• Jeffrey Harris

Why Dispensary Loyalty Programs are More Important than Ever

Trying to find something that will give your dispensary marketing strategy the advantage it needs to help you stand out amongst your competition and boost your ROI? Maybe instead of looking for more channels to bring customers into your store you should be looking for more ways to keep customers coming back.


Just a simple shift in mindset could completely revamp your marketing efforts for the better - From looking for ways to bring customers in, to looking for ways to keep them coming back. While that is not to say that you shouldn’t always be looking for ways to attain new customers, we are saying that you should be putting as much if not more emphasis on retaining your existing customers. But why?


Retaining customers has proven to be 5 to 25 times less expensive than marketing to new customers. On top of being cheaper, improving customer retention rates by just 5% has been shown to be able to boost profits up to 95%. But how can you gain more repeat customers? How can you make customers loyal?

Of course, there are the obvious necessities like quality products, exceptional customer service, and unique customer experience. Besides these prerequisites, loyalty rewards programs are the best way to boost ROI, improve customer retention rates, and increase profits at your dispensary.

In this article, we will be doing a deep dive into loyalty programs and how they can help your dispensary reach new heights - without breaking your marketing budget. But why loyalty programs? What makes them so effective?


Why loyalty programs?


Loyalty programs are great because of what’s known as the Pareto Principle or the 80/20 rule which states that 20% of you customers make up 80 percent of your revenues, and acquiring a new customer is much more expensive than retaining an existing one.


Because of this principle, it is extremely important that sales teams and marketers figure out how to best keep customers coming back and turn them into repeat customers. With loyalty programs, you can do just that, but it’s important that you remember the Pareto Principle - that means keep in mind that the loyalty program is for that special 20% of customers who drive up your profits, not for everyone. Thus, you’ll want to make sure your loyalty program is geared towards building relationships with your most loyal customers and treating them like VIPs.


Keeping your VIPs happy and coming back through your doors is key to running a successful and profitable business - not only do repeat customers visit more often, but they also buy a wider range of products according to headset. Repeat customers have also been shown to spend much more than the average customer - up to 3 times more.

Not only that, but your repeat customers are also your best advocates. Despite all your marketing efforts, referrals are the most influential form of marketing, and you can count on your repeat customers to spread the word about your dispensary and bring new customers in. Your millennial customers will be especially fluent with this, with 90% of them sharing their brand preferences online according to studies.


The power of repeat customers is undeniable. From higher spends to advocating for your business and bringing more people into your dispensary, these customers should be at the top of your priority list. But in order to make these customers truly loyal you’ll need a loyalty program that keeps them coming back and spending more. But before we discuss what your loyalty program should look like, let's talk a bit more generally about cannabis loyalty programs.


Why now?


Why are loyalty programs more important now than ever? Well it’s no secret that the world has experienced extreme change during 2020, especially regarding the COVID-19 pandemic that has impacted the US exceptionally hard financially.


In the post-covid world, customers are relying on loyalty programs more and more to stretch their dollar. In fact, in Washington we have seen this first hand as retailers there have been able to drive sales and loyalty redemptions despite the impacts of the pandemic. Springbig found that Washington retailers increased sales by nearly 15% and increased reward redemptions by 82% despite a .76% decrease in customer visits. These data points indicate that Washington dispensaries within springbig’s network were able to increase the value of each sale and encourage more loyalty redemptions per customer visit during the ongoing pandemic.


Similar numbers were reported in Oregon as well, where springbig found that dispensary partners have experienced a 40% increase in both total spend and visits and a staggering 86% increase in loyalty reward redemptions compared to their performance before the pandemic. With numbers like this in the post-covid world, loyalty programs should be top priority for all dispensaries. But in order to make sure you avoid any unwanted trouble, you should also prioritize compliance when it comes to your loyalty program.


Staying compliant with your cannabis loyalty program


As we all know, the cannabis industry is plagued by countless laws and regulations that vary from state to state which makes things that much more confusing - and dispensary loyalty programs are no exception.


When running a dispensary loyalty program, it is extremely important that you are able to attain and store customer information like their phone number and interests so that you are able to market to them in the future. For general loyalty programs such as starbucks’ or Adidas’ loyalty programs, this isn’t an issue, but for businesses in the cannabis industry it is. Yes, you even have to jump through some hoops to run a loyalty program in the cannabis dispensary.


While in primary cannabis markets such as Washington, Colorado, and California, the cannabis industry is almost as unrestricted as other industries, but other markets that are newer to the scene are still very restricted, especially by consumer privacy laws in the industry.


In some areas, these privacy laws prohibit dispensary CRM systems from storing customer data for marketing purposes, which clearly poses some challenges for dispensaries looking to run a loyalty program. For example, in Oregon, personal contact information must be deleted after 48 hours. This obviously puts a big obstacle in front of any dispensary looking to operate a CRM or loyalty program.


Luckily, springbig has solved this problem for cannabis dispensaries. With our electronic signature application (e-sig), customers can easily opt in to having their data stored, which allows dispensaries to store their data despite federal or state regulations initially banning this from happening.


Unfortunately, restrictions make attaining and keeping customer information especially difficult. The TCPA (Telephone Consumer Protection Act) is one of these which requires businesses to get double-permission from customers before they can legally store their data. Usually, the first form of permission comes from them signing up in store and providing their phone number or email. Following this, the second form of permission is typically sent via message to their phone or email asking them to “reply Y to opt-in” or something to the tune of that. I’m sure we’ve all received messages like this, but how often do you think people actually reply Y to opt-in? Not that often.


Luckily, with Springbig’s 360 Permissions, our own compliance suite, there is a fix to this problem. Customers first opt-in by giving their phone number once they give their phone number the subscriber is sent a customizable join form which they can fill out and even sign digitally right on their phone. In this way, cannabis dispensaries satisfy the double permission requirement without having to send the inefficient opt-in text that so often gets ignored. With 360 permissions, not only do you get access to a customizable join form that can be accessed on your website or used for in-store enrollments, but you also get text-to-join, tap-to-join, and scan-to-join abilities via join codes, an NFC chip, and custom QR codes. You even receive access to multichoice join flyers and an electronic signature color app for collecting signatures from customers.


With all the tools that you need to stay compliant while running your loyalty program, there’s no excuse to put it off. So how should you structure your customer loyalty program?


Structuring your loyalty program


Our previous article, 5 Features Every Cannabis Retail Loyalty Program Needs, goes into detail discussing 5 extremely important features that will make the loyalty program at your dispensary tick. These features include:


  • Tiers

  • A referral program

  • A points-per-dollar based reward system

  • Text message and mobile optimization

  • Automation


These five features are vital to ensuring you get the most out of your loyalty program marketing efforts. If you haven’t read our other article, then keep reading to learn exactly what your loyalty program needs in order to be successful.


That’s right, having a simple loyalty program that gives loyalty members a small discount and allows you to blast loyalty members with ads won’t do. In fact, many loyalty programs are thrown together like this and fail - Studies have shown that 53% of consumers have abandoned a loyalty program in the past year. So what makes a loyalty program worth sticking to?


First, you’ll want to make sure that your loyalty program is tiered. A tiered loyalty program encourages your customers to spend more in order to reach the next tier in your loyalty program and attain rewards. Integrating tiers into your loyalty program may require some hard work and brainstorming, but rest assured that it’s worth it. In creating a tiered loyalty program, it is important to offer different types of rewards and benefits to your customers. These benefits typically fall into three categories: fixed benefits such as point bonuses and early access to new releases, behavioral triggers from actions such as referrals and social media posts, and additional rewards such as welcome gifts and deals on their birthday. As your customers move up in tier, their benefits will get better while you benefit from their loyalty. It’s a win-win.


Second, a referral program is a must for any loyalty program. Referral programs are an essential part of successful cannabis dispensaries and can be easily integrated into customer loyalty programs. They boast the highest ROI of any other form of marketing and customers referred by friends are 25% more profitable, so skipping over this feature is not something that’s in the best interest of your dispensary. In order to get the most out of your referral program, you’ll have to provide your customers with adequate encouragement so that they go out of their way to refer their friends and family to your business. That means real rewards that you customers actually want, not just a small discount. On top of this, with springbig’s referral platform Budz, you’ll have access to unique referral links that allow you to turn your most loyal customers into your #1 advocates by making them influencers for your business. Simply reach out to customers, give them their own unique referral links, and let them go to work for you and watch your customer base grow!


Third is a points-per-dollar system. In a points per dollar system, customers earn 1 point per dollar that they spend at your dispensary. According to Fivestars, a traditional industry rewards program, and our data, point systems like this that allow customers to earn points on the dollar encourage your customers to spend more during their visits in order to attain the points necessary to redeem rewards, making them more likely to tack on an extra pre-roll or concentrate to their usual order.


Fourth is text message marketing and mobile optimization. Text message marketing is extremely important, especially in the cannabis industry as it’s one of the only ways cannabis dispensaries can reach their customers without running into state and corporate restrictions. It boasts a 98% open rate and according to digital marketing studies, also has a 209% higher response rate than phone, email marketing, or Facebook. While text message marketing is powerful, it can’t be the only change you make to your customer loyalty program. According to recent studies, 33% percent of those who left a customer loyalty program did so because they felt that it lacked an enjoyable multi-channel experience. That means they want to see the loyalty program exist seamlessly on their laptop and on their phones through emails, texts, and apps. Many customer loyalty programs either fail to utilize the various channels in which they can get content out to their customers, or fail to make these channels seamlessly integrate into one another. What does seamless integration mean? That means if you receive a text saying that you just received 200 points, you can log into your account on the mobile app and see 200 points in your account.


The last feature that is essential to any cannabis loyalty program is automation. If your loyalty program is working that means that your customer base is growing which also means you’ll have to do more communicating. Doing this manually is not very efficient and may cause you to miss customers when it matters most - so you’ll want to make sure the process of rewarding your customers for their loyalty is automated. This way, you make sure that you catch your customers at all the right moments. With SMS and MMS messaging you can do just that, and with springbig’s marketing platform, you’ll be able to customize exactly what that will look like for you. Whether it’s a weekly newsletter, a thank you message, or alerting your customer that they are close to the next tier of your dispensary’s loyalty program, it can all be set to be automatically sent out through text message.


Watch your customer retention rates grow!


Are you ready to watch your customer retention rates grow? If you’re able to implement each of these features mentioned above into your cannabis loyalty program then you’ll surely do just that.


Loyalty programs have proven their effectiveness in retaining customers, and retaining customers has proven to boast an extremely high ROI with a much smaller upfront investment than more traditional marketing methods aimed at bringing new customers in.


Instead of focusing all of your attention on bringing in new customers, a shift to focusing on keeping your top 20% of customers coming back through your doors could turn big profits and drive change at your dispensary - and springbig can help you every step of the way from text message marketing, referral programs, and more.









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