• Jeffrey Harris

Examining The Impact of Coronavirus on Dispensary Rewards Programs

The past couple of months have been an incredibly volatile period for businesses spanning every industry. A patchwork of city regulations has resulted in sudden store closures and travel restrictions and has drastically impacted the futures of companies around the country and the world. The cannabis industry is no exception. Cannabis dispensaries have been permitted by several states to stay open during the public health crisis and have seen a significant increase in demand from recreational and medical consumers. Retailers benefitted from the influx of customers trying to stock up on necessary products leading up to the pandemic, and many are also experiencing an even higher uptick in loyalty rewards redemptions. However, the outbreak has also highlighted certain vulnerabilities in cannabis retailers’ businesses in the week following the virus peak. Namely how can dispensaries keep their existing customer base and ensure customer loyalty does not decrease during these trying times.


springbig sales data following Washington and California’s legal cannabis markets leading up to the peak in U.S. coronavirus cases show steady increases in sales and redemptions through March 8 to 14, 2020 and then a steep drop off in the following week. In Washington, the market saw 34,905 unique redemptions and approximately $14.3 million in revenue from the week of February 9 to 15. Fast forward to a month later from March 8 to 14 when several states began enforcing shelter-in-place orders and organizations started suspending large events, unique redemptions exploded to 74,623 and revenue increased to nearly $16.3 million. In a span of a month, Washington saw a 113.7% increase in redemptions and 14.4% increase in revenue during the coronavirus outbreak.


California witnessed a similar growth pattern --from February 9 to 15, dispensaries processed 199,788 unique redemptions and made almost $14.8 million in revenue. Redemptions and sales kept climbing until March 8 to 14, where unique redemptions totaled to 375,478 and revenue peaked at over $17.8 million. In the course of a month, California retailers saw a 87.9% increase in redemptions and 20.7% increase in revenue.


The spike in redemptions in both states reflects retailers’ abilities to leverage dispensary loyalty programs and bolster dispensary brand loyalty by creating more value for repeat customers’ visits. After all every time someone leaves their house they want to make sure it counts.


Consumers also likely saw this period as an ideal time to stock up on products and redeem their existing loyalty points to maximize the value of each shopping trip. It is clear from these impressive figures that cannabis loyalty programs are indispensable dispensary marketing tools.


While cannabis retailers experienced a rise in consumer demand leading up to the outbreak, springbig data also points to a sharp decrease in rewards program activity and revenue in the week following the shuttering of business and travel restrictions. In Washington, redemptions dipped by 35.1% and revenue decreased by 34.3% from March 15 to 18. In the same period in California, redemptions reduced by 59% and revenue by 27.8% compared to sales figures from a week earlier. This downturn can be attributed to more states enforcing store occupancy limits, dispensaries being forced to switch to delivery or pickup-only, and fewer people leaving their homes. It is possible that these numbers show how many retailers were slow to adapt to local business restrictions.


Retailers trying to figure out how to push cannabis products and maintain foot traffic,while complying with health regulations, should first and foremost integrate loyalty programs with their existing e-commerce platform. California and Washington’s sharp decreases in redemptions may reflect how loyal consumers are still more willing to shop and redeem their awards in person.


For the foreseeable future, dispensaries must make loyalty accounts and rewards easily accessible on their websites to continue encouraging unique redemptions. In many ways, encouraging redemptions may even be easier online if retailers emphasize loyalty balances and potential rewards during shopping and checkout. To further incentivize online orders and redemptions, dispensaries can also offer exclusive gifts, promotions, and rewards for customers who shop online.


The past few months have shown the overwhelming consumer demand for cannabis products. Retailers can certainly overcome this uncertain period by integrating internal loyalty programs with e-commerce platforms to provide a streamlined and enjoyable shopping experience. Consumers ultimately want to maximize their value when they shop, and dispensaries can continue this positive momentum by providing an accessible and attractive online loyalty program.


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