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Why do I need Reverse ETL?

6min • Feb 28, 2024

While browsing a Seagate study, I stumbled upon a concerning fact: "Only 32% of data accessible to companies is utilized". Although this survey is from 2020, unfortunately, not much has changed since then.

The remaining two-thirds of data often reside in data lakes or data warehouses, making it inaccessible to non-technical users. This lack of data utilization is evident in our data-centric world, where data has the potential to increase revenue, regain customers, and enhance operations. Just to convince you: the use of first party data usually boost revenue with a 40+% profit margin.

In order to effectively harness the power of data, businesses must ensure its quality by verifying its completeness, timeliness, and accuracy. The initial steps towards making data usable involve breaking down data silos, consolidating and centralizing data into a single, reliable source.

The next step involves making this enriched data accessible through everyday business tools and systems. This is precisely where the Reverse ETL process comes into play.

In that article, you'll learn:

  • What is Reverse ETL?

  • What are the benefits of Reverse ETL?

  • How Reverse ETL can help marketing, sales, support and finance teams

  • What is the best alternative between build or buy a Reverse ETL platform?

What is Reverse ETL

In short, Reverse ETL (Extract, Transform, Load in Reverse) is the process of syncing data from a source (in general, a cloud data warehouse) to the cloud applications used by operational (marketing, sales, support, etc.) teams.

This process turns your existing data stack into a Composable CDP so you can improve business operations.

There are five main components to Reverse ETL pipelines: sources, models, segments, syncs and destinations. The process is quite basic: syncs segment data from your source directly to your destinations - based on prebuilt models that define how your data is represented.

Core components of Reverse ETL

The easiest way to understand Reverse ETL is to think of it as a pipeline that connect your source to the rest of your organization tools.

What are the benefits of Reverse ETL?

This Reverse ETL process is becoming increasingly important as organizations seek to leverage the wealth of data collected in various business applications and databases to perform operational analytics and automate and / or personalize customer experiences.

Reverse ETL comes with several benefits:

  • Data operationalization: Data sitting in your warehouse has potential value, but isn't exploited at all. However, it's when this data is activated in business applications, it gives valuable insights and unlocks untapped growth opportunities. All departments in a company can benefit from this data activation process: marketing, finance, customer support, sales, and even data teams!

  • Time savings: From a data team perspective, the main benefit of Reverse ETL is the automation and reliability of sending data to business platforms. Rather than building and maintaining APIs or writing SQL for segmentation purposes, the only thing they have to do is to ensure that the data is available in the data warehouse (or another single source of truth). This means plenty of time to focus on real value-added tasks.

    Disclaimer: your data stays in your data warehouse. Reverse ETL platforms only read it but never store it!

  • Prevention of data silos: Reverse ETL tools provide access to data across your entire company. For instance, sales representatives are not restricted to their sales data alone. This approach breaks down data silos, so you no longer need to constantly request another team or data analyst to generate a list or report. Instead, you can load the relevant data directly into your application and use it as you want.

  • Data consistency: data stays consistent and up-to-date across all systems. Although operational teams work different SaaS systems, they use the same data which brings continuity across the whole business. By automating the flow of data between different systems bidirectionally, you can streamline business processes and reduce manual data entry and reconciliation efforts. This not only saves you time and resources but also minimizes the risk of errors associated with manual data handling.

  • Real-time decision-making: Reverse ETL allows syncing data from your data warehouse into operational systems near real-time. It enables faster decision-making based on the most up-to-date information. This is crucial in dynamic environments where timely actions can make a significant difference. Real-time insights can help you identify patterns and trends, predict customer behavior, and optimize business performance.

  • Analytics: With Reverse ETL, you can easily integrate data from various sources to create a 360° view of your business in a unique tool. This comprehensive data set empowers data analysts and business intelligence teams to conduct in-depth analysis, uncover hidden insights, and inform strategic decision-making based on real-time data.

Concrete use cases of Reverse ETL

Modern companies are increasingly adopting operational analytics. This approach involves making data available to "operational" teams such as sales and marketing for operational use cases. It differs from the classic approach of using data solely for reporting and business intelligence. Rather than using it to shape long-term strategy, operational analytics informs the day-to-day operations of the business. In essence, it utilizes the company's data to empower everyone in the organization to make more informed decisions.

That's where Reverse ETL can help:

Marketing campaigns

The Reverse ETL process leverages your existing data stack to allow automated and personalized customer experiences, all along the customer journey:

  • Ads

Advertising is one of the largest use cases for Reverse ETL because marketing teams often require segments to upload and use for their audience strategies. Reverse ETL allows you to integrate all social media platforms into your data stack, allowing multichannel approaches which are now considered best practice.

Reverse ETL features like our "Visual Segment Builder" can help easily segment the customer database and create audiences that can be used for retargeting, lookalike, or exclusion strategies. It allows you to offer customers targeted ads based on the segments they belong to.

You can even sync both online and offline conversion data from your warehouse to your ad platforms. Sending conversion data is key to better understand the customer journey and feed algorithms used in audience strategies.

DinMo can sent all conversions, both online and offline, to any platform

DinMo can sent all conversions to any platform

Moreover, bidding strategies can intelligently be adapted according to conversion events to obtain better results. As an illustration, you can adjust conversion values based on what matters the most to you. For example, a user's sign-up can take different values*:

  • 0 if the lead is not qualified at all

  • 10 if the lead is attractive

  • 100 if the lead corresponds to your ICP

⚠️*The values should be adapted to your average shopping basket.

The algorithm will, therefore, optimize itself to capture as many qualified leads as possible.

Adjusting conversions also makes it possible to move from value-based to margin-based management.

💡 If you need help with most common Conversions API, check our guide on Meta Conversions API and Google Enhanced Conversions.

  • Personalization

Personalization throughout the customer's lifecycle is probably the second most common use case for Reverse ETL. It allows sending the right communication to the right person, at the right time. Thanks to Reverse ETL, you can segment your entire customer database and automate personalized campaigns. You will find new indicators to personalize your content.

Indeed, by leveraging Reverse ETL, you can send core attributes (e.g. location, age, gender, income, etc.), behaviors (cart abandonment, product viewed, etc.) or custom predictive metrics (risk of churn, expected additional LTV, etc.) to enrich business tools. You can then create hyper-personalized journeys and touch points, unique to each customer. This not only improves customer satisfaction but also boosts loyalty and drives revenue growth.

Most Reverse ETL tools have connectors with most famous lifecycle marketing tool like Braze, Iterable or Batch.

Here are a few examples of use cases you can implement, particularly in your emailing tools:

  • Set up the most basic ones: personalize your message in the correct language, with the correct name, and sent within the correct timezone

  • Add dynamic content to your communications: highlight information that drives your customers to action: limited stocks, expiring membership points, time remaining for an offer, etc.The reverse ETL process can also be used for social proof on emailing. For example, you can show the number of likes or shares on your latest Instagram post directly on your message.

  • Get different product recommendations based on product sensitivity/resources viewed: for instance, if someone checks several articles on your blog on the same subject, send them a guide about it.

  • Reactivate customers: after a certain time without a purchase, send personalized messages to your customers to encourage them to buy again. Something like "Do you want to repurchase this item?" for repeated purchases can be really efficient!

Sales Operations

If you think that Reverse ETL is only for marketing teams, you're wrong. Everybody in a company can benefit from its first party data, starting with sales.

Reverse ETL technology provides a unique advantage that significantly enhances the effectiveness of your sales teams. This advantage involves equipping them with rich, meaningful information that doesn't naturally exist within their tools, such as modeled data, key attributes, product usage, etc. For example, it could show what pages they visit most frequently and which products they are interested in directly in your Salesforce, offering vital insights that can inform your sales strategy.

But that's not all. Reverse ETL also allows you to send alerts directly to messaging tools like Slack. These alerts can be triggered when specific accounts or users reach certain thresholds or take certain actions. For example, if a user interacts with a specific product on your app a certain number of times, a sales rep can be instantly notified. This enables your sales team to proactively reach out in real-time, capitalizing on customer engagement and potentially closing a sale.

Therefore, Reverse ETL not only enriches the data your sales team works with but also transforms the way they interact with potential customers, making their approach more timely, informed, and proactive.

DinMo's Data Modal: Your critical data made accessible to everyone

Customer Support activities

In customer support, response time significantly impacts the customer experience. With a high volume of tickets, it's often impractical to address every customer. Prioritization is crucial, and context plays a key role.

Reverse ETL enables customer support teams to get automated, real-time updates from the data warehouse directly to their ticketing systems. This enhances efficiency and customer satisfaction. Representatives can prioritize and route support tickets based on customer activity, lifetime value (LTV), among other criteria. And of course, with a comprehensive view of a customer, agents can offer more precise assistance.

Prevent churn by calculating customer score models and identifying "at risk" clients.

Include information about customers at risk of churn in your support tools

Finance

Reverse ETL also has advantages for finance teams as it enables the direct transfer of reconciled financial information, such as revenue, invoices, orders, transactions, and payment details, from the data warehouse to their financial systems.

A practical application of this is the ability for finance teams to customize payment plans for B2B customers and automate follow-ups using invoice tools.

In short, reverse ETL allows data stored in the data warehouse to support all operational systems, providing valuable insights for all departments within the company. This tool is essential for enabling functional teams like sales and marketing to make data-driven decisions and take action on a daily basis.

Do I need to build or buy a Reverse ETL tool ?

At this point, you're likely already convinced about the value of Reverse ETL. However, you might still be wondering: what if your company created its own API connectors between your data warehouse and operational systems (like Meta, Salesforce, Brevo, etc.)?

On the surface, it seems feasible. Suppose someone on the Customer Success team wants the churn probability from the data warehouse displayed in Intercom. An engineer could look up the Intercom API, understand the relevant endpoints, and create a custom integration. It sounds simple enough.

But what happens when the predictive methods change, the Support team wants more information displayed in Intercom or switch from Intercom to Zendesk?

In that cases, engineers would need to build and maintain another custom integration. This is where challenges arise:

  • Manually creating API connectors can consume days or weeks. Every third party integration comes with its own specificities and technicality, which make it even worse.

  • API endpoints often can't handle real-time data transfer, meaning you could quickly hit a rate limit

  • Your team would need to constantly maintain these connectors to accommodate changes in underlying applications.

In short, there's little value in your data team building and maintaining pipelines for Reverse ETL, even if it seems cheaper than paying for a solution.

⚠️ When choosing a Reverse ETL platform, be sure to check the criteria that are important to your business: whether the solution is SaaS or on-premise, for which users it is intended (technical or business teams) and the integrations proposed.

💡If you'd also like to find out about other solutions for syncing data, take a look at this guide to data activation tools.

Still not convinced about Reverse ETL?

It's apparent that data warehousing continues to be crucial for modern businesses looking to compete in the digital age. To get the most out of your first party data, it's essential to consider reverse ETL as a key component of your modern data stack.

By integrating your data warehouse with operational systems, you empower your teams to make timely and informed decisions, ultimately leading to a better customer experience, increased revenue, and business growth.

We have illustrated just a few of the possible use cases made possible by reverse ETL. But there are plenty of other cases that could benefit your business that we can discuss, and above all implement.

🚀 Want to check it out? See how our DinMo's Reverse ETL platform works with a free demo.

💡If you'd like to find out more about how Reverse ETL can benefit your company or need help with data activation in general, please don't hesitate to contact me: alexandra@dinmo.com

Table of content

  • What is Reverse ETL
  • What are the benefits of Reverse ETL?
  • Concrete use cases of Reverse ETL
  • Do I need to build or buy a Reverse ETL tool ?
  • Still not convinced about Reverse ETL?

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