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Hey, Michael from AdSumo Digital here.
I just got done watching a video on scaling CPG subscription brands by Jordan Menard, the co-founder of Instant Hydration. In today's email, it's going to be an email about my learnings, and how you can use your email marketing channel to achieve this
Let me layout the situation for you…
Most DTC brands are obsessed with the wrong metrics.
They celebrate 3x first-purchase ROAS, optimize for low CACs, and wonder why they can't break through $150K/month.
Meanwhile, the brands I work with that scale to 8 figures? They're comfortable losing $20-60 on every first purchase.
Because they've built backend systems that make it profitable.
The Auction Reality Nobody Talks About
Here's what most brands don't understand about Meta ads:
You're not competing on creative. You're competing on unit economics.
If you can afford to pay $85 to acquire a customer while your competitor caps out at $50, you win every auction. You get unlimited inventory. They fight for scraps.
But this only works if you have what I call a "backend profit engine."
The 4-Stage System That Changes Everything
After working with 30+ DTC brands and generating $20M+ in backend sales, I've seen the same pattern in every brand that scales profitably, similar to what Jordan says:
Stage 1: Acquisition (Investment Phase)
You're not buying sales. You're buying future cash flow. This mindset shift is everything.
Stage 2: Activation (Where Most Brands Fail)
This is where our retention system kicks in:
Strategic pop-ups that capture behavioral data ("What are you shopping for?")
Welcome flows that create the "aha moment" with your product
Onboarding sequences that lock in usage habits (post purchase)
Brand archetype-specific messaging (high AOV needs education, low AOV needs urgency)
Of course, you have to have a good product to achieve this. That is the backbone of all retention. The best retention strategy is a product that people want more of.
Stage 3: Monetization (The Profit Engine)
This is where we make our money:
Post-purchase flows timed to your natural reorder windows
Behavioral segmentation (VIPs get different treatment than first-time buyers)
Campaign strategies that drive repeats without discount dependency
Cross-sell sequences based on actual purchase patterns
Stage 4: Advocacy (Free Scale)
Happy customers become unpaid marketers through reviews, referrals, and word-of-mouth.
The Math That Unlocks Everything
Here's some example math for you:
Month 0:
First purchase: $65
CAC: $95
Loss per customer: -$30
Hemorrhaging cash. But your email flows start working...
Month 2:
Email flows drove $45 in additional revenue
Customer value: $110 (profitable)
Month 6:
Total customer value: $185
Profit per customer: $90
Result: He could now afford to spend $150+ to acquire customers while competitors were stuck at $50 CACs.
Why Your Brand Archetype Matters
Not all brands can use this strategy. This is more so for lower AOVs/high frequency purchase products, not high AOV furniture/luxury brands with low frequency. And potentially not even for mid-frequency/mid-AOV brands. It depends on your archetype:
High AOV/Low Frequency (Furniture, Luxury)
Longer educational flows
Trust-building campaigns
Complementary product focus
8-12 campaigns per month
Low AOV/High Frequency (Supplements, CPG)
Aggressive retention sequences
Subscription conversion focus
12-16 campaigns per month
Fast repeat purchase cycles
Mid AOV/Mid Frequency (Apparel, Accessories)
New product launch focus
Seasonal campaign strategies
10-14 campaigns per month
Balanced approach
The Retention System That Makes It Work
Here's what we build for every client:
Email Flow Architecture:
Welcome sequences based on stated interests
Abandonment flows. Catered to your top sku’s
Post-purchase journeys that drive repeats
Win-back campaigns for dormant customers
VIP nurture for high-value segments
And plenty more
Campaign Psychology:
Content + offers (not just discounts)
Plain text emails that feel personal
Social proof campaigns that build trust
Product education that creates loyalty
And enough volume to generate consistent cashflow $$$$$
Behavioral Segmentation:
Non-buyers get different messages than VIPs
Recent customers get cross-sell focus
At-risk customers get win-back sequences
Subscribers get minimal communication (don't remind them to cancel)
The Mistakes That Kill This Strategy
1. Product Problems
No amount of great email marketing can save a mediocre product. 80% of retention comes from product quality.
2. Generic Templates
Cookie-cutter flows from Fiverr don't work. Every brand needs custom strategy based on their archetype.
3. Discount Dependency
Training customers to only buy on sale kills your margins and makes this math impossible.
4. Impatience
This is a 90-day play, not a 30-day sprint. Most brands quit before the system pays off.
The Natural CAC Reality
Here's something you've probably experienced:
No matter what you do - new creative, different audiences, better landing pages - Meta gives you roughly the same CAC.
You're not imagining it.
There's a natural CAC for your business based on your category, competition, and conversion rates.
Stop fighting it. Make it work.
The Results That Matter
One client went from $11K/month in backend revenue to $124K in 90 days.
Another recovered $107K in abandoned cart revenue in just 30 days.
A CPG brand increased backend revenue by 87% in the first month.
Same traffic. Same products. Different system.
Your Action Plan
Calculate your true LTV (not just first purchase)
Identify your brand archetype (high/mid/low AOV and frequency)
Build retention infrastructure before scaling ads
Accept your natural CAC and make it profitable
Think in 90-day cycles, not 14-day set ups
The Bottom Line
The brands that will dominate the next 5 years aren't the ones with the lowest CACs.
They're the ones with the highest LTV.
Stop optimizing for first-purchase profitability. Start building systems that make every customer worth 2-3x more.
That's how you go from fighting to stay profitable to scaling aggressively.
Ready to build your backend profit engine?
If you're doing $100K+ monthly and tired of fighting for low CACs while watching competitors scale past you, let's talk.
[Book a 90-day sprint audit call here] - I'll show you exactly how much money you're leaving on the table and how to build a system that makes higher CACs profitable.
No pitch, no pressure. Just a clear roadmap to profitable scale.
P.S. The brands that master this will own their markets while others fight over scraps. Which side do you want to be on?
Talk soon,
Michael
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