Meet Klaviyo –– a heavyweight industry player in the next generation of eCommerce and customer communication. In this podcast, SaaStr CEO Jason Lemkin sits down with Klaviyo CEO Andrew Bialecki to discuss the nitty-gritty details of the journey from the company’s origins to its incredible $9.5 billion valuation.
These days, Klaviyo is known as an eCommerce, email marketing and customer messaging solution. But that wasn’t always the case. Founded in 2012, Klaviyo initially operated as a database with an API that allowed businesses to run queries against their customers. As time went on, their customers began asking about integrations to email and marketing apps. Klaviyo decided to build email and marketing automation tools themselves as part of their platform.
In particular, they noticed that the use cases in the eCommerce sector were blossoming. They spotted an opportunity. Says Bialecki: “In the SaaS world, [companies] were defining customer success…as they went along. In eCommerce, everybody knew the standard playbook. So they were more about ‘How do I scale? How do I automate? How do I make it more personalized and automated?’” Klaviyo built its marketing platform to help eCommerce and retail companies to automate this personalized customer relationship.
For the first few years in the company’s life, Klaviyo dedicated itself to building the perfect product and understanding their customer. “We just had this point of view that we’re going to focus on making sure we really understand our customers and building a product they love –– product-market fit. We’re going to expect that growth will come from there,” Bialecki says.
This took time and patience, but it paid off. They partnered with Shopify early on, and that partnership rapidly accelerated their growth in the eCommerce vertical.
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Pricing & Selling Strategy
When it came to pricing, Klaviyo decided to pursue a value-based model instead of a cost-based model. Conveniently, the Klaviyo platform itself generates and proves ROI. Says Bialecki, “We realized that a lot of companies looked at their customers as transactional…they didn’t realize the value of either pre-purchase or post-purchase, that relationship.”
Klaviyo wanted to be viewed as a premium product, so its prices were higher than the competition. To prove their value and validate their pricing, they examine their customer’s resulting ROI and point to how Klaviyo directly influences their higher returns.
Because of such a wide distribution of customers, Klaviyo approaches selling in ways that attract businesses of all sizes. That’s why they offer freemium-style, self-service models for customers who want to try the product out. If these smaller companies’ needs grow, the sales team will function similarly to consultants and demonstrate the platform’s value and how it can specifically help achieve their objectives.
- Get your product right and take the time to truly understand your buyers. This will pay off in the long run.
- It’s helpful to position yourself to prove your value through ROI to your customer base. This allows you to price at a premium.
- The accelerated shift to online eCommerce has opened the door to more customer understanding than ever before.