The topic of consumer data privacy is quickly reaching a tipping point. With companies like Google and Apple pushing for tougher data privacy rules, the bar has been raised to deliver superior customer experiences that don’t cross the line from being intricately welcoming to scary. With the disappearance of third-party data, brands need to redouble their efforts to be more transparent with consumers, adopt approaches that focus on data privacy, and also explore new ways to improve contextualization. This is especially true if the goal is to get consumers to like a brand enough to want to sign up and share their information.
With all of this in mind, I wanted to speak to one of the smartest people I know about the current landscape and best practices for successfully navigating the many minefields of today in a way that helps foster the brand health and business growth. I recently sat down with Kady Srinivasan, SVP Global Head of Marketing at Klaviyo. She is a marketing veteran and Silicon Valley insider who has held leadership positions at leading companies such as Owlet, Dropbox, and Electronic Arts. Here’s a summary of our conversation:
Billée Howard: Good to see you again, Kady. Tell me a little bit about your new role at Klaviyo and how it intersects with your passion for smart innovation to address many of the privacy issues that arise right now.
Kady Srinivasan: Glad to be back, Billee. I am SVP, Global Head of Marketing at Klaviyo. We are a customer data and marketing automation platform, with a very strong database that powers emails and SMS. This gives us a big difference from the competition – while other companies in our space focus only on helping customers manage emails, we help brands ingest all kinds of data, synthesize them and put them in a form that can be used to fuel communications that are personalized and relevant to their customers. In the first half of 2021, our clients saw almost 100X ROI on their marketing spend and with some of our biggest clients the return was 250 times. This is where the notion of data confidentiality comes into play. The reason our clients are successful is that we help them control their business destiny without relying on middlemen like Facebook or Amazon. Instead, by using first-party data that consumers willingly share, our brands become much more personalized in the way they communicate with their customers. In fact, I coined the term Customer First Data ™ to define data that comes directly from a prospect or customer, which is the best way to evolve personalized experiences.
Customer-First Data is essentially a combination of zero and first party data. Zero-party is the set of information that a customer voluntarily gives you. If an end consumer logs into a merchant site and fills out a quiz or questionnaire, that’s an example of zero-party data. First-party data is when that same consumer visits a merchant’s website and references any behavioral tracking data you can collect. What we have seen is that the combination of zero and first party data is so powerful as it becomes the basis of growth for many of our clients. Brands appreciate being able to rely less on third-party data from Google, Facebook, etc. In a world of data privacy, the biggest protection you have against all of these privacy changes in my mind is this idea that you are investing in your own data. collection. You do it in a way that leads to more contextually relevant and tasteful experiences.
Howard: I totally agree and we’re on the same page on this, as you know. With that in mind, everything I think about on a daily basis has to do with how brands can be more commercially 1: 1 intimate, without being invasive. I’m also very focused right now on the idea of moving from personalization to individualization and I would love to hear your thoughts on both.
Srinivasan: Oh, I love it. I like individualization. I have to be honest with you. I was looking for something other than personalization, so I could steal it from you. (Laughs). I like the idea of one-on-one communications. When you look at today’s consumer landscape, there’s no doubt that most will continue to demand one-on-one communications from brands. The only way for them to go for messaging and communications is if they feel like they’ve been seen and recognized. Do they feel like they identify with the purpose or brand value they are trying to achieve? There’s no other choice but for brands to be able to reach people on a level that makes it really, really intimate like you said.
One of the challenges of individualization is having automated processes in place to help sift through the vast amount of customer data to determine which segments businesses want to target and how they will target each individual customer. These automated processes not only need to be set up quickly and at scale with millions of people, but also need to be constantly updated. That’s a big challenge to overcome and the second is that you not only have to put the infrastructure in place to reach these people, but you also have to have the content that resonates emotionally with them. I think most companies haven’t figured out how to fix this problem yet. Either they seal the whole situation by throwing a lot of bodies in, or they take shortcuts.
One of the reasons I joined Klaviyo is the way we set up the platform, which allowed customers to build their infrastructure quickly and easily so that they could get a lot done in a very short time. . I’ll give you an example that blew me away. For one of our brands, when a customer accesses their website, they are able to create a specific and individualized customer experience. The brand is able to say to the customer: “Here, we know that you are interested in these jeans that you looked at two months ago. The brand brought back the same fall collection and it’s in a color you like based on your past purchases. It’s available at a store in Los Angeles where you live and by the way, you have 50 points in our loyalty reward system that you can apply towards that purchase. This type of powerful customer experience is the standard we need to achieve, but we need to overcome the two challenges highlighted above to achieve it.
Howard: I think that’s absolutely right and one of the missing pieces is definitely emotional contextualization, which is why people often fall on the wrong side of intimacy and seem extremely intrusive. That said, everyone is trying to find a way to cross that fine line with the long term goal of wanting consumers to choose to be part of a brand every day. What are the best practices that people should consider when trying to go this line?
Srinivasan: Marketers need to have a customer-centric mindset to avoid crossing the privacy line in stalking. While cookies have helped make the internet more personal, businesses have started to become invasive once they start buying and selling customer data, making everyone’s information much less private. Just because a brand knows a customer’s behavioral data doesn’t mean it knows everything about them. As Apple and Google’s data privacy changes inevitably result in less accessible third-party data, marketers will need to change their minds to collect and leverage customer-centric data. If done correctly, this new approach can help strengthen customer relationships and leave businesses in a better position to withstand any future changes in data privacy.
This shift to Customer-First Data will involve linking more varied data points to get a much richer picture of who your customer is, through the preferences they have and the choices they have made. What brands can then do is apply AI or machine learning to create predictive analytics for some of the filtered information, then reach out to customers and tell them, we think you like that. Yes or no? For example, creating personalized and automated email feeds based on user behavior (also known as drip or nurture campaigns) allows brands to deliver highly relevant content that is more likely to get a click. In 2020, Klaviyo reported that while the average CTR for all campaigns was 2.25%, it was 6.34% for automated feeds (an increase of 181%). This way, brands can keep trying to update their understanding of consumers and then make communications much more personal. For this to happen, marketers have to stop being lazy because the biggest obstacle in my mind to collecting this kind of customer data is that people just don’t want to burn calories on it. It’s not sexy work, but building the right infrastructure here is essential.
Howard: I totally agree. Because of all the privacy changes, people are ultimately trying to take control of building their own information infrastructures so that they can do exactly what you say. At the same time, there are a lot of federal laws on the table trying to put in place a more consistent approach to protecting consumer privacy. Do you have any thoughts on what matters most here as these paths converge?
Srinivasan: Brand growth, privacy, and customer experience need to start to intersect in a much more seamless way. When you step back and say, I want to grow, but I want to do it the right way, because even though I’m growing a bit slowly, I know there is going to be an exponential increase on the backend. The trust and loyalty that I can get from getting to know a customer the right way is invaluable. Providing a better customer experience is kind of like giving customers a better story and creating that strong connection from the start. I think a lot of people still have the reverse mindset in place. I want to try to educate people on how we all think about this completely wrong paradigm. You don’t start by trying to build the top of the funnel. You start by strengthening your infrastructure, the bottom of the funnel first, which is your own website or app, and then you start to go to the top of the funnel across all of those platforms. It makes your funnel so much stronger and your growth so much more sustainable.