The Total Economic ImpactTM Of Klaviyo

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 automations 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 pre-built 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.

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.