
Retail Untangled
Business hacks and retail insights you won’t find anywhere else. Stories from the coalface. Real time innovation and solutions. Brought to you by the team at Inside Retail.
Retail Untangled
Episode 24: How deploying AI in CRM solutions is powering retail into an exciting new era
In this episode of Retail Untangled, Amie is live from Shop Talk Spring, sitting down with Jake Cohen, VP and head of Shopify at Klaviyo about how artificial intelligence is ushering in an exciting new era for retail marketing and customer engagement
Amie:
Welcome to Retail Untangled, my name is Amie Larter, and this is the podcast where we speak to retail industry experts and find out business hacks that help them succeed. You won’t find these gems anywhere else and we have some superb stories from the coalface as well as helicopter insights from retail industry leaders. This episode is our first in the series we are recording at Shoptalk Spring in Vegas, and I am joined by Klaviyo’s VP and head of Shopify, Jake Cohen, to discuss the evolution of autonomous marketing, examine Klaviyo’s latest B2C CRM release and analyse the impact of these developments on the marketing landscape and customer experience.
So kicking off, when I was in the airport coming over to Shop Talk, I was listening to a podcast that you were on and you spoke about your first exposure to marketing being at just one or two years old.
Very early, by the way, I'm thinking it's going to run in the family. It's something that's been a real consistent in your life and your career from a really early time. Tell me about it.
Jake:
Yeah, it is true. was a little bit early start to a career in marketing. I think honestly, I just got lucky. My parents had been in advertising media since the early 80s, actually, frankly, maybe even earlier than that. And my mother started an advertising agency when I was one. So my dinner table conversations growing up were, how do we maximise cost per point? And how do we make sure that our clients are happy? And our Sunday nights were highlighting discrepancies to find me good so this has been my world for very long time.
Amie:
I love that so I'm keen to understand then what was it about Klaviyo that made you think this is where I need to be?
Jake:
You know it's funny choosing Klaviyo, coming to Klaviyo when I came was not obvious that Clavio is going to turn into the useful tool that I think it's known as today. What was different about it was the data.
I could tell when I started to play with the product and I started to look at what you could do, you could simply do a basic login to implement an integration from any e-commerce platform at the time and instantly all of your data floated and started being usable. And the most important thing that stood out was you could get close to the recordings and attribution on your activity, which is the holy grail of marketing. You do a thing. You understand the impact it has on your business and then you can decide to do more of that or adjust it and improve it. And as soon as I saw that, even though it was early, I knew because I had spent so much time in marketing for so long, that is the thing that businesses need and I'd never seen it put together so elegantly, so conveniently and so effectively. And so it felt like a really good place to lean in and help everyone see that this is now available and that they can use it for themselves.
Amie:
And you're still here, is it 10 years later?
Jake:
Almost, yeah, it has been a long time.
Amie:
That's funny so and now it be remiss of me not to mention and I'm gonna say it's Klaviyo right? I'm gonna have to re-record the first question and we need to kick start with your recent announcement because this is really exciting and there's been a fair bit of buzz about it. It's made it back to Australia and this new B2C CRM platform.
They tell me it's a first of the kind, let's get right into it. What problem are you really trying to tackle with what I think is a fairly big pivot for the business, right?
Jake:
Yeah, so a B2C CRM solves the problem of a business that sells to consumers understanding who the customers are. This isn't a new problem.
Amie:
It's been there for a while.
Jake:
A long time. I think frankly since Roman times, right? Because if there's anyone who's trying to have a product and offer it to understand the problems that people have, what speaks to them, and present your solution in a way that resonates with them. And people have been trying to solve this problem for a really, really long time, but everything has fallen short. The question I ask is why has it fallen short and why do we think we're in a position to actually change it.
Amie:
You're taking over my job now. Why is it falling short?
Jake:
Yes. And so the reason it's been falling short, if you take a step back, two things have changed over the past 15 years. The first thing that's changed is the ability to track interaction. The creation of data has flourished. Since the boom of big data in the sort of early to mid 2000s to now, it's an expectation that anything that happens online, you can track, measure, analyse, and then use as an insight to inform an action. That's new.
The second thing that's new is that consumer expectations have gone so much higher, steady trend, because we've taught them as a society that you don't have to wait, that you don't have to enter in your information again, that people should know who you are. And so the confluence of these things makes it that I have a lot of information I have to understand, and I better understand it really well and use it, or I'm going to lose my customer if someone does it better.
There have been solutions that have tried to solve this problem of CRM. But the problem is they came from a business to business context. And that's great for B2B. The difference between B2B and B2C is the amount of records that you have. So businesses versus customers, the amount of data that you need. So like how many employees versus your pants size and your shoe size and whether or not you're, know, projects or whatever, and how quickly you need to access it. And so, Klaviyo...
We've been known as an ESP, but that's frankly because we've always had this data platform and we added email on top. And it's interesting for me, I saw that all along, but we didn't know how to talk about it. And we just sort of evolved to be able to share with folks, we have all this data, we have applications on top. The benefit to you as a business is you don't have to work hard to get the data in and unify it, nor do you have to work hard to put it to work.
And so that is a B2C CRM. All of your data unified in one place, with the applications to speak to your customers the way they expect to be spoken to, without all of the ridiculous cumbersome overhead to make that True.
Amie:
And it makes a lot of sense.
Jake:
That's good to hear.
Amie:
I'm keen to unpack that a little bit, because it makes so much sense, and you're obviously bringing all of the different arms that you've always played in together. Why do you think it's taken so long to get to this point for the industry?
Jake:
So let's take a step back and unpack what is now together. And then I can kind of share why its taken so long. Yeah, that would be so what we have for announcing Share is B2C CRM. What is that? It's an underlying data platform that pulls in all the relevant, transactional, customer, and interaction data into a single place and unifies it. And on top of that are three buckets of applications. One is marketing, which people have known us for for a long time across multiple channels. The next is analytics, which is what's working across your marketing within your catalog and then with your general customers. And then lastly, service. We believe that service starts not after an order, but as soon as someone expresses interest in your brand.
And there need to be better tools to manage that whole lifestyle. So that is Klavyio's B2C CRM, data plus marketing analytics and service. Why has it taken so long? I think there's two reasons. The first is it's really hard to build something like this. And so as technology progresses in an industry, tends to be iterative. Something happens and someone says, it could be better if we did this. And so they build the next version.
And so it took a while to get to marketing orchestration and B2B into B2C. From analytics to get into bespoke custom to something that's actually out of the box, usable and extensible. And for service, it's basically been help desk forever. And we credit Amazon for changing the consumer expectation of what service is. No one's kind of built that yet. So all of these things exist. You can do B2C CRM without Klaviyo. You just need to buy multiple tools, a team that understands how it works, have someone that can stitch together the integrations, maintain the data consistency, and then use all these things. We just put it in one place to make it easy, fast, and simple to take advantage of what we do.
Amie:
Yeah, it makes sense. And so from a shopper perspective, how is their experience going to change? And how is this B2C CRM going to feel different from the usual brand interactions they're used to?
Jake:
Yeah, so we've done a bunch of studies on this and talked to wild surveys and all these things.It turns out that there are two things that were a little bit of a surprise when we learned, but when you think about it, not so much. One, consumers don't want to have to talk to someone to solve a problem. And two, consumers expect we know more about them than businesses like, kind of show. So what people really want is if I have an issue, which by the way, isn't necessarily where's my order, it might be what type of color do you have to fit this use case, just whatever.
They don't want to have to call someone. They don't want to wait in the chat. They want to be able to do their own research and they want to be easy and fast and simple. One. Two, they don't want to have to take information from here and put it over there. Like how many times have you had an order? You have to go to your email to find the order number. You see your face. You have to pull out the order number and your email address. Oops, I used my other email address.
Amie:
Don't get me into my retail rants. It's a whole other podcast.
Jake:
It's a whole thing. So anyways, no one wants to do that. And so what we want brands to be able to offer is that when a consumer comes to any of your surface areas, so that can be on your website, it can be in your direct communication, on email, text, or whatever. It can be theoretically on social, it can be in an app, it doesn't matter. That when a consumer interacts, it will say something to the effect of, hey, Ames, welcome back. I know that you bought that shirt last month, how's that going? Do you need anything to pair with it or is there anything we can do to help?
What an amazing, delightful experience that would be. Klaviyo is in a position to help people bring data together to do that.
Amie:
And it's the doing piece, I think. Everyone has a lot of data, but not many people are using it properly or in the right way.
Jake:
And on that, I was sitting with a very large CIO global thing, and it's an amazing conversation where they were saying, we have all this data, we can use it, right? Same kind of story. And they had brand managers in the room and this person asked, oh, well, we have a CDP. And the brand manager said, we do. Can we use it? And it was amazing. And basically, what's happened over the years is data has been seen not as an asset as much as a liability. So data gets locked down, and it becomes unable to move into the places you need. The convenience, the unexpected convenience of putting it all in one is you can both lock it down and put it where sort of like Apple's ecosystem. It's more like that instead of trying to stitch it together and having all this mess.
Amie:
Okay, so having it all in the one place, as you just shared a perfect example, often we have it, we don't even know how to use it. What are the real wins here for retailers? How can they actually use that unified data to boost their business?
Jake:
Yeah, there's... So the real wins are going to be reduced costs. More agility which translates to more growth. I'll explain all these. And then just better experiences. And that's going to translate to like a less churn of customers that can keep them full longer, which in turn turns into growth. So we'll go backwards. Have you ever had this experience where you bought something, shoes, and next thing you know you're on a website and there's an advertisement for the shoes you just bought?
And you go onto the website and it's a whole bunch of shoes of different colors than the ones that you just bought and you're like, hello yesterday, get me out of here. It makes you not want to shop there anymore because they're not being empathetic to your needs. So Klaviyo, because we take in the transaction information and give you either suggestions or tools on how to treat specific customers, you can prevent those bad experiences from happening.
And instead of showing the shoes, you might show pants or belts that match.
Amie:
We've all been there and it's horrible.
Jake:
It’s horrible. But if you can do that right, then your customers come back to you So that's horrible. The second is I hear there's an amazing statistic where when Klaviyo is used with a certain e-commerce platform, brands on average grow 60% faster the year after starting on the two compared to the year before.
Amie:
Interesting.
Jake:
Why? And I think there's two answers. One, is everybody has amazing ideas of marketing activities that they could put out there in front of their customers. But when they go bring it to their team or try to do it themselves, oops, the data's not in the right place, or oops, I don't have the creative, or oops, my team's occupied, it's on a backlog, whether it's my agency or internal team, it's because it's so hard to do. When you put it in one place, it's easier to do, which means all those ideas can start to happen.
And you can then iterate on those. You get more cycles. So that's why people grow more. They can actually do the stuff they dream of and actually see how it works and then make changes. And then the third place, saving money, because you don't have to write these integrations and keep track of them and make sure they work, you don't have to hire an implementation agency. You don't have to hire an intern to do it. You don't have to go, why the heck is this thing broken? Because it's just there and working. So you can spend a lot less money and go faster. So in sum, it's, I don't know, I'm obviously very passionate about this, it's amazing. Spend less, do what you want and then your customers stay in your room.
Amie:
Win. Okay so in terms of retail and this personalised piece, unified marketing, are there any retailers that you look at and go, okay, they are crushing it from an experience point of view?
Jake:
There are two, actually, I want to make sure I don't misquote here. One is Daily Harvest, are you familiar with them? They did an amazing job, I'm so impressed with them. They basically, they were using, I think, four different tools to manage integrations, data, emails, text messaging and reviews, at least four or five and they consolidated everything onto Klaviyo and they ended up being able to go the quote that they told me was we used to operate in quarters now we operate in days which is like insane yeah and they were able to basically reduce the actual out-of-pocket expenditure by I think 20% on day one because they had an agency that they had to hire as consultants to help write all the integrations and keep it together. So like literally things I'm telling you, we got that from them. They told us this is what we're seeing, which was really, really cool.
The other one that is amazing is Happy Wax. It's a very cool cable company. So there's a new product that we've announced as part of this B2CC around a public customer hub. I was eluding before how returns is like a pain because you have to pull data from different places. Customer hub takes all of your, in your relationship with a retailer and it puts it in one convenient place for the shopper to see. So imagine you come to a website, you're sitting there looking at the boots that you bought or whatever, and you can sort of have a button and it pulls over a third of the page and it's a table of contents of everything between you and the brand. So it's what you've ordered recently, what you've looked at recently, suggestions specific for you based on your interactions and interests, what information that you've shared with them. Your birthday, your gender, your age, your interests, and an ability to navigate from there to all the places to make changes and take actions. So if you want to make a return, you click a button and your information is prepopulated. If you want to buy again, you click a button and it's just right there in the cart. Like all the things that we want as consumers. So that is live now. That is something that we offer now.
And so have you actually used this and the statistic that I heard, which blew my mind was they obviously everyone gets chat tickets. Where's my order? I want to do this again. Can you help me? Right. Literally in the first 45 days of having this on their website, the volume of tickets related to orders went down 70%.
Amie:
It's a lot.
Jake:
Insane, like insane. But what it tells you is if you give people the information they need in a community place and you don't make them go run around looking they will solve the problem and thank you for that. Their average order value went up because people now see more things that they want and put in their cart.
Amie:
I think from a customer perspective as well, it almost feels like you're being so much more loyal to them. think, you know, when you feel like you're getting treated properly, nicely, I mean, it's almost an expectation, right? There is that sense that, okay, they're doing the right thing. When there is this mix mash of experience and you sort of have those hurdles in the way, it really does impact the brand.
Jake:
The way it feels to me, you know those moments you are at a conference day and you run into someone that you've met before and they don't remember because it was years ago or they had a lot going on and you say you know hey Ames and Ames says nice to meet you and you're like my heart just broke you know that feeling?
Amie:
It does the blank look.
Jake:
Yeah right. And you sort of just like. Totally. As consumers we're sort of told to expect that from the brands that we love like that's BS no it shouldn't be that way it should be that when you show up it's nice to see you again. And Klaviyo helps brands say nice to see you again to their customers in any capacity that you're interacting.
Amie:
Do you think it's going to get to a point, isn't it the point where that's an expectation now?
Jake:
It already is an expectation.
Amie:
Yeah
Jake:
The problem is it's really hard to deliver on. And so what you basically have is a bunch of brands. Here's the thing, taking one step back, you're asking what took here so long. Here's another problem. I'm a marketer, you're a marketer, we're all marketers. When you're a marketer, what you're thinking about is feelings. What you're thinking about is experiences. What you're thinking about is solving problems for people.
Because of all this flourishing of data and all these different tools, we've been asking marketers for the past 10 years to become data architects. It's like ridiculous, right? And so what should happen is that marketers should be able to dream of the experiences that make magic for their customers so that their customers love it and come back and hand off the technical stuff to the technical people and just unblock them.
Amie:
It's so true. mean, I'm running a media business, not a retail business, but we actually split out marketing brand and marketing operations for that very reason. And I think it applies to so many different industries, but it's so much. It's so crucial in retail. And so the whole CRM rollout and pivot, it does feel like a major evolution for the business, which I'm sure is really exciting to be part of. How's it changed Klaviyo's game plan?Jake:
Honestly, it hasn't changed our game plan at all. Our plan forever, forever, forever. I literally have a document I was looking at on what will be true in 10 years, this is from like eight years ago, what will be true in 10 years and what do we want to offer. And the sort of theme that we were thinking about is let marketers be marketers again.
Let business owners be business owners again. Take away all the blocking and tackling, the technical stuff required to be able to give the experiences that got you in business in the first place. And so we've always been focused on data as the way to solve that problem. That's why we built this data platform first, but we didn't know that's a thing. We just knew that something had to exist. So we built it and didn't take credit for it. Fine. Then we built email and people were able to sort of be email marketers again.
But as you expand the functions of what a company needs to do when they interact with customers, it has been our mission and our goal, and continues to be our mission and our goal to make any business give the amazing customer experience they dream of every time to their customers forever. And so that's what B2C CRM is. You shouldn't have to work hard to get your data into one place and unify it. You shouldn't have to work hard to get it into a position where you can use it.
You shouldn't have to work hard to measure how it's going and get ideas on how to improve. You shouldn't have to work hard to put those back into market and then hear the thank yous from your customers coming in.
Amie:
Because that is not necessarily a marketer's strength, is it?
Jake:
What, ideas?
Amie:
No, no, the ideas, yes, the creativity, yes, but not the measurement, not the, it's, it's.
Jake:
Correct. Yeah. Right? Like you're asking creative people to be technical and they can be, that's fine. You can extend Klaviyo as many ways as you want, but should be the extra 20%, not in the base of 80%.
Amie:
For sure. So your CEO and co-founder, Andrew, recently spoke about the future of digital marketing and CRM being autonomous. It's a big concept. What does that mean? And it's sort of a segue from what we were just talking about, really. But what does that mean for retailers, brands, and marketers on the ground?
Jake:
Yeah, so it's a really exciting time in technology right now. Everyone's talking about AI and what it can do. And no one's really seen it work yet. Because it doesn't really work all the way that it will. But basically what it means is, let me explain briefly what AI is, what Klaviyo allows, and how it will become autonomous in the future. AI today, like LLMs, is really just what I call pre-computation. So ChatGPT just looked at all the words on the internet and understood how many times this word is connected to this word in this phrase and this phrase, which is really hard. But that's basically what it is.
And so if you apply that into marketing and service experiences, you can look at the history of what's happened and use that to inform when someone does a certain thing, what do they want to have happen to them next. In order to do that, you need what? Data. And you need all that data in a place that you can read it and pre-compute what might happen. so, Klaviyo's thing has been data unlocks activity. We sort of achieve that. What is coming, we never think we're done, but we've delivered a lot of good value there.
What's coming is, as a marketer, or as a business owner, or as a customer service leader, what you're really thinking about is, how do I take the expectations that people have, deliver, and then push it further? You're always thinking about what's next. What autonomous stuff should do is take care of the things that are a little more rote and a little bit more known. So here's an example. Let's say you know that you have an upcoming product line that you want to announce, and you know that you need to put together a sort of orchestrated campaign where people who are great customers should know first, you should update all of the listings of what this product is, you should offer it as a buying opportunity for people who bought before, and you should make sure that it's a recommended item in your customer service experiences so that when people come back looking for ideas, it's there. Today, that might take a team of 10, three and a half months to go figure out. 90% of that should be automated.
Once the SKU is known, you have the pictures, you have the copy. You should be able to automatically generate the copy for the messaging. You should be able to automatically orchestrate when it goes out. You should be able to automatically understand which audiences receive which versions of that. You should be able to automatically generate ads from it and target the correct people. You should be able to automatically prioritise that recommendation. And you shouldn't have people do that, it should be a button. That's where things are going. That's what we're working on. That's what I think business owners and marketers and retailers can expect in the next three to eight years, depending on how much of that they wanna do.
Amie:
That makes a lot of sense. Now, I think you've just answered my next question. look at you go. Thinking about the customer of tomorrow, where is sort of your business headed? You've just said that three to eight year plan and the expectations. What's the next big thing that you're building towards?
Jake:
We, I mean, right now, we, there will always be the same fundamental truth about Klaviyo. Klaviyo helps brands, marketers, retailers, any business really create amazing customer experiences across every touch point. We do that by pulling in your data, unifying it, and then giving you tools to do stuff and then measure how it's going. So we're going to keep marching in that direction for a while.
You can imagine where that might go, right? We could offer more channels as they come. So you may see additional channels, especially globally, start to be more easily used on Klaviyo. You can imagine how service experiences may extend beyond this little panel. You can imagine how we might expand beyond the world of just retail. Never leaving our home base, but always adding to, to make sure that the experiences that so many businesses, think we have 160,000 brands around the world now that use Klaviyo, which is humbling and awesome. The experiences that they have been able to provide, that tool set should be brought to millions of businesses so that they can do the same thing.
Amie:
You're going to be where the customer is.
Jake:
Yeah. I mean, look, we're all consumers. We all know these experiences. You could even argue there's a certain selfish version of this, which is like, we just want to have better experiences too. So do you, so does he, so does she. I think business owners need tools to do that. And we feel very humbled and happy. We feel very humbled and happy that we're able to deliver.
Amie:
Well, thank you for joining us today.
Jake:
Thank you for having me, it was great.