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News Analysis

The Reasons Behind Klaviyo's Recent $4.2B Valuation

4 minute read
Kaya Ismail avatar
We met with marketing execs to understand the reasons behind Klaviyo’s Series C funding and valuation, as well as the resurging need for good customer data.

2020 has seen the resurgence of email in the ecommerce space. With tools like automation, data analytics, and artificial intelligence, email marketing platforms are more prepared than ever to collect and make informed decisions based on customer data. This treasure trove of data enables marketers to communicate with customers on a deeper level. 

Nowadays, integrations with both traditional and headless ecommerce platforms have become stronger, which allows marketers to micro-optimize user behavior on an online store, increasing the chances of converting customers.

One email marketing platform that continues to be popular in the ecommerce space is Klaviyo, as evidenced by its recent $4.2 billion valuation. To understand the reasons behind Klaviyo’s Series C funding and valuation as well as the resurgence of customer data, we spoke with marketing executives to find out more about the surge of email marketing and need for good customer data.

Resurgence of Customer Data is Driving up Valuations

Inside the world of technology, data is gold dust. With it, behemoths including Google and Facebook have been able to monetize and advertise products and digital real estate in ways that are totally in sync with the consumer's wants and needs. How? Because they had seas of granular customer data at their fingertips, revealing behaviour patterns, likes, dislikes, triggers, and more. 

The data gold rush has also sparked a rush for Data Scientists alongside AI-powered big data analytics engines. 

This thirst for customer data might explain Klaviyo's valuation somewhat. After all, their software is used by steadily growing companies using leading eCommerce platforms in the rapidly expanding online retail space. Hence, Klaviyo doesn't just have consumer data, it has consumer data emanating from potentially the most economically lucrative corners of the internet. 

However, Bay Bertea, Director of Marketing at Mill Valley, CA.-based 2Modern is wary regarding Klaviyo’s valuation, in that it might represent yet another tech bubble. “The reality is that investors are frenzied over technology again, which is great for companies like Klaviyo, but the market valuation here — like so many others — is really no fault of Klaviyo’s; it’s just investors getting a bit excited on potential upside.” 

But Klaviyo isn’t the only company that has received such a big valuation or gotten a new infusion of funds. Recently, Twilio, the cloud communications giant purchased Segment, the customer data platform for $3.2B, which marks a new era for customer data and personalization. 

Contrary to Bertea, Derek Slager, CTO at Seattle, WA.-based Amperity considers that “Both Twillo’s purchase and Klaviyo’s valuation are indicative of a massive market that has been underserved by traditional solutions. As the digital shift accelerates and leading brands continue to invest in better solutions for first-party data, significant growth opportunities will exist for companies that bring real value and impact.”

Learning Opportunities

The rapid shifts in the digital ecosystem in 2020 have shown that companies who know their customers and use customer data are the ones still standing. However, it has been traditionally tough for companies to wrangle and make sense of customer insights, mainly due to communication silos and the disparity of systems used throughout organizations. 

These price tags, as Slager calls them “are shocking to many, but it shows the industry’s increasing desire for brands to get in front of the right people. Customer data platforms have been a steadily growing category over the past few years and more companies like SAP, Adobe, and Microsoft are launching their own solutions for clients to digest data better,” he added.

Related Article: 5 Successful Surprise and Delight Marketing Campaigns

Leveraging Customer Data is Paramount for Marketers

Collecting and analyzing customer data gives marketers visibility over how they understand and communicate with potential consumers from the moment they land on a website or app. The key to making the most of this data is to be able to visualize and take action on what you’re seeing or collecting, and that’s where platforms like Klaviyo earn their bread and butter. 

Also, let’s not forget that with more data come more possibilities for marketers and ecommerce store owners alike. According to the IDC, by the year 2025, there will be 44 zettabytes of information. That's a huge amount of data for marketers and customer data platforms to leverage and use. By leveraging the insights this trove of data brings, the eCommerce sector can see an unprecedented surge. 

The benefits of data analytics are obvious; it enables marketers to transform data into actionable insights and drive better business outcomes. However, the truth is that Klaviyo’s valuation and Twillio’s purchase reflect a trend that is only gaining traction. Customer data is not making a comeback; it’s asserting its presence as the new force to be reckoned with.