• jeffrey harris

Customer Loyalty: The Gift That Keeps Giving

In order to succeed in the ever-growing cannabis industry, you have to take a long hard look inward at your own customer base. Are there new faces coming in to never return again? Do you know what strain to grab when a repeat customer walks in? Are customers purchasing a wide array of products, or sticking to the same SKUs? How would a dispensary sales and marketing team get the answers to these questions? 


If a customer feels like you don’t have what they’re looking for after multiple visits to your dispensary, they will begin to feel mistreated, and over half of people surveyed would stop using a brand after bad sales experience. Think of it like a cashmere sweater going through the wash: the sad truth is that some things just aren't the same after being mistreated, no matter how bad you want to squeeze into that lush V-neck. 


The answers to all these questions is quite simple: utilizing a cannabis CRM designed specifically to fit your dispensary.  


customer royalty 


Another harsh reality we face in the cannabis industry is that providing your customers with an amazing product is no longer all that's needed to keep your customers coming back for more. They have so many other places to choose from, and every reason to go dispensary-hopping to test the market.


Fine, so just as long as you keep a steady influx of new customers, you'll be fine, right? Wrong. It costs 5-10x more to acquire a customer than to retain one, and doing so can affect your bottom line in all sorts of ways: a 2% increase in customer retention lowers costs by 10%, and lowering your customer defection rate by 5% can increase profitability by 125%.


Win-win-win


So you know keeping existing customers loyal is in your model's best interest, but that's far from where the benefits of a dispensary loyalty program end. Customer loyalty impacts almost every metric you need to care about for your dispensary, as 75% of US companies with loyalty programs generate positive ROI (something we know quite a bit about). 


That’s because, in a good loyalty program, customers will be glad to participate and drive sales up for you, just by rewarding loyal customers for continuing to re-up at your dispensary. Well good news: you're on the right track by looking into customer loyalty programs, because research by Fundera shows:

  • 70% of people's decision on where to shop is influenced by where they are members and can earn points/rewards through a loyalty program

  • 84% of adults (a.k.a. your exact target audience) stay loyal to a retailer

  • 43% spend more money with those brands

People want to be loyal to their favorite brands, and barely even need any reason to be - all the more reason to give them one with a great dispensary loyalty program. Cannabis consumers deserve a better experience than fly-by-night shops only in it to make a quick buck. You know it, we know it, and so do your customers. 


The best strategy for outreach is getting them to sign up for your rewards program at the POS for the following, painfully logical reason: convincing them to sign up after their purchase allows you to market directly to someone that you already know is interested in your product- that’s priceless exposure you can’t  can literally buy (or for an annual fee). Offering them rewards for their repeated business will further separate yourself from the competition, both in their minds and in your checkbook. 


the few represent the many


According to our own internal data, we’ve seen less than 10% of customers that are members make up 75% of the total spend for a dispensary by the end of the year, whereas non-members make up 50% of the customer base but only 6% of sales at years’ end. 



Yes, you'll still need to acquire new customers, but the quicker and more frequently you get them to enroll into your loyalty program, the more noticeable the difference will be for your bottom line- something springbig cannabis CRM excels at. How? So glad you asked.


how to structure an efficient loyalty program


In general, loyalty programs are structured in one of two ways; spend-based and visits-based loyalty. The former rewards customers for making a purchase, and depending on what dollar threshold they cross, they get a certain amount of points they can use toward rewards (penny pre-rolls, coupons, etc.). We recommend a spend-based,points-per-dollar system where your customers earn one point for every dollar spent in your dispensary, which can be redeemed for rewards later. Using this structure makes tracking the cost and ROI of your program simple, and proportionately rewards you highest spenders.


Pro tip: encouraging customers to sign up can lead to some good numbers for your program, but 40% of consumers admit to signing up just for the initial discount/offer. To avoid this, allow them to earn a few points with easy tasks: purchases, check-ins, referrals, and more. Remember: 7/10 of people will shop where they can earn points; all they need to do is show up and- boom- the point addiction starts.


customer loyalty: the gift that keeps giving 


The more chances you give people to earn rewards, the more they'll share the love right back. This might sound counterintuitive, but take Starbucks for example - they've enjoyed nearly a 9.2% revenue increase (to $6.6 billion) over the past few years, a big chunk of which they've attributed to their revamped loyalty program.


What does 'revamped' mean? 


They adjusted their program to make it easier for customers to earn points (“stars”) and redeem them for rewards. They use tiers, monthly double-star days, and unexpiring points to encourage them to be put to use, along with allowing new members to earn points from day one of joining. The difference? A 25% membership growth in under two years, where members have accounted for over 40% of sales nationwide, along with an adoption rate of 25%


Not to brag, but springbig's usage rate is 50%. Just sayin’.


So that's our big hack: giveaways and coupons? Yup- and a few texts. You'd be surprised how far coupons will go for prospective customers: 50% of consumers will switch brands "gladly" when given a coupon, and 54% consider no longer shopping with a brand that doesn't offer relatable content and relevant coupons. 


You might think a rewards program to offer customers to earn free/discounted stuff would only bring your overhead expenses up, but the good loyalty programs pay for the annual fee themselves in the long run, and we are a wee-bit better than ‘good’ (see ROI article above).


checks all the boxes 


To recap: customer loyalty is the name of the game; spoiling your customers with reward opportunities is the way to win while neglecting them is the way to lose- simple as that. Why do you need a dispensary loyalty program? Say it with me- because it: 


a) optimizes your business operations b) drives sales up to levels you’ve never seen from your customer base c) lead to bigger and more expensive purchases- and more of them d) keep revenue from your competitors and in your store e) will make customers want to reciprocate your generosity (see b)

Think of it this way: remember that beautiful cashmere V-neck you ruined? As you’re working up a sweat just trying to get it on, you can’t help but think that if only you’d give the proper care to your Brooks Brothers’, you’d be on your way to your date feeling fresh and cozy instead of sweaty and late. The same goes for your customer base- treating them with rewards and “member-only” sales will ensure they stay in your pocket for the long run. Just don’t put them through the dryer, too. 

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