Understanding customer behavior and orchestrating personalized campaigns aligned with customers’ needs and preferences depend on a steady supply of complete, accurate, and timely data.1 Cross-channel campaign management (CCCM) empowers organizations to engage with customers in their moments of need and deliver more relevant customer content to the right audience, at the right time, and most importantly, on their preferred channels.
Although companies need and want to communicate with their customers, research shows most companies don’t do so in a way that works for customers. In fact, self-guided interactions make up 51% of all types of buyer interactions — marketers can no longer assume that one-size-fits-all programs or activities will work for all buyer journeys or buying processes.2 Email service providers (ESPs) and marketing automation platforms can bridge that gap by offering more robust customer analytics data to help companies target high-value customers more effectively, enabling them to send the right message, at the right time, to the right person. Klaviyo is a marketing automation and customer data platform offering online brands direct ownership of their consumer data and interactions, empowering them to turn customer actions into long-term relationships at scale. With Klaviyo, brands can combine customer data with more than 300 prebuilt integrations to create unified customer profiles and automate personalized omnichannel communications that make customers feel seen.
Klaviyo commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study that examines the potential return on investment (ROI) enterprises may realize by deploying Klaviyo.3 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Klaviyo on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed eight Klaviyo customers with experience using Klaviyo. Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a retail organization with a revenue of $150 million per year and a 10% net profit margin. It uses Klaviyo on both its email and SMS channels. It also sends over 145 million email messages to active accounts and 24 million SMS messages each year.
Prior to using Klaviyo, these interviewees noted how their organizations were unable to execute a cohesive customer journey across marketing channels. As a result, customer engagement data silos emerged, making it harder for the interviewees to personalize customer messages and customize engagement through both email and SMS touchpoints. These limitations led to an inability to message at scale, which resulted in lower customer acquisition and retention rates, and missed revenue generation opportunities. Moreover, because their previous marketing automation platform(s) also made it challenging to build and automate personalized customer journeys — interviewees shared that they needed to spend additional time to manually build these paths themselves and rely on developers and designers for additional support prior to Klaviyo.
By using Klaviyo for both their email marketing and SMS channels, the composite organization gains access to a more unified view of their customer engagement data. This encourages more targeted campaigns and more personalized messages and drives additional revenue. Furthermore, Klaviyo’s APIs and easy-to-build templates enable the composite organization to save on internal labor costs.
Consulting Team: Stephanie Slate, Sarah Lervold
Key Statistics
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Return on investment (ROI):
228%
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Benefits PV:
$4.5 millon
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Net present value (NPV):
$3.1 million
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Payback:
13.0 months
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Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Profit growth of nearly $2 million from improved email conversion rates. Klaviyo’s ability to drive segmentation and thus create better targeted campaigns enables the composite organization to leverage appropriate content for different audiences. This drives greater conversion rates through greater open and clickthrough rates with existing customers and the composite organization sees incremental profit growth of $2 million.
- Profit growth of $1 million from net new email subscribers. Klaviyo’s pop-up forms and prompts for data collection allow the composite organization to increase its email subscriber base by 60%. The composite organization inserts these net new profiles into Klaviyo flows and campaigns which convert with similar open, clickthrough, and conversion rates, resulting in a profit value of $1 million.
- Profit growth of $210,000 from improved SMS conversion rates. Klaviyo’s ability to drive audience segmentation to SMS drives a 150% increase in the composite organization’s clickthrough rate and a 25% increase in its place order rate on the channel. This leads to a 10% conversion rate and a 1% place order rate, resulting in incremental profit valued at $210,000.
- Incremental profit of $871,000 due to automated upsell and cross-sell opportunities. With Klaviyo, the composite organization creates more automated flows, which encourages more upsell and cross-sell opportunities to the right audiences. As a result, this leads to an additional $871,000 in profit.
- Increased email marketing manager efficiencies worth $18,000. Klaviyo’s prebuilt templates and no-code access to data-driven personalization helps the email marketing manager build flows and campaigns seamlessly, allowing the reallocation of time to value-added tasks. As a result, the composite organization realizes $18,000 in efficiency savings.
- Improved developer and graphic designer efficiencies worth $392,000. Klaviyo’s API functionality and ease of use enables the reallocation of both graphic designer and developer labor. This allows the composite organization to realize $392,000 in savings.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Gained cross functional efficiency through connected data sources and API integrations. Streamlining data sources across other solutions that their organization uses improves the ease of cross-functional collaboration.
- Enhanced customer satisfaction due to more relevant communication. Customers appreciate receiving targeted communication, especially on their preferred channel.
- Enhanced internal ESP usage enabled by effective customer support. The support and recommendations provided by the Klaviyo customer service team increases usage of the ESP internally.
- Heightened employee morale. Klaviyo allows email marketers to build flows and customer journeys with ease, improving morale among decision-makers and employees.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Klaviyo licensing fees, valued at $874,000. The composite organization’s costs include profiles stored in Klaviyo. Like any marketing automation and customer data platform, the composite organization also pays fees for both email and SMS sends, as well as a monthly fee for SMS short codes.
- Implementation and internal labor costs, valued at $130,000. The composite organization has the option to hire third-party agency to help them implement the Klaviyo solution. The composite organization implements Klaviyo in two months with the aid of this partnership, as well as internal labor from the email marketing manager and two graphic designers. It opts to keep the internal team dedicated to the project for an additional four weeks through the IP warming process. These efforts cost the composite organization over $130,000.
- Ongoing management and training costs, valued at $370,000. The composite organization trains and dedicates a percentage of internal labor from an email marketing manager and two graphic designers to work on and maintain Klaviyo. These internal efforts cost the composite organization over $370,000.
The representative interviews and financial analysis found that a composite organization experiences benefits of $4.5 million over three years versus costs of $1.4 million, adding up to a net present value (NPV) of $3.1 million and an ROI of 228%.
Benefits (Three-Year)
Profit growth from improved email conversion rates Business growth from net new subscribers Profit growth from improved SMS converstion rates Value of automated retention emails Email marketing manager efficiencies Developer and graphic designer efficienciesTEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment Klaviyo.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Klaviyo can have on an organization.
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Due Diligence
Interviewed Klaviyo stakeholders and Forrester analysts to gather data relative to Klaviyo.
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Interviews
Interviewed eight Klaviyo customers at organizations using Klaviyo to obtain data about costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees’ organizations.
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Financial Model Framework
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
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Case Study
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Disclosures
Readers should be aware of the following:
This study is commissioned by Klaviyo and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Klaviyo.
Klaviyo reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Klaviyo provided the customer names for the interviews but did not participate in the interviews.
Drivers leading to the Klaviyo investment
Interviews
| Role | Industry | Revenue | Number Of Active Profiles In Klaviyo |
|---|---|---|---|
| Founder and co-CEO | Luxury goods | $50 million | 600,000 |
| Senior customer relationship manager (CRM) and email marketing manager | Apparel and fashion | $229 million | 420,000 |
| Senior ecommerce manager, retention | Consumer goods | $120 million | 1,800,000 |
| Retention marketing manager | Apparel and fashion | $5 million | 400,000 |
| Senior lifecycle marketing manager | Consumer goods | $130 million | 700,000 |
| Head of customer retention | Consumer goods | $100 million | 4,900,000 |
| Senior retention marketing manager | Consumer goods | $250 million | 2,000,000 |
| DTC marketing director | Beauty | $25 million | 170,000 |
Key Challenges
Although the interviewees’ organizations had significant financial investments in email and SMS marketing, they could not get a full, single view of customer engagement and revenue opportunities.
The interviewees noted how their organizations struggled with common challenges, including:
- Poor customer experience (CX) due to disparate tools and solutions. Prior to implementing Klaviyo, all interviewees described the frustration they felt around the inability to provide seamless CX. Given the SMS and email marketing reports were separated under different solutions, interviewees were unable to work and see patterns across both channels. They could not personalize their customers’ preferred marketing channels, which meant that customers would receive campaign messages — sometimes simultaneously — via both email as well as SMS channels. This led to customers unsubscribing from both channels, resulting in businesses losing key customer contacts and potential revenue opportunities.
- Inability to customize audience communications through an unsophisticated batch and blast strategy and approach. The interviewees described how their previous ESP solutions limited the granularity of audience segments they could create, which meant they could not fully customize their communications. The senior lifecycle marketing manager of a consumer goods company said, “Previously, we have been sending batch and blast emails to our full active profiles, without targeting our customers.” Many interviewees felt they were left to create generic marketing strategies and communications as almost all customers, regardless of where they were in the buying process, were put into the same campaigns.
- Cumbersome technologies required expensive resources to build flows and campaigns, slowing down marketing initiatives. Due to the complexity of the technologies, the interviewees could not build sophisticated campaigns and needed their colleagues in development to build flows to support their marketing efforts. Thus, important marketing initiatives had to wait until the developers had bandwidth to support them. The friction between systems and integrations meant that interviewees could not scale messaging nor growth. A senior CRM and email marketing manager at an apparel and fashion company shared, “[Before Klaviyo], we had to partner with a data analyst or a data engineer to try to get us the data we needed. I needed more people pulling segments and building flows for us.”
Investment Objectives
The interviewees’ organizations searched for a solution that could:
- Manage customer engagement efforts across multiple channels under a single all-in-one cross-channel platform.
- Enhance audience segmentation.
- Produce meaningful and actionable analytics and insights.
- Enable data integration with other solutions used at their organizations.
Composite Organization
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the eight Klaviyo customers, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. [The composite organization is a global ecommerce company with $150+ million in annual revenue. Before implementing Klaviyo, it had 1.4 million profiles in its legacy email service provider (ESP) and used a different provider to address their SMS needs. Each year, the composite organization sends over 145 million email messages to its active customer profile list and 24 million SMSs to its customers via their mobile devices. Their average order value is $175, and it has a 10% net profit margin.]
Deployment characteristics. [The composite organization implements Klaviyo over the course of two months and needs an additional four weeks for the IP warming process. Its internal team is composed of one email marketing manager, two graphic designers, and one developer to help implement and maintain the system. Moreover, since the composite organization is an enterprise business, it opts to have additional onboarding support from a third-party agency, incurring a one-time $70,000 for the support during migration. By using Klaviyo for both their email marketing and SMS channels, the composite organization gains access to a more unified view of their customer engagement data. The interviewees can optimize customer journeys across multiple channels and receive reports on performance.]
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Profit growth from improved email conversion rates | $106,124 | $765,231 | $1,669,068 | $2,540,424 | $1,982,895 |
| Btr | Business growth from net new email subscribers | $64,974 | $422,128 | $835,728 | $1,322,830 | $1,035,828 |
| Ctr | Profit growth from improved SMS conversion rates | $81,270 | $84,521 | $87,902 | $253,6933 | $209,776 |
| Dtr | Value of automated retention emails | $117,000 | $361,530 | $620,638 | $1,099,168 | $871,443 |
| Etr | Email marketing manager efficiencies | $7,178 | $7,079 | $6980 | $21,636 | $17,619 |
| Ftr | Developer and graphic designer efficiencies | $157,713 | $157,713 | $157,713 | $473,139 | $392,209 |
| Total benefits (risk-adjusted) | $534,259 | $1,798,202 | $3,3378,029 | $5,710,489 | $4,509,762 |
Profit Growth From Improved Email Conversion Rates
Evidence and data. Email marketers interviewed for this study shared that, after implementing Klaviyo and gaining granular access to both real-time and historic data, they could create very robust segmentation and automation sequences to target their current customers with the right message at the right time. As a result, the interviewees’ organizations grew profits.
- A senior lifecycle marketing manager at a consumer goods organization described how Klaviyo helped with their ability to see actionable data: “Klaviyo has really allowed me to get in and have a bird’s eye view of what’s going on in our customer retention strategy so I can easily identify what needs help and what is doing well. It also allows me to teach my team how to go in and make campaigns and change things to optimize those too.”
- A senior CRM and email marketing manager at an apparel and fashion company shared how communication is key when you have something on a recurring basis and, and how Klaviyo’s ability to edit flows helped with conversions. They shared: “We’ve seen opportunities to improve those templates or lines of communication — it’s very easy to update those templates within the flows. If we need to, for example, add icons to give more life to [the communication], you could edit that, save it, and it’s live to the next customer that’s going to receive it. Whereas when I was on our previous solution there were quite a few steps to do that, such as cloning the flow and then restarting it. Within Klaviyo, the flows are already built so all that development, the dynamic content, is already there. You can update certain messaging on the fly.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- There are 1,400,000 named profiles in the existing portfolio. This increases 5% annually, leading to 1,470,000 in Year 2 and 1,543,500 in Year 3.
- The percentage of active profiles for the composite organization is 50%.
- The composite organization sends four email messages each week to active profiles, which equals 145,600,000 emails annually. The number of email messages grows simultaneously with the number of profiles. In Year 2, the composite organization sends 152,880,000 emails and in Year 3, it sends 160,524,000 emails to active profiles.
- There are 52 weeks in a year and the composite organization sends four messages per week.
- In the prior ESP solution, the composite organization sees a 20% open rate, a 0.5% clickthrough rate, and a 0.1% place order rate.
- The average order value is $175. As a retail ecommerce company, the composite organization has a net profit margin of 10%.
- With Klaviyo’s improved segmentation, the composite organization sees improvements in its open rate. In Year 1, it experiences a growth of 25%, 30% in Year 2, and 35% in Year 3. Likewise, it sees improvements in its clickthrough rate (i.e., 2.0% in Year 1, 2.3% in Year 2, and 2.5% in Year 3), and its place order rate (i.e., 1% in Year 1, 5% in Year 2, and 8% in Year 3).
Risks. The ability to see an increase in incremental profit on existing profiles due to improved conversion rates through the deployment of Klaviyo can vary across organizations due to differences in:
- The percentage of active customer profiles.
- The number of messages sent to active customers annually.
- The open rates, clickthrough rates, and conversion rates of campaigns managed in the prior environment.
- The average order value and the net profit margin.
- Mail privacy updates, which has caused and will likely continue to cause tracked engagement to decrease. Interviewees warned that they are already seeing their clickthrough rates fail as they are not able to track those emails.
- Any additional tools leveraged by interviewees for sourcing marketing attribution to ensure accurate reporting.
- When first starting with Klaviyo (or any ESP), companies will likely go through an IP warming period to ensure their messages aren’t marked as spam, which means they are not sending to their full lists. As a result, company revenue associated with Klaviyo in the first few months will likely be lower during the IP warming period.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2 million.
Profit Growth from improved email conversion rates
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| A1 | Number of named profiles in existing portfolio | Assumption | 1,400,000 | 1,470,000 | 1,543,500 |
| A2 | Percentage of active profiles | Interviews | 50% | 50% | 50% |
| A3 | Messages sent to active customers annually | A1*A2*4*52 | 145,600,000 | 152,880,000 | 160,524,000 |
| A4 | Open rate in prior environment | Interviews | 20% | 20% | 20% |
| A5 | Clickthrough rate in prior environment | Interviews | 0.5% | 0.5% | 0.5% |
| A6 | Place order rate in prior environment | Interviews | 0.1% | 0.1% | 0.1% |
| A7 | Average order value | Interviews | $175 | $175 | $175 |
| A8 | Net profit margin | Assumption | 10% | 10% | 10% |
| A9 | Subtotal: Profit from existing profiles in prior environment | A3*A4*A5*A6*A7*A8 | $2,548 | $2,675 | $2,809 |
| A10 | Open rate with Klaviyo | Interviews | 25% | 30% | 35% |
| A11 | Clickthrough rate with Klaviyo | Interviews | 2.0% | 2.3% | 2.5% |
| A12 | Place order rate with Klaviyo | Interviews | 1% | 5% | 8% |
| A13 | Subtotal: Profit from existing profiles with Klaviyo | A3*A7*A8*A10*A11*A12 | $127,400 | $902,948 | $1,966,419 |
| At | Profit growth from improved email conversion rates | A13-A9 | $124,852 | $900,272 | $1,963,610 |
| Risk adjustment | ↓15% | ||||
| Atr | Profit growth from improved email conversion rates (risk-adjusted) | $106,124 | $765,231 | $1,669,068 | |
| Three-year total: $2,540,424 | Three-year present value: $1,982,895 | ||||
Business Growth From Net New Email Subscribers
Evidence and data. Interviewees shared that Klaviyo’s forms and triggered pop-ups helped them build their audience list and acquisition of new customers. Forrester gathered the following information from the interviewees:
- In the legacy environment, interviewees struggled to acquire new customers due to clunky, ill-placed forms and pop-ups on the website. With Klaviyo, the interviewees could create segments on the fly that allowed them to capture subscribers and send targeted messaging.
- As potential customers visited the interviewees’ organizations’ websites, the interviewees leveraged Klaviyo’s forms to gather emails and drive a larger pool of buyers. A senior lifecycle marketing manager of a consumer goods organization illustrated how they acquired new customers with Klaviyo’s help: “We implemented teasers for our email capture on our site and this drove a 30% increase in Klaviyo email sign-ups. This was done with native Klaviyo functionality which could really personalize those popups and teasers to the best of your ability, allowing us to ensure it matches our brand.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- Klaviyo’s pop-ups enable the composite organization to increase the number of net new customer profiles by 840,000 in Year 1. The percentage by which Klaviyo improves the composite organization’s ability to get net new customers will decrease over time, which results in 808,500 net new customers in Year 2 and 771,750 in Year 3.
- There are 52 weeks in a year and the composite organization sends four messages per week.
- The percentage of active profiles for the composite organization is 50%.
- The composite sends four messages every week to each customer.
- The average order value is $175. As a retail ecommerce company, the composite organization has a net profit margin of 10%.
- Klaviyo’s improved segmentation drives improvements in the composite organization’s open rate. In Year 1, it is 25%, in Year 2, it grows to 30% and in Year 3, it increases to 35%. Likewise, it sees improvements in its clickthrough rate (i.e., 2.0% in Year 1, 2.3% in Year 2, and 2.5% in Year 3), and its place order rate (i.e., 1% in Year 1, 5% in Year 2, and 8% in Year 3).
Risks. The ability to see an increase in incremental profit on net new customer profiles through the deployment of Klaviyo can vary across organizations due to differences in:
- The percentage of net new customers organizations will gain, which varies due to pop-up placement and strategy.
- The percentage of active profiles.
- The number of messages sent annually to active customers.
- The average order value and the net profit margin.
- Mail privacy updates, which has caused and will likely continue to cause tracked engagement to decrease. Interviewees warned that they are already seeing their clickthrough rates fail because they are not able to track those emails.
- When first starting with Klaviyo (or any ESP), companies will likely go through an IP warming period to ensure their messages aren’t marked as spam, which means they are not sending to their full lists. As a result, company revenue associated with Klaviyo in the first few months will likely be lower during the IP warming period.
- Interviewees leveraged additional tools for sourcing marketing attribution to ensure accurate reporting.
Business growth from net new email subscribers
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| B1 | Percentage of new customers increase with Klaviyo | Interviews | 60% | 55% | 50% |
| B2 | Net new customers with Klaviyo | A1*B1 | 840,000 | 808,500 | 771,750 |
| B3 | Percentage of active profiles | A2 | 50% | 50% | 50% |
| B4 | Messages sent to new active customers | B2*B3*4*52 | 87,360,000 | 84,084,000 | 80,262,000 |
| B5 | Open rate with Klaviyo | A10 | 25% | 30% | 35% |
| B6 | Clickthrough rate with Klaviyo | A11 | 2.0% | 2.3% | 2.5% |
| B7 | Place order rate with Klaviyo | A12 | 1% | 5% | 8% |
| B8 | Average order value | A7 | $175 | $175 | $175 |
| B9 | Net profit margin | A8 | 10% | 10% | 10% |
| Bt | Business growth from net new email subscribers | B4*B5*B6*B7*B8* B9 | $76,440 | $496,621 | $983,210 |
| Risk adjustment | ↓15% | ||||
| Btr | Business growth from net new customers (risk-adjusted) | $64,974 | $422,128 | $835,728 | |
| Three-year total: $1,322,830 | Three-year present value: $1,035,828 | ||||
Profit Growth From Improved SMS Conversion Rates
Evidence and data. Interviewees whose organizations used Klaviyo for targeted messaging and behavioral triggers with SMS saw profit growth through the channel. Moreover, interviewees who used Klaviyo for email and SMS appreciated the ability to optimize across channels and have data consolidated in one place. Communicating on the customers’ preferred channels avoided duplicative messaging on overlapping silos.
- A founder and co-CEO of a luxury goods company explained how their organization could be innovative in the types of messages they could send over both marketing channels. They shared: “We’ll try SMS to different segments or folks who purchased more recently. If we’re trying to get them to come back or abandon cart sequences, we’ll do the SMS first and we’ll send an email instead if they don’t respond to that or they can’t receive that.”
- A senior retention marketing manager at consumer goods shared this sentiment: “Because we have Klaviyo, SMS, and email together, it’s allowed us to make a flow that has email and SMS touchpoints together. Instead of having to build separate flows, you can have one flow and [tell it to] send an email, wait a day if they don’t purchase, then send the follow-up SMS. Having that integrated software has been very helpful for us — it saves us a lot of time and allows us to get more granular in some of our flows and get more personalized because they have great segment builders and great flow builders.”
- Another benefit of having both email and SMS in Klaviyo meant that interviewees were able to gain a single source of truth. A retention marketing manager at a fashion and apparel company explained the impact this had on their company, “We had Klaviyo for email and a different software for SMS, which meant we had overlapping attribution issues. At that point, Klaviyo and [our SMS solution] conflict with each other for attributing different orders and you have to go to another analytics software to kind of break out SMS from email. The great thing about having it all in one place is that Klaviyo does that for you. It’ll attribute either an SMS or an email to an order and doesn’t have as much of that overlap.”
- A senior lifecycle marketing manager for a consumer goods company explained how their company used Klaviyo to increase SMS sign-ups: “We added teasers to our sign-up forms to encourage customers who may have closed the pop up to go back into the [the SMS] flow. We’ve been able to get a lot more sign-ups that way.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- The composite organization sends 10 promotional SMS messages a month to a list of 200,000 customers who have opted into the SMS communication channel.
- In the prior environment, the composite organization sees a 2% clickthrough rate and a 0.5% place order rate in the SMS channel.
- The average order value is $175. Since the composite organization is a retail ecommerce company, it has a net profit margin of 10%.
- With Klaviyo, the composite organization increases their SMS clickthrough rate by 150% and their place order rate by 25%, meaning the clickthrough rate rises to 5% and the place order rate rises to 0.63%.
Risks. The ability to see an increase in incremental profit with SMS through the deployment of Klaviyo can vary across organizations due to differences in:
- The number of customers who opt for SMS.
- The number of SMS messages sent annually to active customers.
- The average order value and the net profit margin.
- SMS is relatively expensive and the costs of the marketing channel are not always clear, so there is a greater risk of overages. If brands are art-centric and rely heavily on multimedia messaging services (MMS), there is greater risk of overages as MMS are inherently more expensive. Moreover, Klaviyo SMS prepaid credits do not roll over month to month, so if companies buy too many credits, they incur the cost regardless of if they use them.
- Interviewees leveraged additional tools for sourcing marketing attribution to ensure accurate reporting.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $210,000.
Profit growth from improved SMS conversion rates
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| C1 | Number of SMS messages sent a year | Composite | 24,000,000 | 24,960,000 | 25,958,400 |
| C2 | Clickthrough rate in the prior environment | Interviews | 2% | 2% | 2% |
| C3 | Place order rate in the prior environment | Interviews | 0.5% | 0.5% | 0.5% |
| C4 | Average order value | A7 | $175 | $175 | $175 |
| C5 | Net profit margin | A8 | 10% | 10% | 10% |
| C6 | Subtotal: Profit from existing profiles in prior environment | C1*C2*C3*C4*C5 | $42,000 | $43,680 | $45,427 |
| C7 | Increase in clickthrough rate on SMS with Klaviyo | Interviews | 150% | 150% | 150% |
| C8 | Increase in place order rate on SMS with Klaviyo | Interviews | 25% | 25% | 25% |
| C9 | Clickthrough rate with Klaviyo | C2*(1+C7) | 5% | 5% | 5% |
| C10 | Place order rate with Klaviyo | C3*(1+C8) | 0.63% | 0.63% | 0.63% |
| C11 | Subtotal: Profit from existing profiles with Klaviyo | C1*C9*C10*C4*C5 | $132,300 | $137,592 | $143,096 |
| Ct | Profit growth from improved SMS conversion rates | C11-C6 | $90,300 | $93,912 | $97,669 |
| Risk adjustment | ↓10% | ||||
| Ctr | Profit growth from improved SMS conversion rates (risk-adjusted) | $81,270 | $84,521 | $87,902 | |
| Three-year total: $253,693 | Three-year present value: $209,776 | ||||
Value Of Automated Retention Emails
Evidence and data. Klaviyo highlights which email templates have a higher propensity to convert customers to upsell and cross-sell purchases — thus enabling interviewees to apply better targeting to achieve additional conversions. Moreover, according to the interviewees, Klaviyo improved customer churn and thus customer retention as the triggered emails matched with customers’ behavioral preferences.
- Interviewees shared how Klaviyo’s data and segmentation empowered them to create better CX. A senior ecommerce manager, retention of a consumer goods company shared: “One thing that has changed is our customer value, as our list is so much bigger now, we have to be a lot more careful about segmenting and who we’re sending to, because not every person on our list is a valuable customer. I would say overall, we’re able to get more revenue from our list, but I wouldn’t say across the board that it’s a more valuable consumer. It’s a higher quantity.”
- The ability to see more speed to value and make improvements sets Klaviyo apart for a founder and co-CEO of a luxury goods company: “A big part for us is being able to go in and try different angles and different copy and different creative and see what resonates best with our customers in those abandoned cart flows. We’re able to improve them a lot faster because Klaviyo has that interface.”
- Interviewees shared that they were able to create additional flows, such as an abandon checkout series and an abandon browse series to other series they already had, growing additional revenue opportunities. A senior retention marketing manager of a consumer goods company said: “We have Klaviyo flows to upsell you and remind you and get these things to spend more. We also offer a free gift with purchase — there’s tiers there. Klaviyo has allowed us to do more upsell, cross-sell flows, but the most of our AOV [average order value] increase has come from the website experience and different testing that we’ve done there, product launches, etc.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- There are five automation flows prior to Klaviyo.
- In Year 1, the composite organization builds an additional flow with Klaviyo, totaling six flows. This increases to eight flows in Year 2 and 10 flows in Year 3.
- The average value of a single automation flow each week is $25,000.
- The composite organization has a 10% net profit margin.
Risks. The ability to see an increase in incremental profit on automation retention emails through the deployment of Klaviyo can vary across organizations due to differences in:
- The number of automation flows before Klaviyo.
- The average value of an automation.
- The net profit margin of an organization.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $871,000.
Value of automated retention emails
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| D1 | Number of automations before Klaviyo | Interviews | 5 | 5 | 5 |
| D2 | Number of automations after Klaviyo | Interviews | 6 | 8 | 10 |
| D3 | Average value of an automation per week | Interviews | $25,000 | $25,750 | $26,523 |
| D4 | Value of automations with Klaviyo | (D2-D1)*D3*52 | $1,300,000 | $4,017,000 | $6,895,980 |
| D5 | Net profit margin | A8 | 10% | 10% | 10% |
| Dt | Value of automated retention emails | D4*D5 | $130,000 | $401,700 | $689,598 |
| Risk adjustment | ↓10% | ||||
| Dtr | Value of automated retention emails (risk-adjusted) | $117,000 | $361,530 | $689,598 | |
| Three-year total: $1,099,168 | Three-year present value: $871,443 | ||||
Email Marketing Manager Efficiencies
Evidence and data. Interviewees unanimously shared how their respective email marketing teams gained efficiencies in their daily workflows with Klaviyo. This allowed for more time dedicated to strategy and planning. Teams saved time when building and maintaining both campaigns and flow emails through the use of the content library and stored template features. Furthermore, given the platform’s ability to track data across email marketing activity, interviewees shared time savings related to reporting key metrics across the organization.
- The senior retention marketing manager at the consumer goods organization stated: “When I started, I was doing all this myself. I would say having all three systems integrated, the pop-ups, the email, the SMSs, probably saved like 30% of time between reporting, campaign building; maybe even 50%. It was just an incredible time savings because you don’t need to log into three platforms, worry about data syncing between three platforms, or have three different weekly meetings with these different companies.”
- The DTC marketing director at the beauty organization shared: “It’s quicker to build emails in Klaviyo — both campaigns as well as triggered email flows. We utilize cloning existing messages and the template library to quickly switch out content, which allows us to build emails more efficiently. That’s been the best time saver and it minimizes a lot of double work.”
- The DTC marketing director reiterated how their team saves time by avoiding duplicate marketing efforts: “We have segments running continuously on the backend, whether a contact is more likely to engage in an email or an SMS so that we avoid hitting them with every single piece of marketing on every channel. If we deploy an email and an SMS on a given day, we segment them so that the customer only gets one or the other if they clearly engage with only email or only SMS. We didn’t have that set up with [our prior solution].”
- The senior CRM and email marketing manager at an apparel and fashion organization stated: “As far as the tool itself, the drag-and-drop editor is easy to use and there are very few bugs, where you can build an email and the end result is what it’s going to look like in all inboxes. The tool is also easy to use when it comes to segmentation.”
- The senior ecommerce manager of retention at the consumer goods organization shared, “Klaviyo has all of our flow data, all of our campaign data, all of our subscriber data, website data and other first-party data that we can use easily to build segments.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- The email marketing manager dedicates 98 hours annually to weekly reporting and 96 hours to monthly reporting before using Klaviyo. Forrester assumes three weeks of paid time off for the email marketing manager each year.
- With Klaviyo, the email marketing manager dedicates 25 hours annually to weekly reporting and 48 hours to monthly reporting.
- The average fully burdened hourly rate of the email marketing manager is $55.
- The email marketing manager dedicates 32 hours annually to building and managing campaigns and flows prior to using Klaviyo.
- With Klaviyo, the email marketing manager dedicates 8 hours in Year 1, 10 hours in Year 2, and 12 hours in Year 3 to building and managing campaigns and flows.
Risks. The ability to see email marketing manager efficiencies through the deployment of Klaviyo can vary across organizations due to differences in:
- The skill level and experience of the email marketing team.
- The average fully burdened salary of the email marketing manager.
- The type and cadence of reporting conducted at an organization.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $17,600.
email marketing manager efficiences
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| E1 | Number of hours dedicated to weekly reporting in the prior environment annually | 2*49 | 98 | 98 | 98 |
| E2 | Number of hours dedicated to weekly reporting with Klaviyo | 0.5*49 | 25 | 25 | 25 |
| E3 | Number of hours dedicated to monthly reporting in the prior environment | 8*12 | 96 | 96 | 96 |
| E4 | Number of hours dedicated to monthly reporting with Klaviyo | 4*12 | 48 | 48 | 48 |
| E5 | Average fully burdened hourly rate of an email marketing manager | TEI standard | $55 | $55 | $55 |
| E6 | Subtotal: Reporting labor savings with Klaviyo | ((E1-E2)+(E3-E4 ))*E5 | $ 6,655 | $6,655 | $6,655 |
| E7 | Hours per week dedicated to building campaigns, building and maintaining flows, etc. by the email marketing manager in prior environment | Interviews | 32 | 32 | 32 |
| E8 | Hours per week dedicated to building campaigns, building and maintaining flows, etc. by the email marketing manager with Klaviyo | Interviews | 8 | 10 | 12 |
| E9 | Subtotal: Email marketing manager efficiencies gained with Klaviyo | (E7-E8)*E5 | $1,320 | $1,210 | $1,100 |
| Et | Email marketing manager efficiencies | E6+E9 | $7,975 | $7,865 | $7,9576 |
| Risk adjustment | ↓10% | ||||
| Etr | Email marketing manager efficiencies (risk-adjusted) | $7,279 | $7,865 | $7,755 | |
| Three-year total: $21,236 | Three-year present value: $17,619 | ||||
Developer And Graphic Designer Efficiencies
Evidence and data. In addition to the marketing team, interviewees shared that their development and design teams realized efficiencies and were able to decrease reliance on third-party agencies to supplement their teams’ work. This is a result of Klaviyo’s API functionality and accessibility for non-developers to engage with the platform without waiting for team members to customize technical aspects of the platform.
- The senior CRM and email marketing manager at an apparel and fashion organization said, “In terms of executive reporting, there’s a lot of screenshot opportunities to share, and that obviously saves time instead of having to get the data and create a chart [on spreadsheets]. A lot of developer time is saved by using the tool.”
- The senior CRM and email marketing manager continued: “Just recently, we launched a subscription platform and thankfully there was a native API where it was just a matter of clicking and signing in with your credentials and it was set up and then the data was flowing. That was like a big one on the Klaviyo side. Whereas, if we wanted to do that on [another platform], it would take hours and QA and those sorts of things.”
- The senior CRM and email marketing manager summed up their experience: “Because we were on Klaviyo and I had a previous experience using the tool, I felt comfortable enough to take on the reporting, the building, the segmenting [from an agency]. The value of what they provided was something that I could take on because I was using a familiar tool.”
- The founder and co-CEO of a luxury goods company stated: “Klaviyo had this ability to connect to our other systems through programming APIs. We saved a lot of money there, and automated a lot of systems that otherwise we would have had to pay a developer to put together. We had no idea how to replicate [the development techniques] because we’re not developers. It used to cost us money to figure out how the system works. What we found is it was so much easier to just do it in Klaviyo because of how they do things. It just made so much more sense.”
- The DTC marketing director at a beauty organization stated, “[Our designer] does all the slices, and she also would probably say the exact same thing that just like being able to save different content slices and then be able to drag and drop them into different templates that we’re using. Definitely helps save time on her end.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- There are two graphic designers who save 85% of their time with Klaviyo.
- The average fully burdened salary of the graphic designer is $87,750.
- There is one developer who dedicates 45% of their time to email marketing before Klaviyo.
- With Klaviyo, the developer saves 33% of their time spent on email marketing.
- The average fully burdened salary of a developer is $175,500.
Risks. The ability to see internal cost savings in graphic designer and developer labor through the deployment of Klaviyo can vary across organizations due to differences in:
- The skill level and experience of the designers and developers.
- The average fully burdened salary of the developer and designers.
- How frequently the marketing strategy requires use of design and development techniques.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $392,000.
developer and graphic designer efficiences
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| F1 | Number of graphic designers in the prior environment | Composite | 2 | 2 | 2 |
| F2 | Average fully burdened salary per graphic designer | Composite | $87,750 | $87,750 | $87,750 |
| F3 | Percentage of time dedicated to Klaviyo | Interviews | 15% | 15% | 15% |
| F4 | Subtotal: Cost savings in avoided graphic designer spend | (F1*F2) - (F1*F2*F3) | $149,175 | $149,175 | $149,175 |
| F5 | Number of developers | Composite | 1 | 1 | 1 |
| F6 | Percentage of time dedicated by developer in prior environment | Interviews | 45% | 45% | 45% |
| F7 | Percentage in reduction in effort with Klaviyo | Interviews | 33% | 33% | 33% |
| F8 | Average fully burdened hourly rate for a developer | Composite | $175,500 | $175,500 | $175,500 |
| F9 | Subtotal: Cost reduction for development labor | F5*F6*F7*F8 | $26,062 | $26,062 | $26,062 |
| Ft | Developer and graphic designer efficiencies | F4+F9 | $175,237 | $175,237 | $175,237 |
| Risk adjustment | ↓10% | ||||
| Ftr | Developer and graphic designer efficiencies (risk-adjusted) | $157,713 | $157,713 | $157,713 | |
| Three-year total: $473,139 | Three-year present value: $392,209 | ||||
Unquantified Benefits
Additional benefits that customers experienced but were not able to quantify include:
- Gained cross functional efficiency through connected data sources and API integrations. All interviewees stressed the connection between Klaviyo and their data sources, specifically their ecommerce platform as a benefit. The founder and co-CEO for a luxury goods organization shared this sentiment: “One of the nicest things about Klaviyo is its ability to allow developers to use the API to update customer records. We can have these custom properties that we can tap into Klaviyo as our single source of truth for customer data, even outside of our main system of record.” The same interviewee mentioned how most of the API connections are out of the box, and “because Klaviyo has its open AI architecture, the connections are easy to implement and connect to your current tech stack.”
- Enhanced customer satisfaction due to more relevant communication. Interviewees noted their organizations’ customers are much happier with the messages they receive since they switched to Klaviyo as the messages are more relevant to their needs. An ecommerce manager, retention for a consumer goods company said: “I would say that Klaviyo impacted our CX because with the data that we’re getting from Klaviyo, we’re able to tailor our messaging more so to where our consumer is in the funnel instead of broad campaigns or broad messaging. We have the app data we need to meet the customer where they’re at; I think that definitely is a better consumer experience.”
-
Enhanced internal ESP usage enabled by effective customer support. Several interviewees mentioned how they were impressed with Klaviyo’s customer support and how they felt like the customer success team enhanced their productivity, application adoption, and using the functionality to build better campaigns:
- The ecommerce manager, retention for a consumer goods company shared: “I’ve had a really great experience with the CSM [customer success manager] that we’re working with. We’re at the tier where we have that personalized hands-on support which we didn’t have when we first launched the program because we weren’t in that tier yet. Having the day-to-day hands-on support is helpful.”
- The founder and co-CEO for a luxury goods organization said: “We have a customer success manager that we meet with once a month who is always offering tips and tricks. My previous meeting was with him, and he goes to our account and makes sure things are working right, all the analytics look right, and it’s super helpful to have that as well.”
- A senior CRM and email marketing manager at an apparel and fashion company articulated: “The level of support that you get through, whether it’s on site with the live chat or the account manager that you’re given, is quite valuable. Our account manager is basically a partner in our success and so there’s been opportunities that he lets me know about that we launched and saw immediate results.”
- Heightened employee morale. Interviewees said because of Klaviyo’s ease to use, they could build multiple flows, and improve their organizations’ performances. The founder and co-CEO for a luxury goods organization shared: “Our employees were very happy when they didn’t have to [build individual flows for a particular service] because I think that was a stressful part of the job for them. I think everybody’s happier. The customers are happier, our team is happier. It’s a good thing.”
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Klaviyo and later realize additional uses and business opportunities, including:
- Streamlining CX through additional integrations. With the numerous integrations and as Klaviyo continues to build more, it is possible that even more CX will be streamlined. For example, pushing audiences to paid ad channels to improve return on advertising spend.
- Growing from additional revenue gained through automation. Interviewees shared that with the possibility of creating additional automation, there are more opportunities to gain revenue. A head of customer retention at a consumer goods company shared, “Two years from now, I hope that at least 50% of our revenue is coming from automation. Our goal is to be more targeted as we go.”
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Gtr | Klaviyo licensing fees | $0 | $339,660 | $352,296 | $365,231 | $1,057,187 | $874,339 |
| Htr | Implementation and internal labor costs | $130,460 | $0 | $0 | $0 | $130,460 | $130,460 |
| Itr | Ongoing management and training costs | $0 | $148,948 | $148,948 | $148,948 | $446,843 | $370,411 |
| Total costs (risk-adjusted) | $130460 | $488,608 | $501,244 | $514,179 | $1,634,490 | $1,375,210 |
Annual Klaviyo Fees
Evidence and data. The interviewees explained their organizations paid a fixed monthly rate based on their profile, email, and SMS consumption. The annual Klaviyo platform fee included:
- Detailed customer profiles.
- Hyper-precise segmentation.
- Drag-and-drop automation builder.
- Built-in forms and pop-ups.
- More than 300 pre-built integrations.
- Email/SMS/app push-sending infrastructure.
- Templates with built-in best practices.
- Campaigns for targeted, one-off messages.
- AI personalization tools.
- Automated A/B testing.
- Personalized product recommendations.
- Prebuilt or custom analytics and reports.
- Personalized benchmarks.
- Precise multi-channel attribution.
- Built-in compliance and deliverability.
- API usage.
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- The composite organization pays Klaviyo an annual licensing fee of $339,660 in Year 1. This includes Klaviyo profile fees, email consumption fees, SMS consumption fees, and fees for SMS short codes. The number of profiles in Klaviyo grows with the number of emails and SMS messages sent to customers. In Year 2, the annual Klaviyo fees increase to $352,296 and to $365,231 in Year 3.
- Pricing may vary. Contact Klaviyo for additional details.
Risks. The Klaviyo platform licensing fees may vary based on:
- The number of profiles in the Klaviyo platform.
- The number of emails sent each month.
- The number of SMS messages sent each month.
- The ability for organizations to stay within their monthly allowance of emails and SMS messages and not incur overage charges.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $874,000.
Klaviyo licensing fees
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| G1 | Annual Klaviyo profile and email fees | Composite | $0 | $124,800 | $129,480 | $134,160 |
| G2 | Annual Klaviyo SMS fees | Composite | $0 | $170,182 | $176,989 | $184,068 |
| G3 | Klaviyo SMS short code | Composite | $0 | $13,800 | $13,800 | $13,800 |
| Gt | Annual Klaviyo fees | G1+G2+G3 | $0 | $308,782 | $320,269 | $332,028 |
| Risk adjustment | ↑10% | |||||
| Gtr | Annual Klaviyo fees (risk-adjusted) | $0 | $339,660 | $352,296 | $365,231 | |
| Three-year total: $1,057,187 | Three-year present value: $874,339 | |||||
Implementation And Internal Labor Costs
Evidence and data. The composite organization implements Klaviyo over the course of two months, with an additional four weeks needed for the IP warming process. Its internal team is composed of one email marketing manager, two graphic designers, and one developer to help implement and maintain the system. Since the composite organization is an enterprise business, it opts to have additional onboarding support from a third-party agency, paying a one-time $70,000 fee.
- Due to the complexity of their legacy environment, the DTC marketing director at a beauty company opted to purchase a dedicated onboarding specialist from Klaviyo for the implementation: “Because of the package that we purchased with Klaviyo, we needed an onboarding strategist. We are paying more for more support.”
- A founder and co-CEO for a luxury goods organization shared: “What we liked about Klaviyo and why we ultimately switched is it’s a lot more user-friendly and clear when it comes to setting stuff up. It’s a lot more hands on and instead of having to wait two or three days for our old providers’ services team to help us build out a flow, we could just hop in and do it. That led to us doing a lot more and understanding the process better and ultimately earning more money because we controlled the process.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- Due to its size and complexity, the composite organization pays $70,000 for implementation support from a third-party agency.
- The length of implementation is eight weeks and the length of the IP warming process is four weeks.
- One email marketing manager dedicates 85% of their time to work on Klaviyo’s implementation. During the IP warming process, the email marketing manager dedicates 90% of their time to ensure success. The average fully burdened salary of an email marketing manager is $114,750.
- Two designers dedicate 50% of their time to support Klaviyo’s implementation. During the IP warming process, they both dedicate 90% of their time. The average fully burdened salary of a graphic designer is $87,750.
Risks. The Klaviyo implementation and internal labor costs may vary based on:
- The number of weeks needed for implementation. This will vary significantly by organization given the relative skill set of their personnel.
- The number of weeks needed for the IP warming process. According to some of the interviewees, their organizations must increase the volume over time to ensure that Google and other email filters will not mark the messages as spam, which will lead to more deliverability issues later.
- The fully burdened salaries of all personnel involved and the percentage of time they dedicate to the implementation and the IP warming process.
- The time it takes to customize Klaviyo and its templates to the organization’s unique needs.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $130,000.
implementation and internal labor costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| H1 | Third-party professional services fee for implementation support | Composite | $70,000 | $0 | $0 | $0 |
| H2 | Length of implementation (weeks) | Interviews | 8 | 0 | 0 | 0 |
| H3 | Number of email marketing managers working on implementation | Interviews | 1 | 0 | 0 | 0 |
| H4 | Percentage of time dedicated to implementation by an email marketing manager | Interviews | 85% | 0% | 0% | 0% |
| H5 | Fully burdened salary of an email marketing manager | TEI standard | $114,750 | $0 | $0 | $0 |
| H6 | Number of designers working on implementation | Interviews | 2 | 0 | 0 | 0 |
| H7 | Percentage of time dedicated to implementation by graphic designers | Interviews | 50% | 0% | 0% | 0% |
| H8 | Fully burdened salary of a graphic designer | F2 | $87,750 | $0 | $0 | $0 |
| H9 | Subtotal: Internal labor cost for implementation | (H2*H3*H4*(H5/52)) + (H2*H6*H7*(H8/52) | $28,506 | $0 | $0 | $0 |
| H10 | Length of IP warming process | Interviews | 4 | 0 | 0 | 0 |
| H11 | Percentage of time dedicated by personnel for IP warming process | Interviews | 90% | 0% | 0% | 0% |
| H12 | Subtotal: Internal labor cost for IP warming process | (H10*H3*H11*(H5/52)) + (H10*H6*H11*(H8/52) | $20,094 | $0 | $0 | $0 |
| Ht | Implementation and internal labor costs | H1+H9+H12 | $118,600 | $0 | $0 | $0 |
| Risk adjustment | ↑10% | |||||
| Htr | Implementation and internal labor costs (risk-adjusted) | $130,460 | $0 | $0 | $0 | |
| Three-year total: $130,460 | Three-year present value: $130,460 | |||||
Ongoing Management And Training Costs
Evidence and data. Interviewees noted that once their organizations set up Klaviyo, the email marketing manager would use it to create new flows and monitor performance. With the efficiencies gained in Klaviyo, the interviewees’ organizations needed less time from dedicated graphic designers for support and only had a developer trained as a contingency plan.
- A retention marketing manager opted to have quarterly training sessions with the Klaviyo team: “[The trainings] usually last about an hour. They have a panel of three to four people talking about different aspects of the platform. They may focus on SMS deliverability or segmentation for the day and go into a deep dive. After that, they hold a Q&A and depending on the number of questions, it could extend the training to an hour and a half.”
- A senior lifecycle marketing manager of a consumer goods company shared: “I have a biweekly meeting with our rep and she’s great at giving you what you need so it was training upfront. Now, we’re working on more strategic work. I found Klaviyo’s training to be very good especially for onboarding and that continued support is very helpful.”
Modeling and assumptions. For the financial analysis, Forrester made the following assumptions:
- The composite organization employs one email marketing manager who dedicates 70% of their time to managing Klaviyo. The email marketing manager dedicates 6 hours to Klaviyo training each year, as well as having biweekly meetings with Klaviyo’s customer success team.
- The average fully burdened salary of an email marketing manager is $114,750.
- The composite organization employs two graphic designers who dedicate 30% of their time to Klaviyo. Both graphic designers dedicate 4 hours each year for additional Klaviyo training.
- The average fully burdened salary of a graphic designer is $87,750.
- The composite organization employs a developer who opts to be trained on Klaviyo in case backup is needed, dedicating four hours each year to this effort. The average fully burdened hourly salary of a developer is $84.
Risks. The Klaviyo ongoing management and training costs may vary based on:
- The internal team that is employed for ongoing management and how much training they need.
- Amount of salary, which depends on skillset or geographical location.
- The number of hours companies dedicate to training.
- The number of hours an email marketing manager dedicates to ongoing management.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $370,000.
ongoing management and training costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| I1 | Number of email marketing managers dedicated to ongoing management | Interviews | 0 | 1 | 1 | 1 |
| I2 | Percentage of time dedicated by email marketing manager | Interviews | 0% | 70% | 70% | 70% |
| I3 | Fully burdened salary of an email marketing manager | H5 | $0 | $114,750 | $114,750 | $114,750 |
| I4 | Number of graphic designers dedicated to email creation | Interviews | 0 | 2 | 2 | 2 |
| I5 | Percentage of time dedicated by graphic designers | Interviews | 0% | 30% | 30% | 30% |
| I6 | Fully burdened salary of a designer | F2 | $0 | $87,750 | $87,750 | $87,750 |
| I7 | Subtotal: Ongoing management costs | (I1*I2*I3)+ (I4*I5*I6) | $0 | $132,975 | $132,975 | $132,975 |
| I8 | Number of email marketing managers trained | Composite | 0 | 1 | 1 | 1 |
| I9 | Hours dedicated to Klaviyo training | Interviews | 0 | 6 | 6 | 6 |
| I10 | Hours dedicated by marketing manager to meeting with Klaviyo customer success team | Interviews | 0 | 26 | 26 | 26 |
| I11 | Fully burdened hourly salary of an email marketing manager | E5 | $0 | $55 | $55 | $55 |
| I12 | Number of graphic designers trained | Composite | 0 | 2 | 2 | 2 |
| I13 | Average fully burdened hourly salary of a graphic designer | TEI Standard | $0 | $42 | $42 | $42 |
| I14 | Hours dedicated to Klaviyo training | Composite | 0 | 4 | 4 | 4 |
| I15 | Number of developers trained | Composite | 0 | 1 | 1 | 1 |
| I16 | Average fully burdened salary of a developer | TEI Standard | $0 | $84 | $84 | $84 |
| I17 | Hours dedicated to Klaviyo training | Composite | 0 | 4 | 4 | 4 |
| I18 | Subtotal: Training costs | (I8*(I9+I10)*I1 1)+(I12*I13*I14 )+(I15*I16*I17) | $0 | $2,432 | $2,432 | $2,432 |
| It | Ongoing management and training costs | I7+I18 | $0 | $135,407 | $135,407 | $135,407 |
| Risk adjustment | ↑10% | |||||
| Itr | Management and training costs (risk-adjusted) | $0 | $148,948 | $148,948 | $148,948 | |
| Three-year total: $446,843 | Three-year present value: $370,411 | |||||
Consolidated Three-Year Risk-Adjusted Metrics
-
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Cash Flow Chart
Total costs Total benefits Cumulative net benefitsCash Flow Analysis (Risk-Adjusted)
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($130,460) | ($488,608) | ($501,244) | ($514,179) | ($1,634,490) | ($1,375,210) |
| Total benefits | $0 | $534,259 | $1,798,202 | $3,378,017 | $5,710,478 | $4,509,762 |
| Net benefits | ($130,460) | $45,651 | $1,296,958 | $2,863,839 | $4,075,988 | $3,134,552 |
| ROI | 228% | |||||
| Payback period (months) | 13.0 |
Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Total Economic Impact Approach
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Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
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Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
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Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
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Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Appendix B: Endnotes
1Source: “Best Practices: Cross-Channel Campaign Management For Retailers,” Forrester Research, Inc., March 31, 2022.
2Source: “Lifecycle Revenue Marketing Is The Future Of Frontline Growth For B2B Organizations,” Forrester Research, Inc., January 19, 2023.
3Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
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