How Koala used Segment to build out its customer data infrastructure

Furniture brand and digital startup chooses Segment for its single source of customer truth

Lacking enterprise-size scale to have granular customer information, and not wanting to be beholden to Google for its own first-party data, home-grown furniture startup, Koala, looked to another relative newcomer, Segment, to solve its customer data problems.

When Koala was starting out as an online-only startup up against large competitors in the furniture market, it knew it would have to do things quickly, nimbly and deploy the most appropriate tools to maximise its customer smarts. It's this philosophy that saw the team pick Segment to guide its customer data infrastructure.

"One of the best things Segment did for us early on was knowing it was very easy to integrate new technologies, like advertising or customer service. It then made sure they were integrated properly and compliant with the various regulations," head of data and analytics, Koala.com, Tom Hunt, outlined to CMO. "It was central to how we built our online experience and moved towards our current technology and advertising stack."

The size of the outfit, when it comes to business, can work for you and against you. In this case, it made for an easier path. Koala's size and newness allowed it to more easily integrate new technologies as it wasn't burdened by the weight of incumbency and rigid silos.

"We knew it would be the only way a startup of our size would be able to get the understanding of customers, the behaviours, to immediately give people a better user experience and understand why people are converting or not converting, engaging, or not, with the website and how we can better communicate with them," Hunt said.

"All of this stuff is easy to do for large enterprises that have fine grained data available. But there were just no other tools that would let us be that sophisticated, that early. This solution would let us control our first-party data instead of someone like Google holding it on our behalf and only giving us access to it if we paid them a lot more money."

Democratising access to customer data

Segment was founded in 2011 to help companies manage their customer data and challenge the traditional CRM model. The technology is built around 'analytics.js', an open source library launched in 2012, Segment CEO and co-founder, Peter Reinhardt, said.

Technically, it's a JavaScript code to measure how users interact with a website, enabling Segment to build the right customer data infrastructure for a seamless experience while being mindful of data privacy, he explained.  

"If you think about the most-loved brands of the world, whether it's Netflix, Apple or Amazon, one of the reasons they're loved is they've gone to great lengths to have a personalised experience for the customer," Reinhardt said. "To do that, they've had to build some heavy infrastructure to listen to their customers and observe what they are doing. But you can usually only build that infrastructure well at scale.

"What we've done is create a small package of that infrastructure and made it available to others, whether that's large enterprises or small startups."

In Koala's case, the ambition was to simplify and streamline customer insights gathering and analysis. "We originally had a small handful of different tools we were attempting to use. Trying to keep all of those tools aligned with all of the questions we were trying to answer and all of the information we were trying to collect, was extremely tedious," Hunt said.

"With Segment, there's just one set of events and one set of questions, all of which are just pushed through the tool. We only need to build it once. Everyone has a common set of truths about what is happening through the Segment data."

Privacy protection is another important benefit of having a single source of customer data architecture.

"If somebody gives you information about themselves, you have to be careful with that,"Hunt commented. "As we started to implement a much for complicated set of technologies and as we qualified for a new set of regulations or needed to implement new precautions for consumer data protection, Segment had already thought about it and it was easy to roll into the tools that were already there."

Read more: 7 ways to run your marketing department like a software startup

Digital insights fuel bold offline marketing  

One of the unexpected outcomes of adopting Segment has been Koala making the move to more traditional, off-line marketing plays, thanks to the power of rich customer data.

"One of the best things Segment has let us do ... is understand our traffic patterns down to the minute. And we've used that to build out tools that let us drive our TV and radio media buying," Hunt said. "For a small startup that started buying Facebook ads, we're now buying TV and radio ads and we have tools to measure how those are going."

Overall, Koala has seen its marketing efficiency improve. But equally, if not more importantly, Hunt told CMO the business has gained confidence in increasing its marketing spend in offline media to support its digital business.

"We've been able very aggressively to scale up marketing in other channels that traditionally do not have good measurement because Segment has given us the ability to build those tools that allow us to take those big steps," he said.

The increased marketing allocation, which brings more people to the site, also puts greater focus and pressure on the site to deliver the best possible experience. Looking ahead, Koala sees further opportunities to hone the site's responsiveness.

"There's always more that can be done in personalising the user experience and making an individual's reaction to our website more natural and more fluid," Hunt said. "One of our focuses is, in real time, being able to change the content and change the messaging on the page based on their behaviour."

Koala is also hoping to better support customers digitally through its website by creating a virtual showroom for its products.

"This goes beyond the advertising and the measurement we do, but actually to use an understanding of the customer to provide them with the best possible experience on the screen because as a direct consumer brand that's the thing that we have to compete," Hunt added.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia. 

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