A marketer’s full funnel guide to navigate data privacy changes
Less stalking, more talking
Change—it’s the only constant in life. And modern marketing.
While announcements like Apple’s iOS 14.5 update and Google’s phasing out of third-party cookies aren’t shocking, they’re far from a pleasant surprise—much less a welcome one for ecommerce marketers.
Whether you’re already pivoting your plans or you’re bracing for impact, one thing’s clear—it’s time for marketing as usual to change.
Wondering where to start?
Klaviyo’s agency partners have been thinking about what these data privacy changes mean for merchants—and not just thinking, but also helping them shift their strategies to market more effectively in a privacy-first world.
If you’re feeling stuck or unprepared for what’s to come, then let this resource be your North Star. It’s chock full of advice from ecommerce masterminds from the likes of Brand Caffeine, Classy Llama, Common Thread Collective, MuteSix, PAASE, Slicedbread, Structured, Tinuiti, and Vaimo. Plus, find insights from marketers at brands including CROSSNET and Nomad, and technology vendors including Flowbox, Friendbuy, Loop, LoyaltyLion, Octane AI, and REVIEWS.io.
Use the Klaviyo data analytics tool and dashboard to apply predictive learning to your marketing.
Read on to find tips on how to directly address the ramifications of Apple and Google’s data privacy changes. Plus, learn how to “flip the funnel” and build a brand that can outlast any data privacy changes to come. But first, let’s start with the basics—what you need to know about these data privacy changes and what they mean for you.
Keep reading to learn:
- What you need to know about the data privacy changes
- Tips for acquisition and retention
- Tips for conversion and optimization
- Tips for retention and loyalty
- What flipping the funnel means
Jump to a section:
- The lowdown: What you need to know
- 6 tips for acquisition and attribution
- 4 tips for conversion and optimization
- 3 tips for retention and loyalty
- Flipping the funnel
- The way forward
The lowdown: What you need to know
The way you’ll be able to report on email data and how you use third-party data—or the information you collect on users through an indirect relationship—is fundamentally changing. And it all comes down to the cookie.
While these tiny pixels started as a way for advertisers to track consumers and provide more personalized content, cookies can now seem creepy as consumers become increasingly concerned about how much of their private information is publicly available.
Big tech realized consumers were growing wary and recognized more regulations were likely on the horizon after government interferences such as GDPR and CCPA, so they’ve incorporated more privacy features into their platforms.
Apple’s response to consumer privacy concerns
Previously, Apple could track and share your data across other apps and websites through something called an Identifier for Advertisers (IDFA), or a unique identifier Apple generates and assigns to every device. This IDFA tracks users’ online behavior and provides advertisers with data they can use to serve consumers relevant ads based on their browsing history.
But with the iOS 14.5 update, which affects all Apple devices (and over one billion people globally), apps now have to ask to collect and share your data, and consumers can opt out at any time.
Of course, if only a small percentage of the population was opting out of tracking, this wouldn’t be such a big deal. But only 15 percent of worldwide users and six percent of US users have chosen to opt into tracking on iOS 14.5.
Google’s response to consumer privacy concerns
Google plans to phase out third-party cookies (3PC) in 2023. Cookies are the tracking codes that exist on various websites and follow users around the internet. They let advertisers track people’s movements online in order to target them with relevant ads.
In lieu of 3PC, Google will test Federated Learning of Cohorts (FLoC), which tracks groups of people based on their common interests, as opposed to tracking individuals based on their online behaviors.
While FLoCs may ease the burden of cookies disappearing altogether, they certainly don’t replace 3PC, and marketers will need to better understand how to effectively target these groups of users as opposed to targeting individual users.
How these data privacy changes will affect ecommerce businesses
Long story short, advertising on third-party platforms is going to be more challenging and less efficient since marketers’ will lose their ability to deliver highly personalized and targeted messages to consumers.
Not to mention, paid advertising is getting pricey—cost per impressions (CPM) and cost per click (CPC) are increasing, which is effectively inflating customer acquisition costs (CACs) on third-party platforms.
Meanwhile, there may be a lower return on ad spend (ROAS) because the attribution windows on advertising platforms may be shorter, causing lower activity attribution.
What is Customer-First Data™ and why should you care?
As it becomes more difficult to collect, target, and measure with third-party data, savvy marketers are shifting their focus to first-party data and zero-party data.
Zero-party data accounts for the information that people voluntarily offer to brands, like their email address or phone number, and first-party data accounts information observed by a brand about someone on their owned properties.
Zero- and first-party data are consent-driven, while third-party data is not explicitly opted-in to — or at least hasn’t been until recently. On top of that, all the ambiguity surrounding how advertisers actually collect data has largely made consumers distrust the process altogether.
Keep in mind that Apple and Google aren’t responsible for the repercussions to ecommerce marketers—consumers are. Apple and Google are simply listening to what people are asking for and giving it to them.
For this reason, a more appropriate name for first- and zero-party data is Customer-First Data because it takes into account whether people want to engage with brands through explicit consent.
This idea shouldn’t be revolutionary, but it is. And it requires a mindset shift, but if you’re ready to put your customers first, then keep reading for full-funnel tips to address the data privacy changes, plus a new approach that’ll help you build a brand to withstand future changes.
6 tips for acquisition and attribution
Perhaps the biggest question weighing on marketers’ minds is, “How is this going to change the way we approach customer acquisition and attribution?”
If you’re wondering how to adapt your top-of-the-funnel tactics in response to these data privacy changes, consider the following advice based on conversations with Klaviyo’s agency partners.
They start with the quick wins and low-hanging fruit you can implement immediately, and lead into more long-term strategies for growth.
Acquisition tip 1: Rethink how you measure attribution
Measuring the impact of your marketing dollars on third-party channels will undoubtedly be a challenge moving forward.
In fact, as ROAS becomes significantly harder to track because of the reduced visibility around user activity, many marketers are being forced to revisit the way they think about attribution completely.
One emerging attribution method that’s proving to be popular is ditching platform-specific metrics in favor of measuring your marketing efficiency ratio (MER).
MER is also sometimes referred to as blended ROAS because it refers to evaluating the return on investment (ROI) of all online advertising compared to other channels. More specifically, MER looks at your total revenue divided by total advertising spend.
But what does this mean for marketers?
It suggests that you’ll have to zoom out of attribution on a channel-by-channel basis (e.g., understanding the ROAS for Facebook advertising) in exchange for measuring the ROI of paid advertising as a whole and determining if it’s effective for your brand.
While MER is going to be a popular way to determine the effectiveness of paid advertising, you have different options to measure attribution. That’s why it’s important to research and identify a model that works for your business.
Acquisition tip 2: Consider your product promotion strategy in your ads
The inability to get hyper-targeted on third-party platforms will also influence which product promotion strategies are most effective in your advertisements.
For example, since it’ll be more difficult to personalize ad content to individual users, merchants with a limited number of SKUs may focus on conveying the brand story or promote full collections instead of specific products. Meanwhile, merchants with many SKUs may focus on promoting best sellers.
Additionally, as CPMs and CACs increase, marketers will need to be mindful of the profit margin on each ad sale.
Consider not just what shoppers will be interested in, but also what will be profitable for your business. For some marketers, this means aiming for a higher average order value (AOV) by focusing your paid promotions around product bundles and high-ticket items.
Acquisition tip 3: Leverage lookalike audiences
As third-party data becomes less available, marketers can use the Customer-First Data they already own, such as email addresses and phone numbers, to reach new audiences through lookalike audiences.
The MuteSix team typically creates multiple lookalike audiences for their clients, expanding beyond just paying customers to also include people who have added an item to their cart, people who have visited the brand’s website, and other subscriber segments.
While there are endless data points you can use to segment, consider defining what types of behavior indicates a high-value customer for your brand, and use that to fuel your lookalike audiences.
Acquisition tip 4: Use lead ads to collect email addresses
What are your goals with paid advertising? If they mainly revolve around quick conversions, it may be time to examine a more scalable strategy.
For example, rather than relying on paid ads for one-off sales, you can use them as an opportunity to gather Customer-First Data by building your email and SMS lists through lead ads.
Additionally, this strategy can bring new shoppers through the funnel and ultimately pay off better than trying to get them to buy on the first interaction with your brand.
Acquisition tip 5: Place a greater emphasis around ad creative
Ads will have to appeal to a broader audience, so you may need to change your approach to your creative elements, such as copy, content, promotions, media, and messaging.
Chase added that one strategy he finds consistently effective is what he explains as promoting content he collects at the bottom-of-the-funnel to top-of-the-funnel prospects.
Consumers who are hearing of your brand for the first time will be hesitant to buy—whether at the first glimpse of an ad or the tenth time seeing it— without social proof. This is where the testimonials, reviews, and other UGC come into play.
“Focusing on social proof is essential in today’s competitive landscape. UGC is an often under-used resource that lets brands increase top-of-funnel traffic, onsite engagement, and product discoverability. By activating their community, brands have access to regular, fresh content that performs better than staged product images.”
Cecilia Rehn, digital marketing manager, Flowbox
Across the board, marketers are placing their bets on content that builds trust among new shoppers.
Acquisition tip 6: Consider reallocating your time and budget
While marketers used to depend on digital advertising for its ability to easily track performance, a less reliable attribution model means many are taking this time as an opportunity to experiment on other channels.
“Now that Facebook’s in-platform reporting data is getting more murky, it gives me more freedom to test top-of-funnel channels we’ve never had good reporting with in the past […] All of these are channels we can’t track or attribute sales to, but we can’t do that with Facebook anymore, either, so I’ve taken the approach of testing everything.” Chuck, marketing director, Nomad
In conversations about budget reallocation, Klaviyo’s agency partners said these were the most popular strategies to drive traffic for their clients:
- Organic social media (e.g., TikTok, YouTube, Instagram, Pinterest, etc.)
- Influencer marketing
- Over-the-top advertising (OTT)
- Connected television (CTV)
- Out-of-home advertising (OOH)
- Public relations (PR)
- Search engine optimization (SEO) and search engine marketing (SEM)
In fact, they unanimously agree that experimenting with new customer acquisition channels will be key to sustaining growth.
In addition to considering organic marketing channels, some marketers are re-allocating their ad spend to different paid social platforms.
The overarching message among marketers? Now is an ideal time to experiment with channels you may not have otherwise considered.
4 tips for conversion and optimization
Once you get a new shopper to your website, how do you turn them into a paying customer?
Although this is an age-old question for ecommerce marketers, conversion and optimization techniques are becoming increasingly important since third-party data will result in less qualified traffic.
When you’re moving new shoppers through your funnel and driving them to conversion, consider the following tips.
Conversion tip 1: Capture Customer-First Data
It’s more important than ever to collect, own, and leverage Customer-First Data in order to communicate directly with shoppers in a way that’s relevant to them. But first you need an effective strategy to capture this data.
For many marketers, signup forms are the best way to collect Customer-First Data from shoppers. Signup forms include:
- Embedded forms
But you can’t just plop a signup form on your website and call it a day. It’s also important to create a positive user experience and test collection methods to ensure new shoppers are more likely to subscribe.
Additionally, think outside the popup box to consider how you can collect richer, more useful information. One way to do this is to use UTM parameters in order to get a better sense of where shoppers are coming from.
By collecting Customer-First Data that a shopper consents to and then targeting them after in a way that’s relevant, you create a more holistic user experience.
The name of the game with signup forms is data collection, which means the more information you can use to fuel personalized customer experiences, the better.
Conversion tip 2: Create robust customer profiles
Email addresses and phone numbers aren’t the only types of Customer-First Data you can collect. You can use signup forms to collect additional information about your customers to use in future marketing automations—and all you have to do is ask.
But dates are just one example of the kind of information you can collect. The options are endless—you could use signup form fields to ask subscribers about their:
- Intent (e.g., are they shopping for mens’ vs. womens’ clothing?)
- Preferences (e.g., do they like cats vs. dogs?)
- Interests (e.g., what’s their favorite coffee roast?)
Consider what you can ask your subscribers up front to effectively build out their customer profiles. Then analyze their behaviors and actions, such as browsing activity, to create more personalized experiences.
Customer first-data collection goes beyond signup forms, as well. For example, implementing an onsite quiz is an extremely effective way to collect both email addresses and phone numbers while also gathering more information on the shopper.
As you contemplate the best way to move forward with your marketing efforts using Customer-First Data, consider how you can consensually collect more information from your shoppers in order to start building out more robust customer profiles—and stronger relationships.
If you’re looking to expand your Customer-First Data collection, take a look at your current technology stack for opportunities to gather more information from shoppers on your owned channels and connect it back to your marketing automation platform.
Conversion tip 3: Optimize owned assets
As marketers grapple with the challenge of seeing more unqualified traffic come through the funnel, conversion rate optimization (CRO) is going to be top-of-mind as customer experience takes first priority.
“How are you bringing people to this site? What experiences are they having when they land? How are you treating them and shepherding them while they’re there? Consider whether touch points like browse, search, and checkout are optimized to construct an exceptional customer experience.”
Brian Derth, head of strategy and growth, Vaimo
To convert more shoppers, use your historic data and double down on what’s working in terms of the products, landing pages, and other owned assets that shoppers engage with most and that are performing well.
Additionally, the destination to which you bring consumers through your ads is often equally, if not more, important than the ads themselves.
But improving the usability of your web pages and thinking critically about the full customer journey isn’t just a CRO tactic—it can also help with segmentation.
Conversion tip 4: Use retargeting and remarketing to get new customers over the finish line
Even with the best CRO strategy, not every shopper will make a purchase on their first visit to your website. But after someone subscribes, you can use their email address and phone number to effectively bring them through the funnel.
Setting up email and SMS automations is an exceptional place to start—plus, it’s relatively low cost for a solution that will make you money in your sleep. Some of the baseline marketing automations to increase conversion with new customers that Klaviyo’s agency partners recommend include:
- A welcome series
- An abandoned cart automation
- A browse abandonment automation
But while these automations are simple to set up, a set-it-and-forget-it attitude will be limiting, which is why ensuring you effectively segment these automations can make all the difference in your ability to convert customers through email and SMS.
Personalization shouldn’t start and stop with your abandoned cart automations, though—it should inform the strategy around every communication you have with your customers.
Additionally, while iOS 14.5 will affect the extent of which marketers can use Facebook to retarget shoppers (since you’re losing the data around website or app activity that you might typically use to source Custom Audiences), using your email list as a source should work similarly to how it has in the past.
If you ever doubted the power of an email list, remember that you can use them for personalized retargeting in addition to remarketing through owned channels.
3 tips for retention and loyalty
Experienced marketers know their job isn’t finished once a shopper makes a purchase. In fact, it’s often the post-purchase experience that’s the biggest contributor to (or detractor from) a brand’s success.
Consider the fact that 48 percent of all ecommerce transactions are from repeat customers, so your current customer base may be your greatest as you deal with these changes to data privacy.
Retention tip 1: Don’t skimp on loyalty and referral programs
Every brand has a few raving fans who come back to purchase again and again (even if it’s just your mom and your best friend), which is why loyalty programs are invaluable tools for increasing customer retention and word-of-mouth.
With the right incentives, you can make your customers feel like one in a million, which can influence both repeat purchases and referrals.
Encouraging word-of-mouth can also influence new customer acquisition in a way that’s much more affordable than paid advertising—and the CACs don’t increase.
Retention tip 2: Curate an exceptional post-purchase experience
Customer retention isn’t always about creating exceptional VIP experiences—sometimes it’s simply about making sure your checks and balances are in order.
Many marketers don’t invest their time in the post-purchase experience, but this can be the difference between a customer returning or choosing another brand the next time they shop.
For example, one of Common Thread Collective’s clients is a non-alcoholic spirit company. In the brand’s post-purchase automation, they email customers different recipes they can try using the spirit, as well as a shopping list that they automatically receive via text so they can buy the cocktail ingredients.
Part of the post-purchase experience is also thinking about returns. Returns can cost you money and negatively impact the perceived value of your products, but there are small ways you can reduce returns (and bad reviews) after a customer makes a purchase.
Creating a seamless returns experience is going to be critical as you adjust to data privacy changes and focus more of your marketing efforts around customer retention.
The best part? You can use your Customer-First Data to enable a better returns experience.
Retention tip 3: Focus on LTV and RPR
Customer retention is a long game, and it’s more important than ever that you make the play.
Marketers often focus on the performance of customer acquisition efforts rather than considering the impact of customer retention. But prioritizing LTV and repeat purchase rate (RPR) is going to be critical as the data privacy changes confirm the importance of leveraging your current customer base.
As you react and adapt to the data privacy changes, evaluating the performance of your efforts at every stage in the funnel—and not just the top—is going to be how you make your brand resistant to change.
Flipping the funnel
Now that you’re equipped with tips to span the entire marketing funnel amid the data privacy changes, you may be pondering where exactly to start. Although it may be natural to take a top-down approach, think about your ecommerce presence as if you were building a house.
And if you want to lay a foundation for your brand, you have to flip the funnel.
Start by focusing on conversion and retention. Prioritize collecting Customer-First Data, optimize your owned assets (your emails, SMS messages, and website), and set up your customer infrastructure at the bottom of the funnel in order to create more personalized experiences at scale—without relying on Apple, Facebook, Google, or any other third-party platform.
This is how you create a lasting impression starting from the first touch a shopper makes with your brand, through their first purchase, and beyond. And it’s how you can create a business that’s built to withstand changes to data privacy, both now and into the future.
The way forward
As the digital marketing landscape continues to evolve, we have no choice, as marketers, but to adapt—and that’s not always easy.
But it’s important to keep in mind that these changes will help you maintain a customer-first mindset and ensure you’re creating experiences that people actually want to see and engage with. Ultimately, this also makes your brand one that new shoppers will trust and customers will come back to time and again.
While this transition may require you to shift your thinking and may result in plenty of trial and error, these data privacy changes enable you to put your customers at the forefront of your marketing strategy—which is really what we should be doing.