Our Conversation with Klaviyo’s Kady Srinivasan

The topic of consumer data privacy is quickly reaching a tipping point. With companies like Google and Apple putting more stringent rules around data privacy, the bar has been raised on providing superior customer experiences that don’t cross the line from being welcomingly intimate, to creepily invasive. With the demise of third party data, brands need to work harder than ever to be more transparent with consumers, adopt data privacy-centric approaches and also explore new ways to improve contextualization. This is especially so if the goal is to get consumers to value a brand enough to want to opt in and share their information.

Klaviyo’s Kady Srinivasan On The Intersection Of Data Privacy, Customer-First Data + Killer CX

With all this in mind, I wanted to speak to one of the smartest people I know in the industry about the current landscape and best practices for successfully navigating today’s many minefields in ways that drive brand health and enterprise 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 senior positions at leading companies such as Owlet, Dropbox and Electronic Arts. Following is a recap of our conversation:

Billee Howard: Great to have you back, Kady. Tell me a little bit about your new role at Klaviyo and how it intersects with your passion around innovating smartly to address many of the privacy concerns going on right now.

Kady Srinivasan: Happy to be back, Billee. I’m the SVP, Global Head of Marketing at Klaviyo. We are a customer data and marketing automation platform, with a really strong data backbone that powers email and SMS. This offers us a big competitive difference — while other companies in our space are focused solely on helping customers drive email, we help brands ingest any kind of data, synthesize it, and put it in a form that can be used to power communications that are personalized and relevant to their customers. In the first half of 2021, our customers saw nearly 100 X ROI on their marketing spend and with some of our larger clients, the return was 250x. This is where the notion of data privacy comes into play. The reason our customers are successful is that we help them control their business destinies without depending on intermediaries like Facebook or Amazon. Instead, by using first-party data that consumers willingly share, our brands become much more personalized in how they communicate to their customers. I actually coined the term Customer First Data™ as a way to define data sourced directly from a prospect or customer, which is the best way to scale personalized experiences.

Customer-First Data is essentially a combination of zero-party and first-party data. Zero-party is all the information that a customer willingly gives you. If an end consumer signs on to a merchant website and fills out a quiz or a questionnaire, that is an example of zero-party data. First-party data is when that same consumer goes to a merchant’s website and refers to all of the behavioral tracking data you can gather. What we have seen is that the combination of zero- and first-party data is so powerful because it becomes the basis of growth for a lot of our customers. Brands appreciate being able to rely less on third-party data from Google, Facebook etc. In a world of data privacy, the biggest hedge you have against all of these privacy changes in my mind, is this idea that you invest in your own data collection. You do it in a way that drives toward more contextually relevant and tasteful experiences.

Howard: I absolutely agree and we’re on the same page about that, as you know. With that in mind, everything that I’m thinking about on a daily basis is related to how brands can be more commercially intimate 1:1, without being invasive. I’m also very focused right now on the idea of moving away from personalization to individualization and would love your thoughts on both.

Srinivasan:  Oh, I love that. I love individualization. I have to be honest with you. I’ve been looking for something other than personalization, so I might steal it from you. (laughs). I love the idea of individualized communications. When you look at the landscape of consumers today, there is no doubt that most will continue to demand individualized communications from brands. The only way that they will opt into messaging and communications is if they feel like they have been seen and acknowledged. Do they feel like they identify with the purpose or value of the brand that they are trying to get to? There is no choice but for brands to be able to reach people at a level that makes it really, really intimate, like you said.

One of the challenges with individualization is setting up automated processes to help sift through the vast amount of customer data to  determine which segments businesses want to go after and how they are going to target each individual customer. These automated processes not only have to be set up quickly and at scale with millions of people, but also have to be constantly updated. That’s one big challenge to overcome and then the second is that you not only have to set up the infrastructure to reach those people, but you have to have the content that emotionally resonates with them. I think most companies haven’t figured out how to solve that yet. They either duct tape the whole situation by throwing a lot of bodies at it or take shortcuts.

One of the reasons I joined Klaviyo is because of the way we’ve set up the platform, which has allowed customers to create their infrastructure quickly and easily so they can do a lot in a very short amount of time. I’ll give you an example, which blew my mind away. For one of our brands, when a customer comes to their website, they are able to create a specific individualized customer experience. The brand is able to tell the customer: “Hey, we know that you’re interested in this pair of jeans that you were looking at two months ago. The brand has brought back the same fall collection and it’s in a  color that you like based on your past purchases. It’s available in a store in L.A. where you live and by the way, you have 50 points in our loyalty reward system that you can apply to this purchase.” This kind of powerful customer experience is the standard we need to get to, but we need to overcome the two challenges highlighted above to get there.

Howard:  I think that’s exactly right and one of the missing pieces for sure is emotional contextualization, which is why people often fall on the wrong side of intimacy and come across as extremely invasive. Having said that, everyone is trying to find a way to walk this fine line with the long-term goal of wanting consumers to opt in to be a part of a brand each and every day. What are some best practices that people should consider when trying to walk that line?

Srinivasan: Marketers need to have a customer-first mentality to avoid crossing over the line of privacy into stalking. While cookies helped make the internet more personal, businesses started toeing the line of being invasive once they started buying and selling customer data, making everyone’s information a lot less private. Just because a brand knows a customer’s behavioral data, doesn’t mean they know everything about them. As Apple and Google’s data privacy changes inevitably result in less accessible third-party data, marketers will have to shift their mindset to collecting and leveraging Customer-First Data. If done properly, this new approach can help foster stronger customer relationships and leave businesses in a better position to withstand any future changes to data privacy.

This shift to Customer-First Data will involve tying more varied data points together to get a much richer picture of who your customer is, through the preferences they have and the choices that they’ve made. What brands can then do is apply AI or machine learning to create predictive analytics for some of the information filtered in and then check in with customers and say, we believe that you like this. Yes or no? For example, creating personalized, automated email flows based on user behavior (also known as drip or nurture campaigns) allows brands to serve up highly relevant content that’s more likely to get a click. In 2020, Klaviyo reported that even though the average CTR for all campaigns was 2.25%, it was 6.34% for automated flows (a 181% increase). This way brands can keep trying to update their understanding of consumers and then make the communications that much more personal. In order for this to happen, marketers need to stop being lazy because the biggest barrier in my mind to collecting this type of customer data is people just don’t want to spend the calories on it. It is not a sexy job, but building the right infrastructure here is critical.

Howard: I totally agree. Because of all of the privacy changes, people are ultimately trying to take control of building out their own insights infrastructures so they can do exactly what you’re saying. At the same time, there is a lot of federal legislation that’s on the table to try to stitch together a more uniform approach to consumer privacy protection. Any topline thoughts on what matters most here as these paths converge?

Srinivasan: Brand growth, privacy and the customer experience must start to intersect much more seamlessly. When you take a step back and say, I want to grow, but I want to do it in the right way, because even if I grow a little bit slowly, I know that there’s going to be an exponential increase on the backend. The trust and loyalty I can achieve by getting to know a customer the right way is invaluable. Providing a better customer experience is in a sense giving customers a better narrative and creating that strong connection upfront. I think that a lot of people still have the reverse mindset in place. I want to try to educate people about how we were all thinking about this paradigm completely wrong. You don’t start with trying to build the top of the funnel. You start with shoring up your infrastructure, the bottom of the funnel first, which is your own website or app, then you start going to the top of the funnel through all of these platforms. That makes your funnel so much stronger, and your growth so much more sustainable.