Emotional Marketing in 2021: Connect with Your Audience

The Evolving Relationship Between Brands and Consumers

Brands represent the tangible expression of emotional connections. The items we choose – clothing, entertainment, technology – communicate our values and self-perception to the world. These choices also actively contribute to the formation of our individual identities.

For a century, strengthening this connection has been central to the field of marketing, with its foundations deeply embedded in the principles of Freudian psychoanalysis.

The Shift from Mass Marketing

Historically, a significant constraint existed for marketers: the necessity of appealing to broad audiences. Traditional media like radio, television, and print necessitated delivering a single message to everyone, regardless of whether the product represented extravagance or value.

The advent of the internet fundamentally altered this dynamic. The concept of the “masses” fragmented into increasingly specific segments, prompting a shift in marketing strategies towards targeted demographics and communities built around shared interests on social networks.

The Rise of Niche Branding

Consequently, both specialized brands and large corporations are now capable of reaching highly focused audiences. This trend has become increasingly prevalent across all types of businesses.

However, the competitive nature of advertising and social media platforms inevitably leads to rising costs for reaching these niche groups. Strategies that were once effective eventually lose their viability.

New Challenges in 2021

In 2021, two additional factors further complicate the landscape: a surge in new e-commerce brands and evolving privacy regulations on third-party platforms.

Klaviyo's Advantage

Klaviyo is uniquely positioned to capitalize on these evolving trends. While the expense or complexity of acquiring new customers may increase – as previously discussed – the cost of communicating with an existing customer remains relatively stable.

Marketers who excel at personalization, particularly through owned marketing channels like email, will gain a competitive advantage. The focus is no longer solely on targeting narrow audience segments; it’s about cultivating a strong emotional connection with each individual customer.

Building a relationship with an audience of one is becoming the new standard.

Economic Growth and Rising Advertising Costs

The year 2020 witnessed substantial growth in e-commerce due to the COVID-19 pandemic. However, the initial months of 2021 introduced a new challenge: escalating customer acquisition costs, which in some instances, have reached concerning levels.

For example, a source interviewed by TechCrunch, requesting anonymity, reported a near 50% decrease in return on investment for Facebook advertising during early 2021. Similar cost inflation has also been forecasted by companies such as ECI Media Management.

Factors Contributing to Increased Costs

Two primary factors are driving this increase in acquisition expenses. Firstly, an unprecedented influx of businesses are transitioning to online platforms, a shift accelerated by the COVID-19 pandemic and associated lockdowns.

The timing of the pandemic proved opportune for the evolution of e-commerce. Despite the influence of Amazon and tech startups like Bonobos and HelloFresh on many tech enthusiasts, market analysis from PipeCandy indicates that only approximately 25% of all commercial activity occurs online.

Had the pandemic occurred a decade prior, traditional brick-and-mortar businesses might have faced significant difficulties in rapidly acquiring the necessary technical expertise for an online transition.

Ease of Online Store Creation

Currently, establishing an online storefront is no longer a complex undertaking. Steve Deckert, Director of Business Development at WooCommerce – a key competitor to Shopify – explains, “An online store can be launched in under 30 minutes, often at no cost or for as little as $50.”

This represents a substantial improvement compared to ten years ago, when setting up an online presence was considerably more cumbersome.

Privacy Changes and Their Impact

Secondly, alongside the surge in online businesses, major platform companies are implementing measures to enhance user privacy. These changes encompass Apple’s restriction of IDFA, Google’s planned replacement of third-party cookies with FLoC – a privacy-focused alternative – and Facebook’s recent limitations on data usage originating from outside its network.

These Facebook changes are likely a response to the updates implemented by Apple in iOS 14.

Klaviyo, by focusing on first-party data, remains relatively unaffected by these platform privacy adjustments. Andrew Bialecki, a co-founder of Klaviyo, emphasizes the company’s deliberate decision to prioritize first-party data and anticipate the increasing limitations of third-party data.

“We anticipated the changes browsers are making regarding cookies, and Apple’s rollout aligns with our expectations,” states Bialecki.

Concerns Regarding Targeting Accuracy

While the full impact of these privacy changes is yet to be quantified, many marketers express concern that reduced data availability will lead to less precise targeting. Consequently, brands reliant on accurate ad targeting to minimize acquisition costs – which includes nearly all companies except the largest – may experience increased expenses.

Securing Customer Email Addresses is Paramount

Should marketers' concerns materialize, the ongoing enhancements in targeting capabilities across various platforms – including social media networks and sales platforms like Amazon – may plateau. This potential shift would necessitate a greater emphasis on first-party data, gathered directly on a brand's website, to facilitate personalized communication with customers following their initial purchase.

The aim is to boost repeat purchase rates and maximize the return on investment from the original customer acquisition efforts.

The Importance of Early Data Collection

However, the process of collecting first-party data isn't limited to the point of sale.

Once a brand successfully directs a customer to its online store – whether through advertising, influencer marketing, or other channels – the primary objective is typically to obtain their email address. Some businesses prioritize phone numbers, and platforms like Klaviyo also support SMS messaging.

Utilizing Popups and Checkout Forms

Klaviyo, alongside numerous other providers, offers dynamic popups triggered by specific user behaviors, such as time spent browsing or clicks on particular links. An email address can also be captured during the checkout process itself.

These pop-up forms and email signup opportunities are now ubiquitous across the e-commerce landscape.

Recovering Abandoned Carts and Nurturing Leads

The fundamental reason for prioritizing email collection is straightforward: a significant proportion of first-time visitors to an e-commerce site will not complete a purchase. Even among those who add items to their cart, approximately 75% will abandon it.

Obtaining an email address allows the brand to re-engage with potential customers and attempt to finalize the sale, rather than losing the opportunity entirely.

Establishing Brand Identity Through Communication

The online storefront also serves as the foundation for a brand's overall communication style and aesthetic. For example, Death Wish Coffee’s website showcases a bold, grunge-inspired design that is consistently reflected in their social media, email marketing, podcasts, and all other customer interactions.

Boosting Personalization for Increased Revenue

As previously discussed in the second part of this EC-1 analysis, Klaviyo faces competition from numerous platforms. The vast majority of these alternatives provide some capacity for email capture and campaign deployment, including automated responses to actions like abandoned carts.

However, a limited number of competitors independently gather data, often resulting in incomplete information. Klaviyo’s core strength lies in its ability to collect comprehensive customer data – encompassing location, entry source, viewed items, and browsing duration. Following a purchase, the platform further enhances insights with predictive data points like estimated gender and typical purchase frequency.

This collected and processed data forms the foundation for effective personalization. For example, a campaign promoting a new autumn sweater collection could segment audiences based on gender, purchase history, and prior email engagement. Distinct email variations, tailored with different subject lines and discounts, would then be delivered to each segment to optimize results.

Will Critcher, Director of E-commerce at Death Wish Coffee, highlights Klaviyo’s advantages in data breadth and the speed with which its tools facilitate personalized messaging. He states, “Their flows allow for efficient management and control through conditional splits, detailed performance analysis of each email element, and the ability to create and append properties to refine messaging continuously, based on proven effectiveness.”

Skilled marketers approach each product with a data-driven mindset, tailoring messaging to resonate with specific audience segments.

Darin Hager, Email Marketing Manager at Adjust Media, illustrates this with an example: a new shorts release during winter. “Sending an email advertising shorts with a short inseam to customers in northern Canada would be ineffective. Instead, I targeted residents of Texas and Florida with a dedicated campaign showcasing these shorts. They’re simply not suitable for Boston’s climate,” Hager explains. “This targeted approach ensures the message reaches the most receptive audience.”

Looking ahead, e-commerce businesses should actively explore extending personalization strategies beyond email. This includes optimizing storefront experiences, social media interactions, and any emerging customer communication channels.

Beyond Transactions: The Power of Emotional Connection

Effective customer segmentation and targeted messaging are crucial, but establishing a genuine connection with customers – demonstrating a brand’s human side – is paramount for fostering emotional engagement, moving beyond purely transactional interactions.

The expression of emotional communication is diverse, varying significantly between brands. As Critcher observes, Klaviyo provides a compelling illustration of how to project authenticity and demonstrate care.

He notes their intentional approach and high level of execution, stating that, “they do a damn good job of it.” Considering Klaviyo as a marketing entity, their efforts have been remarkably effective.

Growth Through Authenticity

Remarkably, Klaviyo’s growth has been largely organic, driven by word-of-mouth referrals and direct customer engagement, with minimal reliance on paid acquisition channels.

The company’s marketing initiatives commenced in 2015 with Alexandra Edelstein, an early team member, creating comprehensive help documentation based on her direct interactions with users.

These conversations, and the resulting documentation, have consistently shaped the brand’s voice and approach.

Investing in Customer Success

Recent hires are heavily focused on expanding Klaviyo Academy, providing detailed training and professional certifications.

Furthermore, the company hosts its own annual conference and maintains a busy schedule of workshops and showcases featuring brands utilizing the platform.

Critcher posits that providing a venue for customers to promote their own businesses has proven highly beneficial for Klaviyo; participants in the Live From Your Laptop series frequently exhibit increased brand loyalty.

Understanding the Customer Base

For the majority of Software-as-a-Service (SaaS) companies, providing live events and comprehensive help documentation is considered standard practice. However, Klaviyo demonstrates a particularly strong commitment to prioritizing its customers.

Edelstein notes that from the company’s early stages, even during periods of disorganization, the founders consistently encouraged all employees to engage with customers extensively. All customers, regardless of size, were treated with equal importance. “I distinctly remember my first customer interaction being with Rose, a woman in her late 60s or early 70s who operated a quilting business. She was utilizing Klaviyo to distribute quilting patterns to her clientele. This experience fundamentally shaped my customer-centric approach, as it highlighted that many customers, like Rose, deeply integrate their personal lives with their businesses, and are simply striving to maintain operations,” Edelstein recounts.

Currently, direct customer interaction is a mandatory component of the role for all personnel, including those in technical positions.

For instance, new members of the product team undergo the same onboarding process as all other new hires: participation in support rotations and the creation of a store utilizing Klaviyo. Subsequently, all employees are expected to continue handling support requests and share their customer interactions during team meetings. “Typically, my team engages in over 150 customer conversations each quarter,” states Klaviyo advisor and former chief product officer, Conor O’Mahony.

Bialecki suggests that entrepreneurs aiming to cultivate a customer-first organization frequently underestimate the significance of seemingly minor decisions concerning company culture, product development, and hiring practices. Consistent interaction with customers is crucial not only for providing assistance, but also for ensuring employees have access to a broad range of insights.

“The capacity for rapid and in-depth learning is the primary skill that has driven our success,” Bialecki explains. “We internally refer to this as curiosity, but it also encompasses quickly becoming proficient in any given area. Regardless of your field of work, a thorough understanding is essential. How can you devise a solution that provides a competitive edge? There are a remarkable number of skills one must master, and there are no shortcuts.”

The company’s location in Boston may also offer insight into Klaviyo’s culture and its communication style with customers.

“Silicon Valley sometimes exhibits a sense of superiority, believing itself to be the epicenter of the tech world, emphasizing rapid iteration and disruption, and aiming for significant impact,” observes Jenny Dearborn, formerly chief talent officer at SAP and now chief people officer at Klaviyo. While she remains based in Silicon Valley, she notes a distinct difference in her Boston-based colleagues. “A Boston-based tech company often conveys a sense of humility… In a Silicon Valley company, there’s less emphasis on pausing to acknowledge and appreciate accomplishments. That sense of arrogance is less prevalent in Boston.”

These strong internal team relationships have fostered robust connections with customers, enabling Klaviyo to facilitate personalized marketing that creates the emotional bonds e-commerce businesses require to thrive in the current decade. This is a vital model for other startups to emulate, though it represents only one of the lessons Klaviyo has to offer. Further insights are presented in the fourth and concluding section of this EC-1.

Klaviyo EC-1 Contents

• Introduction
• Part 1: Company Origins
• Part 2: Business and Expansion
• Part 3: The Dynamics of E-commerce Marketing
• Part 4: Startup Growth Strategies

Additional EC-1 reports are available on Extra Crunch.