Strengthening Cannabis Loyalty Programs: 4 Questions With Sandra Bergman

As a cannabis retailer, a dispensary loyalty program is a must-have to retain and deepen relationships with your valued customers. That’s because incentives and new reasons for your existing customers to purchase new cannabis products can help to capture more revenue and increase your profitability. 

However, a successful cannabis loyalty program takes a thoughtful approach, consistent attention, and new strategies to ensure you’re offering your customers the best experience possible when shopping with you. Plus, the loyalty program you implement also needs to align with your financial goals. 

Perhaps you have a customer rewards program implemented–but it’s very simple and does not provide rich customer data. Or, maybe you have all the bells and whistles with sophisticated software, but you don’t know how to use them. 

Regardless of where your program stands today, Sandra Bergman, the founder of ESBE–a loyalty marketing consultancy–offers a few insights below about the role of loyalty programs and how you can measure them and align them to your financial goals. 

Sandra has more than 25 years of marketing experience, with five-plus years in the cannabis industry. She has worked to grow the retail marketing strategies for two of the largest cannabis operators in Colorado. Now, she leverages her wealth of marketing expertise to help cannabis retailers nationwide retain more customers, create better loyalty, and boost sales. 

Q: Why are loyalty programs so important for dispensaries today? 

Sandra Bergman: We all know it’s less expensive to retain a customer than it is to acquire a new one. It costs 5-7X more to attract new customers than it does to retain current ones, so with tight marketing budgets, it’s a smart strategy to lean into customer retention programs.

One of the biggest benefits of having a customer loyalty program is staying top-of-mind with your customers. You now have a way to communicate with your customers once you’ve compliantly received their phone number and/or email address and consent. Your customer communications are an opportunity to give customers a better understanding of your brand to (hopefully) enable a deeper connection and affiliation with your brand. The more people know the more they tend to trust. 

When used effectively, you can use those vehicles to create reasons for customers to visit your store, and even to spend more. Cannabis education, product introductions, exclusive savings for loyalty members, special event invitations, giveaways, vendor in-store events are all good fodder for regular communications.

Q: What could we do to improve better adoption of loyalty programs and create a better experience for our customers? 

Bergman: Customer loyalty programs have become ubiquitous in mainstream retail and that’s carried over to retail dispensaries. Some customers will even ask about if you have a points or loyalty program, especially in more mature legal markets. But in any market, program participation increases when you have a multi-prong approach: 

• The program should be easy to understand, and customers should immediately see the value they will get for joining. The easier a program is to explain, the easier it is for customers to say “yes, sign me up!”. It doesn’t have to be complicated to be effective. 
• In-store staff need to be well versed in how the program works and the benefits of the program. (This is also easier when the program is simple.) Hang a poster in the back office/break room/kitchen/employee bathroom that explains why it’s important to get customers into the loyalty program. Answer “what’s in it for me?” Also include some frequently asked questions customers might have about the program. 
• Make mentioning the loyalty program part of every transaction. Shoppers are used to this in every other purchasing environment, so why not in a dispensary? It’s very simple: Not a member? Let me tell you why you should be. Already a member? Let’s see if you have rewards to spend.
• The budtender is just one touchpoint in the store. There’s many others to leverage and communicate that you have a program and why customers should join. A great exercise is to walk the store like a customer, or even with a friend who has never been in before. See what they see, and notice all the places you have at your disposal to communicate – front door/windows, lobby, check-in, screens, POS, counters, product displays. Each of these is an opportunity to communicate with customers.

Q: What metrics should we be using to track the success of our rewards programs? 

Bergman: I look at a variety of metrics when analyzing the effectiveness of a cannabis loyalty program. There are a few different areas to track and each have their own metrics.

A successful loyalty program changes behavior. The key ways to measure if your program is doing that is to look at: 

Member vs. non-member behavior – Are your loyalty members visiting or spending more compared to non-members?

Average order value over time – Is it increasing or decreasing?

Visit frequency – Are customers reducing their time between visits?

Customer retention rate – Are you retaining more customers than you’re losing?

To understand how engaged people are with your program, look at member growth, opt-in rates and reward redemption rates. 

For campaign engagement look at open rates, click-through rates, unsubscribes, revenue generated.

Q: What are the biggest mistakes dispensary owners/managers make in designing or facilitating their rewards programs? 

Bergman: There are a few mistakes that I commonly see operators make with their loyalty programs and they have big financial impacts. 

1) Not setting an expiry for rewards. 

If a customer hasn’t shopped in six months to one year, they should not be considered loyal. The exception would be in seasonal tourist areas where people visit just a couple times per year, where a longer expiry period may be necessary. 

2) Awarding points post-tax. 

That’s just giving away money, which no dispensary can afford.  

3) Most operators do not understand that the number of points on your books is a financial liability. 

Accountants know this, but they are not in the room when a loyalty program is being built. So it behooves retailers to encourage members to spend their points rather than let them stack up and go unused.

 

Mosaic believes in the power of loyalty programs, and that rewards, combined with a superior user experience–is key to winning over cannabis customers. To learn more about Mosaic’s all-in-one eCommerce and loyalty solution for cannabis dispensaries, book a free demo with our team here.