We write about loyalty a lot here at Foottraffik, and for good reason: More than the bump you’ll get from a partnership with a hot influencer or even trends related to current events, loyalty is an absolutely critical x-factor when it comes to running a successful retail operation, be it a dispensary or not. Your most loyal customers are your most valuable ones, hands down. According to strategic planning consultants Altfeld, Inc:
“A study by Marketing Metrics tells us that the probability of selling something to a prospect is only about 5-20%, while the probability of selling something to an existing customer is 60-70%.”
Viewed in this light, the equation is pretty simple. If you’re not building loyalty, you’ll have to churn through an awful lot of customers just to keep your head above water.
So, how do we earn customer loyalty? (You’ll notice we chose that word carefully: Loyalty isn’t something you can purchase or trade.) If you read our blog with any frequency, you know that loyalty programs are a big deal in retail overall, and they’re especially important in the cannabis sector, a fluid and ever-evolving landscape. How important? Retail and e-commerce experts eMarketer currently figure that:
“58.7% of internet users believe earning rewards and loyalty points is one of the most valued aspects of the shopping experience.”
That’s a chunk of the public that is literally demanding that you offer them meaningful rewards for demonstrating their loyalty to you. We’ll start by sharing a few of the most popular rewards, then dive into a discussion of ways you can earn their business, increase enrollment in your loyalty program, and get on the road towards building the most crucial and valuable segment of your customer base.
Loyalty Building: What Rewards Are Most Popular?
- Cards on the Table: It may seem old-fashioned in the digital age, but punchcards remain among the most popular offerings for loyalty programs. Of course, the cards themselves aren’t the actual offering; it’s the “buy ___ get 1 free” promise that’s the real reward. But those physical reminders of customers’ membership in your rewards program are solid and tangible items that help nudge them towards the tiny dopamine rush of completion.
- Referral Rewards: We’ll expand on this in greater detail later on, but unsolicited word-of-mouth referrals are hugely valuable to you. That’s why we recommend you save your biggest bonuses for customers who help spread the word about your brand. In a very real sense, it’s the best kind of influencer marketing you could ask for!
- Cashback Rewards: Again, we’ll expand on this in a moment, but this system is a simple formula by which customers earn points (or some other units) for each dollar they spend. The only challenge is in determining the formula you’re going to use long-term; you certainly don’t want to be in a position in which you change the math (and you’ve suddenly devalued your customers’ hard-earned credits!).
- Matching Donations: This is a strategy in which a dispensary will match the a preset value of purchases with a “donation,” typically a mid-grade strain or product. It’s popular both for the customer’s perception they’re getting “something for nothing”—of course, that’s not strictly accurate here—but also the “surprise factor,” by which they get to sample a product or brand they might not have otherwise. And, of course, because not every product is a strong seller, it’s a great way to shift slow-moving stock off of your dispensary shelves.
- Gift Cards: Like the punchcards we referenced earlier, gift cards can deliver outsized value compared with their cost. Why? For one thing, they’re physical objects representing your brand. For another, they’re designed to be shared with friends and family, thus helping spread the word from your customers to their most trusted associates. Depending on your local regulations, you can incentivize purchases of gift cards by offering a discount to the original purchaser, or give them out yourself when loyalty program members spend a preset amount at your dispensary.
- Don’t Be Afraid to Charge: Think asking members to pay for premium status is a no-no? Think again: As marketing consultants digitalcommerce360 report, an increasing number of retailers are turning to annual subscription models for their premium-tier services. (In fact, we’re pretty sure you’re familiar with at least one of them.) You could offer one-time welcome gifts for their initial subscription, then unlock members-only deals over and above your daily and weekly specials.
7 Ways to Increase Your Loyalty Program Enrollment
As we pointed out a moment ago, loyalty isn’t something you can buy. But that’s not to say you can’t incentivize it. (After all, that’s the premise behind loyalty programs in the first place!) As you get to work coming up with deals to offer your customers, we want to help streamline the process by sharing 7 best practices from the field:
1.Keep It Simple: One of the major reasons loyalty program enticements fall flat is because they’re too complicated. If you find yourself whipping out the calculator to tabulate a points schedule every time you explain the system to a customer, that’s an indication it’s to complicated. Measure your points system in dollars, and measure your rewards in terms of tangible goods. Side note: Be sure your program is compliant with all applicable laws. Giving out free cannabis to new customers, for instance, is not the way to go.
2. Spread the Word: As we’ve discussed previously, the vast majority of consumers are more apt to trust a recommendation from a friend (or influencer) than traditional advertising. Loyalty programs are a huge contributor to that word-of-mouth buzz: According to MIT Sloan Management Review, customers are 117% more likely to recommend your brand when you have a strong and generous loyalty program in place. And you can incentivize that kind of social sharing by rewarding selfies posted with specific hashtags or writing an online review.
3. Make It Timely, Part I: Effective deal-making depends to some degree on time pressure. That’s why real-estate and many other contracts have set periods for due diligence and first right of refusal. Similarly, a little immediacy can go a long way towards nudging customers to act. Taking a page from supreme cannabis holiday 4/20, look at a recent time-sensitive campaign from cheeky retailer Entirely Pets. The image of a very…uh…relaxed-looking dog is great, but the real takeaway is the short window—four hours—for a great deal on some of the store’s most popular products. It’s a great strategy for building buzz and excitement, and it reminds your customers that they ignoring your offers at their own expense.
3. Make It Timely, Part II: Of course, there’s also the long game to think about. Most loyalty programs are constructed on the premise that a set number of purchases or sales totals will earn you a reward down the line, and it’s an effective strategy when well-executed. That’s why we recommend you balance short-term offers—such as our previous example—with a more traditional long-term approach. Following our first rule of deal-making (Keep It Simple, remember?) both styles are simple enough to comprehend but when combined will add depth and complexity to your offering.
4. Check, Please!: Every dispensary has a capable, intuitive POS system in place (please don’t tell us you don’t). And that makes checking in—entering new customers into your database—a snap. Why not make it rewarding as well? In return for their contact info and preferences, offer them a small—and legally compliant—token of your appreciation? Here’s a bonus for both of you: If a customer shares the name of an existing loyalty program member who referred them to you, thank them too with a special gift or a points bump! Now that’s the way to demonstrate your dispensary loyalty program is several notches above.
5. Keep It Personal: While anyone can join a loyalty program, it becomes far more impactful when it gets personal. Because you can easily track individual customers’ purchases once they’ve opted into your loyalty program, make good use of that information by offering personalized deals based on products, brands, and strains they love. It’s an incredibly simple but powerful way to build connection, and you’ve already got all the tools you need at your fingertips.
6. Data Is Gold: According to brand loyalty specialists Bond, most consumers are happy to exchange personal data for rewards:
87% of Americans are willing to have various details of their activity tracked in exchange for more personalized rewards and brand experiences.
That’s huge. Because as a growing number of retailers are belatedly coming to realize, customer data—as much as or more than the products they purchase—is the real prize. Why? Remarketing, as we’ve remarked before, is the practice of reaching out to customers who have already interacted with our brand. Remember that stat we shared at the top of this article? The probability of selling something to an existing customer is 60-70%. That’s why you should be making data collection a top priority.
7. Make It Easy: In addition to making enrollment in your loyalty program fast and easy, you can (and should) continue to remind these top customers of your gratitude. From offering expedited checkout in a special members-only line, or by utilizing saved payment information (for those dispensaries using the debit platform CanPay) to streamline their transactions, there are plenty of small but meaningful ways you can let these top customers know how important they are.
Loyalty Building: In Conclusion
If it’s not clear by now, we’re huge fans of loyalty programs. They’re impactful, endlessly configurable, and—most important—they deliver real and lasting value not only to dispensaries, but to their customers. And at the end of the day, that more than anything else is the name of the game.
But merely instituting a loyalty program isn’t the end of the line; it’s the beginning. Bond, the loyalty specialists we quoted earlier, share a potentially disquieting fact:
“The average consumer belongs to about 14 loyalty programs, but uses fewer than half of those on a regular basis.”
In other words, you’ve got to leverage all the tricks and tools at your disposal to create a clever, engaging, and adaptable system to build—and keep—your customers’ loyalty.
If you know anything about us, you know that’s all we do. Ready to talk? Reach out anytime.