Implementing a Successful Dispensary Rewards and Redemption Program to Boost Sales
Dispensary loyalty programs are one of the best tools for businesses to keep customers engaged and encourage spending. When it comes to the cannabis industry specifically, Headset found that loyalty customers spend about 35% more per basket and buy more products than non-loyalty customers. Given that 80% of future revenue will come from just 20% of existing customers according to a study by the Gartner Group, it makes sense to create a strong dispensary loyalty program for your cannabis business.
Retailers may think that acquiring new customers is most crucial to ensuring the long-term success of their businesses. However, engaging existing customers is both cheaper and easier and provides a greater return on investment. According to Forrest Research, it costs five times as much to acquire new customers than it costs to keep current ones. And existing customers – who already know your brand and have some loyalty – are more likely to buy new products. Marketing Metrics data shows that the probability of selling to existing customers is 60-70% while to a new customer is only 5-20%. Clearly, keeping current customers happy and loyal is of utmost importance.
Setting up a Dispensary Loyalty Program
How can retailers implement a successful dispensary loyalty program?
First, make it easy for customers to register and track reward points. Simplify the sign-up process by only asking for basic customer information like name, email and phone number, especially if registration happens during check-out. Nobody wants to prolong their checkout or feel like they are holding up a line! If retailers want to collect more detailed customer information around purchase habits, they can send out a questionnaire via email or text at a later point...and maybe offer extra points to entice your customers to take the time to complete it.
When it comes to tracking points, retailers should provide hassle-free ways for customers to access their point totals. Offer customers the option of opening an account on your website where they can track points and consider sending automatic text messages after each purchase with information about what those points are worth. If retailers don’t explain the value of their loyalty points and what customers can do with them, they won’t have incentives to come back and redeem them.
Another way to create a successful loyalty program is to make the reward points truly valuable and offer rewards that customers actually want. Perks could include free delivery, concierge service, full-size samples or even a VIP budtender line for customers at the highest spending tier. Select highly-desired or new products as items that can be redeemed with reward points. This allows customers to test out products they might be curious about without having to make a financial commitment. Retailers can also hold exclusive tastings and events for customers who have reached a certain spending level. Lastly, don’t forget to change the offers regularly to keep incentivizing customers to come back for new deals. Overall, the goal is to retain customers by making them feel valued and making them feel they are getting good value from your store.
Measuring a Dispensary Loyalty Program
How will you know that your dispensary loyalty program is successful? Watch the redemption rate, which is the total number of points being redeemed divided by the total number of points being issued. The average loyalty program has a redemption rate of 13.67. If a retailer’s rate is lower than the average, it may mean that customers are not finding value in the rewards program and that the program needs more fine-tuning to align with customer needs.
Given the potential benefits to your bottom line, thinking through these calculations and acting on the results will yield a measurable dollar value.