How important is having a cannabis loyalty program?

How does customer retention compare to customer acquisition?

If you operate a dispensary, store, or delivery service in the cannabis industry, having a cannabis loyalty program is extremely important to your success. Your ability to retain clients and maximize profits is a greater key to your long-term goals than you may realize.  This is because it is less expensive to retain a customer than to acquire one. In fact, some estimates say customer acquisition is five times more expensive. This is because you only acquire a customer once, but you can have unlimited repeat business from a customer you retain for an unlimited period of time.


What should a loyalty program do for me?

A true cannabis loyalty program has three goals:

  • Drive a customer to buy larger quantities of product.
  • Drive a customer to buy larger sizes of each product.
  • Drive a customer to buy from you more often.

 For example, if your customer likes cookies, you want them to buy a larger bag of cookies, buy more bags of that larger size of cookies and buy more bags of larger sizes of cookies more often.  This behavior increases your profit levels exponentially. A good loyalty program has a variety of methods for you to create deals that give incentives, reward these purchases and create habits among your customers.


Does a discount offer drive loyalty?

Discount offers are a small part of a cannabis loyalty program but should definitely not be the only offer type. If you have a loyalty solution that is centered around discounting, you will most likely never realize significant growth in profits from it. Many solutions claim to be loyalty programs and then have you give the same discounts to new customers and existing customers. If an existing customer can get the same discount at any time as a new customer, you are not giving incentives the customer wants to shop with you again and you are not making them feel rewarded for shopping from you.


Communicating loyalty is important!

Giving existing customers unique deals and values are a key to a successful cannabis loyalty program, but communicating that information is also important.  Email has always been a strong communication method to deliver loyalty messaging, but often lacked the instantaneous drive of mobile communications.  SMS or text messaging became the new thing, but texting people to make them feel like a special valued customer doesn’t work. It’s not my opinion, it’s backed up by dispensary owners who lose as much as 40% of their customers who opt-out of SMS.  You can’t get customers to buy from you if you can’t communicate with them.


If your loyalty program encourages you to hit customers fast and furiously, often and without appropriate messaging, your solution is driving your customers away from you and costing you much more than the increased fees they charge you for sending out all those messages. In-app messaging, messages people receive through a smart app have the lowest opt-out rate of all marketing with some solutions seeing less than 2% of customers opting out.  That means you are keeping in contact with as much as 98% of your customers. Since your store is most likely serving a finite geographic area, this is extremely important because you can’t find new customers once you have saturated your local community. Don’t burn your community with annoying test messages, use smarter communication as part of your cannabis loyalty program.


Customer shopping behavior is important!

Discount programs are bad for establishing your customer’s behavior if they are flat and are the same for everyone. They train your customers to look for the best deal on the internet and shop wherever it is cheapest, so you lose customer loyalty and profit at the same time. Creating good customer behavior becomes easy when you give existing customers special deals and value that they cannot get elsewhere. Select a cannabis loyalty program that drives your customers to return to you and make the profit you deserve.


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