4 Ways To Increase Profit Margins With Email Marketing

0:00The reason most e-commerce brands struggle to scale profitably has nothing to do with their ads. It has nothing to do with the product. It's just something much simpler and most e-com owners never even look at it. I've worked with over 120 e-commerce brands in the past 7 years with my agency Magically and there are four things I see destroying profit margins over and over again. And all four of them are fixable without spending a single extra dollar on acquisition. So, stay with me because the last one is one almost nobody talks about. Number one, stop giving discounts

0:34to people who would have bought anyway. And this is the most expensive mistake I see inside abandoned cart and checkout flows. And almost every brand is making this mistake because here's what the typical setup looks like. Someone adds a product to the cart and does not complete the purchase. E-com brand sends them a few reminder emails and eventually drops a discount to close the sale. Sounds reasonable, right? But here's the problem. That flow is sending the same discount to two completely different types of people. First-time visitors who have never bought from you before and generally need a financial nudge to trust you enough to convert and

1:10returning customers who have already bought from you before. They already trust your brand and in many cases they were going to come back and complete the purchase anyway. And when you give a 10% or 50% discount to a returning customer who was already planning to buy, you just gave away margin for nothing. They did not need the discount. You just trained them to expect one next time they abandon a cart. And the fix is a conditional split inside your cart and checkout abandonment flow. In Klaviyo, this is straightforward to set up. You create a split based on whether the person has placed an order before. And

1:45if they've never purchased, they go into the path that eventually offers a discount after a few reminder emails. And if they are returning customer, they go into a completely different path that's focused on objections that a returning customer might have. And this works because the friction for a returning customer is almost never price. Because they already know your brand is worth the money, right? The friction is usually a small practical question or just simply getting distracted. So, a personal check-in resolves that without costing a penny in margin. And if they still do not convert after that and your margins allow for it, you can optionally offer like a

2:22smaller incentive than what you give to non-buyers. So, for example, if new customers get 10% off, maybe you can give 5% off to returning customers. But the key is that always less and always comes later. And this one change across your cart and checkout and payment flows can make a meaningful impact on your blended margin because you are no longer discounting customers who are already going to buy from you. So, before we go to the next one, I just want to mention I have a free email marketing course on my website that breaks down all of these systems in detail. It's completely free, there's no fluff, and the link is in the

2:58description below. And now, let's continue with the video. Number two, clean your list and stop paying for subscribers that hurt you. And this one surprises people because it feels counterintuitive. The idea of deleting email subscribers feels like destroying something valuable. But once you understand what unengaged subscribers are actually doing to your business, it becomes obvious. So, Klaviyo, our recommended email tool for e-com brands, they charge you based on the number of active profiles in your account. So, let's say you have 80,000 contacts and 60,000 of them have not opened a single email in 6 months and have never purchased before, you are paying for 60,000 profiles that generate zero

3:41revenue. And that's a direct hit to your margins every single month. But trust me, it gets even worse cuz these unengaged contacts are not just costing you money on your bill, but every time you send an email to them, you are sending a signal to Gmail and Yahoo that a large percentage of your audience does not want your emails. And inbox providers, they use engagement as a ranking signal. So, low engagement across a bloated email list means worse inbox placements for everyone, including your most loyal customers. So, you are paying more to reach fewer people in worse positions, and that's a triple hit to your margins. So, the fix is to

4:21suppress the contacts who are clearly never coming back, like the people who haven't engaged with your emails and website in the past 6 months, and who have never purchased before. But also people who has ever marked you as spam, anyone with a hard bounce, and anyone who was added to your email list over a year ago and has never received a single email from your side. And when you do this, when you suppress all these

4:44people, two things happen immediately. First of all, your Klaviyo bill will go down, and your open rates will go up, which means your deliverability improves, which means more of your emails reach more of the right people on your email list. So, your email list gets smaller, but the value of each send goes up, and that's a better margin math. Number three, build a non-discount campaign strategy. Every time you send a

5:06discount email, you are making a trade. You get revenue now in exchange for training your customers to wait for a deal before they buy. And over time, that trade gets worse and worse because the e-com brands we see with the strongest margins are not the ones sending the most promotions. They're the ones who've built a campaign calendar where discounts are rare and intentional, and the rest of the content is valuable enough that customers open

5:33and buy without needing an incentive. So, here's why this works. When a customer trusts a brand, they will buy at full price. And trust is built through consistent, useful, interesting communication over time. Educational emails that teach them something. Behind the scenes content that makes them feel connected to your brand. Social proof that reminds them that other people love the product. Problem to solution emails that position the product as a natural answer to something they're already dealing with. And none of these emails require discount. All of them move the needle on repeat purchase behavior. And because the customer is buying at full price, your margin on each sale is

6:10significantly higher. So, the practical shift simple. Just have a look at your last 30 days of email campaigns and count how many were promotions or discount based. And if more than one or two out of every 10 to 15 emails had a discount, you're over relying on incentives. And you want to start replacing some of those with content emails. And then you'll notice that your open rates will likely go up because of the variety that creates the curiosity for people to open your emails. And your full price conversion rate will improve because your audience is no longer waiting for the next sale cuz they simply don't know when to expect it. So,

6:45we aim for a maximum of one sales event per month and sometimes even every other month. And for some brands, we even have only one or two sales events a year. And the rest of the calendar is just content that builds trust and drives revenue without touching your margins. Number four, segment your email list and stop sending the same email to everyone. And this is the one that almost nobody talks about. And it's where a significant amount of margin quietly disappears in campaigns. And not because of what you

7:15send, but because of who you send it to. Because most e-commerce brands, they blast every email campaign to their full email list. And that creates two problems that both hurt your margins. First thing is deliverability. We already talked about it. When you send to unengaged subscribers alongside your best customers, the low engagement signals from those unengaged contacts drag down your overall sending reputation. So, your emails end up in the promotions or in the spam folder for people who actually want to hear from you. So, your revenue percent will drop and you end up sending more campaigns to hit the same revenue target, which increases the pressure to use discounts

7:53to drive response. Second problem is relevance. A customer who bought your premium product three times in the last 6 months should not be receiving the same email as someone who signed up like 6 months ago and never bought from your store. The first one is a VIP who responds to excellent activity and loyalty recognition. Second customer is still in trust-building phase and needs a completely different message. When you segment properly, you can tailor your messaging to where each person actually is in their relationship with your brand. So, your highest value customers get treated differently. Your new subscribers get content that builds the trust needed for the first purchase. And

8:32your lapsed customers get reengagement content rather than the same promotions your active buyers are receiving. And by applying this tactic, the revenue impact will be real. Because more relevant emails get higher open rates, higher click rates, and more revenue. And also, this higher engagement improves your deliverability, which means more emails reach more inboxes. And because you're not discounting your VIP customers who would have bought anyway, your blended margin goes up. So, in Klaviyo, you want to start with four segments. Your engaged 30 days, engaged 60 days, your engaged 90 days, and a VIP segment based on the purchase frequency or lifetime value. You want to start sending your

9:10standard campaigns to your 90-days engaged segment, and you want to start sending your highest value content and early access offers to your VIP segment. And you want to run a separate nurture track for new subscribers who've not yet converted. So, this is not complicated at all to set up, but almost no brand does it well from the start. And the margin difference between a segmented sending strategy and the blast to everyone approach compounds significantly over time. So, everything we just covered cost nothing to

9:39implement except a little bit of time. You just need a smaller approach to who you send to, when you discount, and what your emails actually say. The brands that improve their margins through email are not the ones with the biggest list or the most creative subject lines. They are the ones that treat email as a precision tool rather than a broadcast channel. But, none of this matters if your emails are landing in spam before anyone ever sees them. And this is where the real execution falls apart for a lot of e-commerce brands. And it's the kind of problem that gets worse silently until the damage is already done. So, if

10:14you want my team to take over your Klaviyo account and build this properly, check out the first link in the description below and book a free strategy call with me. And during the call, I will show you exactly where your current email setup is leaking margin and what we would do differently for you. And right after this, go watch my video on how to fix emails going to spam fast because strategies in this video only works if your emails are actually reaching the inbox. So, I will see you

10:43in this video.