Case Study: Optimizing Klaviyo Performance & Deliverability for a Local Cannabis Retailer Growing their E-Commerce Presence

We recently began working with a local cannabis retailer that offers a curated selection of hemp-derived and CBD products, edibles, drinks, flowers, pre-rolls, and vapes. The retailer has built a strong reputation for quality and customer service in-store and is now looking to grow its e-commerce presence.

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Below, we discuss some of our key findings and recommendations as we begin working together.

Klaviyo Account Setup

Klaviyo’s billing update on February 18, 2025, is creating a lot of stir among customers, leaving many facing a jump in their billing. For busy business owners, it can be challenging to figure out how to navigate this. At Cannascale, our team not only has expertise in marketing within the hemp industry, but we’re a Klaviyo Partner with technical experts to help you navigate this. Need help? Reach out for a free consultation.

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Account Billing Level:

Active Profile Count: Over 18,000

Current Klaviyo Plan: 10,000 active profiles, 100,000 emails per month

Monthly Cost: $150

Upcoming Billing Increase: On Feb 18, 2025, Klaviyo will automatically upgrade this account to the 20,000 profile tier, increasing the monthly cost from $150 to $375.

Optimization Plan:

To mitigate the cost increase, we identified a significant portion of inactive profiles that could be suppressed to optimize billing without impacting engaged subscribers. These profiles are unlikely to engage in the future and can be suppressed to reduce the active profile count before the billing adjustment takes effect.

Here is a definition of this segment:

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Suppressing these profiles will bring the active count down to 14,000, but the monthly cost will still rise to $350. To further optimize expenses, we recommend expanding the suppression criteria to remove additional unengaged profiles while ensuring that recently engaged users remain active.

It's important to note that suppressed profiles are not deleted and can be reinstated at any time. By taking proactive measures while maintaining list quality and deliverability, we can better manage costs.

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Critical Deliverability Issues: Dedicated Domain Setup

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Issue: The dedicated sending domain is no longer active, significantly impacting email deliverability. Due to authentication failures, recent campaigns have open rates as low as 12-16%.

Solution: We need access to the DNS Zone to reconfigure the dedicated sending domain and restore email authentication. This is urgent to prevent further damage to deliverability. This needs to be fixed and either set up again or set up a new dedicated domain before any sending takes place. This is very important, as emails will not authenticate until this is fixed, and further sending under this setup will negatively affect deliverability.

Required DNS Records: SPF, DKIM, and DMARC records

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2024 Campaign Analysis

Through 2024, this client had over 75 campaigns, and over 600 orders were placed, generating a total revenue of more than $65,000 with an AOV of approximately $100.

All deliverability metrics are within normal limits: the open rate is 49%, the click rate is 2.32%, the unsubscribe rate is 0.28%, the bounce rate is 1.32%, and the spam complaint rate is 0.01%.

With the recent issues with the dedicated sending domain being disconnected these stats will plummet unless this is addressed quickly.

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2024 Flow Analysis

Seven flows were active in 2024, with over 450 orders for $38,000 in revenue and an average order value of $80. No significant updates have been made to flows in the last 12 months.

All deliverability metrics for the flows are within normal limits, with an open rate of 52%, a click rate of 7.85%, and a spam complaint rate of 0.08%. The unsubscribe rate of 0.63% and bounce rate of 2.13% are a bit high and suggest lower-quality or bot traffic joining the lists. We will look at segmentation to reduce these.

With the recent issues with the dedicated sending domain being disconnected these stats will move downward very quickly unless this is addressed quickly.

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List Growth 2024

From what we see below, the main list creation took place in April 2024 with an import of 7,924 profiles. Since then, the list has grown to 10,819, a net increase of 2,895 profiles.

As expected, the mobile signup form has been the bigger driver of new signups. Some research suggests 72% of global e-commerce sales were conducted via mobile devices in 2023, with expectations to approach 88% by 2027.

At Cannascale, we are spending more and more time working with clients to ensure their customer journeys are well-understood, and optimized for mobile. Any friction coming from sign-up forms, non-responsive emails, websites, checkouts, and more can significantly impact revenue performance.

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Site Forms

The form stats in Klaviyo, where there is an embedded form, reflect site traffic which is why the views are 473,535, as anyone coming to the site will be shown the embedded form.

The popup forms better indicate incoming traffic. There, we see about 80,000 views for the year, and roughly 4,500 forms were filled out.

The top-performing form was the mobile popup, which accounted for 69,000 views and 4,000 submissions, giving a submit rate of 5.82%.

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Deliverability Test Results

As we noted above, the deliverability situation is not good because the DNS records for the dedicated domain are no longer set up and authenticating.

GlockApps is a leader in deliverability testing. We tested a recently sent campaign using the GloackApps test seed list. The results show a very poor overall deliverability score of 32.9%, meaning most emails do not reach the inbox. Of the test mailboxes, 29% reached the inbox, over 67% were delivered to the spam folder, and almost 10% were blocked between sending and arriving at the test inboxes. Of the significant inbox providers, Gmail was sent to spam 100% of the time, both from direct Gmail accounts and Google Workspace accounts, which are generally corporate domains. In addition, Hotmail and Outlook also went to spam for 100% of the test emails.

The email list has over 22,000 active emails. Of those, nearly 12,000 (54%) are Gmail addresses. Microsoft (Outlook, Hotmail, Live, MSN) accounts for a much smaller 700 (3%), and the Verizon Group (Verizon, AOL, Yahoo) accounts for 1,700 (7%).

Once we get the dedicated domain re-setup, deliverability will improve.

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Summary of Recommendations & Next Steps

We will need to pause Flows and address deliverability issues prior to sending out any more emails. Once email authentication is restored we can reactivate flows and begin tactfully sending out campaigns again. Albeit a slower process, small, yet growing hemp brands, need to build from a strong foundation if they want to be able to grow their e-commerce presence

Address Deliverability Issues Immediately

• Reconfigure the dedicated sending domain and restore email authentication (SPF, DKIM, DMARC).
• Gain access to the DNS zone to ensure records are correctly set up.
• Monitor inbox placement and sender reputation to prevent further deterioration.

Optimize Account to Control Billing Costs‍

• Suppress unengaged profiles to reduce the active profile count before Klaviyo’s automatic upgrade.
• Expand suppression criteria to remove additional inactive subscribers while maintaining engagement levels.
• Regularly audit list health to prevent unnecessary billing increases.

Enhance Email Performance & Engagement

• Improve segmentation to reduce bounce and unsubscribe rates.
• Identify potential bot traffic and implement measures to prevent low-quality signups.
• Optimize flows and campaigns by focusing on high-performing segments.

Flows Audit & Revision

• Refresh the flows, following a deeper dive into their current performance
• Align the branding of the flows to the new branding being adopted in the campaigns

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Need help? Reach out to Cannascale for a free deliverability consultation.