How to Use Email and SMS Marketing to Offset Rising CAC

Introduction

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As digital advertising costs continue to increase, e-commerce brands are relying on email and SMS marketing to keep overall Customer Acquisition Cost (CAC) in check. Below, we’ll explore how to accelerate your Lifetime Value (LTV) velocity, segment your audience more effectively, plan a strategic campaign calendar, and implement core automated flows to boost your long-term profitability.

Read our detailed blog about about maximizing velocity of LTV here.

1. Velocity of LTV

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Why It Matters

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A shorter time to recoup your acquisition investment means you can reinvest more aggressively in growth. For instance, if you make your desired margin on a customer 3 months after their first purchase instead of 12, you can expand advertising efforts significantly faster.

Key Strategies to Boost Velocity

• Implement a robust segmentation strategy to tailor messaging and increase campaign send volume without sacrificing engagement.
• Develop a thorough campaign calendar focused on return-customer contribution margins.
• Set up retention-focused flows to encourage faster repeat purchases after the initial conversion.

2. Segmentation Strategy

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Key Segments to Implement

1. Engaged Subscribers: Those who clicked in the last 30 days or opened in the last 7 days.
2. Recent Subscribers: Joined within 30 days, have not purchased yet.
3. Active On-Site (Window Shoppers): Never purchased but recently browsed.
4. Past Purchasers: Includes first-time buyers and repeat buyers.
5. Winback Segments: Inactive past purchasers who haven’t engaged for 90+ days.

Engagement Metrics to Watch

• Click Rate (CTR): Generally 2–5% for campaigns; under 1% may indicate segmentation or creative issues.
• Open Rate: Typically in the 40–60% range, though often inflated.
• Unsubscribe Rate: Aim for around 0.1–0.2%.

3. Campaign Calendar Development

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A well-structured campaign calendar is crucial for driving sustainable growth. It should be built around product seasonality, cultural moments, and required return customer contribution margins. Most return customer revenue is driven through email/sms. In most cases, this is the highest margin revenue your business will drive. Generally, each campaign send to a respective segment will have a relatively forecastable amount of revenue driven from it (barring it is not a new offer etc that has not been done before). Forecasting the amount of return customer revenue you need in relation to new customer revenue in order to maintain your growth rate and margin requirements, then working backwards from this to determine the quantity of campaigns you need to send should be a core step in planning your calendar.

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Do’s

• Leverage seasonality and cultural moments relevant to your brand.
• Build around needed return-customer contribution margin to maintain your growth goals.

Don’ts

• Don’t rely on guesswork or a disjointed plan.
• Avoid sporadic, uncoordinated sends.

4. Core Automations/Flows

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The 80/20 rule is a great way to approach developing your flow structure. A handful of flows will drive the bulk of flow revenue. Our approach and recommendation when it comes to flows is getting the core flow structure implemented, and continuing to conduct scheduled A/B tests on a weekly/monthly cadence (varies by specific flow subscriber volume) to maximize the impact of these flows and iterate faster. This will amount to more revenue being driven than spending time and resources developing ancillary flows that account for a small amount of actions taken by subscribers.

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Essential Flows to Implement

1. Welcome Flow – Greet new subscribers.
2. Abandoned Cart Flow – Recover potential lost sales.
3. Browse Abandonment Flow – Engage window shoppers.
4. Non-Purchaser Offer Flow – Convert those who engaged but haven’t bought.
5. Post-Purchase/Pre-Delivery Flow – Educate and re-engage buyers.
6. Replenishment Sequence – Prompt reorders.
7. Winback Sequence – Re-engage lapsed customers.
8. Sunset Sequence – Clean your list.

Conclusion

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By using a solid segmentation plan, crafting a focused campaign calendar, and implementing core automation flows, your brand can significantly lower the impact of rising CAC while maintaining strong margins. Over time, these strategies increase your velocity of LTV and help sustain profitable growth.

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We also did a webinar covering these topics in detail with our partners at Sendlane if you want to skip the reading and watch instead! You can watch that here. Or flip through the deck here.

Now let's dive in!