifetime Value (CLV)

All of these formulas lead to possibly the most important metric of all, the Customer Lifetime Value.

CLV measures the value of customers over time.

“Customer lifetime value is the dollar value of a customer relationship based on the present value of the projected future cash flows from the customer relationship” – Marketing Metrics

Success from Analysing Metrics for Closed Loop Marketing

This data driven approach allows your business to focus on specific areas that require improvement.

They lead you to an increased ROI as you focus on the areas that matter in retaining customers and turning them into promoters.

Closed Loop Marketing is an automated process that follows a lead through the customer lifecycle.

By assessing Units Per Transaction, Purchase Frequency, Customer Retention Rate, Discount Rate and Customer Lifetime Value you begin to really know how you're going and where your marketing efforts need improvement.

Keep your customers coming back and turn them into promoters with automated Closed Loop Marketing through Infusionsoft, learn more about our work today!