The Missing Customer Data Layer
I have an idea, and I hope that someone steals this.
If you do steal and build this, I'd love to invest. Or if you know about something similar that exists already, I'd like to include it in this newsletter.
Something I think about a lot is the evolution of the tech stack for DTC brands. This should not be a surprise, given the nature of this newsletter.
One of the themes in that evolution is the fragmentation of data as brands introduce more tools into their stack. I think we're nearing a tipping point where brands already need a better "customer data layer" because no single tool or source in their stack includes all of their customer information.
I had the exact problem when I was building Conversio too. Segment had its Personas functionality, but it was way out of our budget. So what we did instead is that we used Intercom (which we primarily used for messaging and customer communication) for things it was not really built to do: everything from a CRM to lightweight reporting. We could do this because we were piping a lot of customer data into the platform to better personalise our messaging.
This is not dissimilar to what brands do with Klaviyo today. Klaviyo supports 200+ integrations, which means they likely have close to 100% of customer information in there. And I'd argue that for the longest time, Klaviyo was the closest to what I would imagine a true "customer data layer" would be. This is also positioning that Klaviyo has toyed with in recent years where their website H1's would talk about being a Customer Data Platform (CDP). I also thought that positioning was aspirational but not completely misaligned with how customers were using it.
Today I'd add Gorgias to the same bucket as Klaviyo. They are a popular addition to the tech stack of leading DTC brands, supports many integrations and get close to a 100% view of a customer. But Gorgias is built for customer conversations and just uses that data to better converse. So it is inherently flawed as a customer data layer or platform.
Similarly, personalisation solutions like Nosto or Clerk.io also house a bunch of customer data. It is a data destination with specific applications in how a brand can use that data.
I believe that a tool-agnostic data layer is needed to store all the relevant data points for a prospect and customer. Segment probably gets closest, but it's not optimised for DTC brands and definitely not cost-efficient for all but the top 1% of brands, I suspect.
This is why I think brands need and will benefit from this:
- Having a single data warehouse will improve data accuracy and integrity. Any data-based solution is still affected by the "crap in, crap out" phenomenon. Having a unifying layer consolidates the relevant data points and removes duplication. It also simplifies the monitoring of all data sources, which is complicated in a decentralised or fragmented environment. (The latter has created the need for tools like Trackstar because the humans running brands just can't address all the data or systems issues in real time anymore.)
- A customer data layer should be both a destination (for all the supported integrations to push data to it) and a source (to push consolidated data back to supported integrations). This greatly speeds up a brand's ability to share data between tools that are otherwise siloed, which in turn means getting all of the relevant customer data into each tool in the stack.
- Brands are always evolving and changing tools. A customer data layer means greater data portability and ultimately making the process of switching tools in one's stack much easier. Use the example of switching from Klaviyo to Omnisend. It is possible to export subscribers, but so many of the data points will be lost. If you had a customer data layer, you can effectively stitch together customer-centric metrics that relate to their email or SMS engagement between Klaviyo and Omnisend. No more gaps in your data and you are not beholden to stick to tools purely not to lose your data.
Maybe there is a part of me that is too idealistic, and that's why I often think about topics and ideas like this.
I believe that (tech) products can be better, though, and we should not have to duct tape so many of our tools together. At the same time, I also believe that brands should not just have a single configuration of their tech stack, and they should be empowered to pick the tools that are best for them.
Picking best-in-class tools uniquely suited to your brand should however not come at the cost of data fragmentation.
Who is building this?
In the world of ecommerce enablement
Interesting bits of company and product news coming from the diverse world of ecommerce enablement.
- VideoWise unveiled a brand new website that showcases many well-known brands as customers (CrossNet, CrossRope, Fanjoy, Ava Estell, Dr Squatch). When I invested early on, the product and focus were wildly different to what it is today. Their new "Shoppable Video Marketing" features best represents their evolution. I believe that ecommerce will continue to fragment, and the ability to grab video content (related to your brand) from anywhere and make it shoppable is a very efficient way to reduce the friction of converting new people to customers.
- I have been keeping my eyes on anything that sounds like "retail", "wholesale", and "B2B". It is a sales channel (and challenge) that is often a topic of conversation when we speak to Cogsy-powered brands. Sparklayer is a relatively new and impressive solution that I'm keeping my eyes on. They just added support for Katana (another remarkable company that I think deserves more credit), but it is features, like their new "Quick Buy Mode", that really interest me. Selling B2B doesn't have to be boring; it can be efficient and beautiful.
- If you're a brand on Shopify and want to sell subscriptions, you currently have many great options: from Recharge (the OG) and Bold to the upstarts Skio, Smartrr, Retextion and Rodeo. It is then interesting to compare Recharge's latest updates with something like Rodeo's new feature to split a subscription (only Skio also supports this, as far as I can tell). One of the most general frustrations I've heard from existing, and past Recharge-powered brands are about limitations around the customer portal and, thus, the ability to provide customers with a great (support) experience. All of the upstarts have tried to address this to some extent, and Rodeo's split subscription feature is just another example of that.
- Another comparison of how an OG incumbent roadmap compares to those of more modern upstarts is Aftership releasing the ability to embed your order tracking page on your Shopify store. This is something that the likes of Rush and Wonderment have empowered brands to do for a while now. In a similar vein to the subscription upstarts, both Rush and Wonderment understand brands' greater focus on providing great customer experiences, which is why they built this functionality very early on. Good to see Aftership following along and validating this trend.
- Both Omnisend and Klaviyo announced batches of new features. Most of them are not what I would consider press worthy. However, I like the expansion of Klaviyo's Benchmarks tool, which serves as a sanity check of how well you are doing. Brands often try to optimise something that is already exceeding market averages or are not aware of where their biggest opportunities for improvement are. Benchmarking against others helps with this. My lingering thought about Omnisend & Klaviyo's updates is just how powerful these platforms are today. This begs the question: Are all email (and SMS) marketers savvy enough (or have enough time) to truly wield the full power of these sophisticated tools?
- Talking about powerful functionality that I wonder how many brands use: Nosto now has weather-based targeting available. On the surface, I understand that most products have some element of seasonality. I am, however, not sure that changing messaging on whether it rains today or not improves any metric meaningfully. File this into the "explore this when I've run out of all other ideas to optimise my store" bucket.
- Paloma now enables brands to add a checkout experience straight into a DM with prospects or customers. The trend of the native checkout experience is not new, and I believe we'll see it growing. Another recent example is Popup, which effectively helps brands build a specific buying experience (versus a more holistic experience of browsing on a complete website).
- The stated use cases for Shipstation's new Split Shipping feature shows just how mature and sophisticated operations have become for many brands. The supply chain is evolving and brands want to focus on providing customers with the best experiences. Marry the two and you need tools like this to facilitate that complexity in your operations.
- In the previous issue, I spoke about Rockerbox's new "Channel Overlap" feature that I thought was smart. They now integrate with Podsights to link podcast advertising to actual dollar amounts. This integration immediately made me wonder how many DTC brands are consistently (and successfully) using podcasts as a marketing channel. (If you know the answer or have an opinion, hit reply and let me know.)
- The world of DTC finance continues to expand. Wayflyer just announced another $253M in debt financing. Alongside them, Manufactured also shared that they had added $13M of debt financing. The size of these financings differs greatly. What is interesting, though (and something to watch) is the specialised nature of Manufactured's financing products, where they combine the provision of capital with other services (product sourcing, vendor management etc.). I suspect we'll continue to see the "generic" financiers like Wayflyer and Clearco growing. I think specific solutions like Manufactured or Settle will also gain traction for their specialised offerings.
- Aspire released Bulk Terms, and I like their messaging about the new feature: "Work with 10x the influencers in a fraction of the time". It is often not the shiniest features in a product that delivers the most value.
- I mentioned benchmarking earlier and have recently seen Varos pop up in a few Twitter conversations. I'm not familiar with the product (yet 🤪), but I did recently see an extensive demo for Luz which was mightily impressive. From their website and based on my understanding of the data and technology, I was sceptical that they could deliver on the promise. Suffice it to say, I think their Competitor Tracking functionality is very well done, and the insights they surface are something many brands can benefit from.
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