A loyalty program is either a software or system set up by a marijuana dispensary that offers exclusive discounts and promotions to customers enrolled in the service.
Consumers exchange contact information such as a phone number or email to receive promotions from the program.
Are you interested in learning what loyalty program to run at your dispensary? Which ones are successful? What to avoid?
Keep reading to find out.
Types of Cannabis Loyalty Programs
Fortunately, a few ways to get creative with setting up your dispensary's loyalty program. Here are some ideas to consider:
Dispensaries are using tablets more than ever, which are excellent ways of capturing valuable customer data.
Customers enter their email or phone number, and the dispensary technology tracks their visits.
Visitors then earn bonuses which they can redeem at the checkout or get emailed to their phones.
Referral programs are another excellent way of rewarding customers for spreading your company's name among their network of friends.
This is effective because it sends new business to your dispensary and builds more loyalty with your clients because they are helping their friends.
Cash Back Points
With every dollar spent, customers will receive a set of reward points they can redeem in-store when making their purchase.
This is a very common program type for dispensaries, and your clients should already know about this type of offering.
Tiered Rewards Program
A tiered program is another excellent way to build customer loyalty. It works better over the long term as points build up over time and the customer reaches new tiers, thus saving money and building long-term loyalty.
Loyalty cards work when a customer visits the store, and the store records the visits on a punch card or the point-of-sale system. The more visits the customer makes, the more loyalty points they can use at checkout to buy products.
Do Dispensary Loyalty Programs Work?
Our data shows they encourage consumers to spend more per visit. So in this aspect, yes. Cannabis loyalty programs work.
The average dispensary order size from loyalty program members was $134.66. Customers that received a general discount ordered on average $100.37. Those without discounts ordered $89.71 on average.
The average ticket size in dispensary loyalty-based programs is greater than in general or no discounts. Loyalty programs offer exclusive deals, discounts, and points to participants, which could explain more significant ordering trends.
Consumers walk out with more products. Who wouldn't want that? However, you also need to run a rewards program that incentivizes more frequent orders. Would a dispensary loyalty program help with that? Let's look at the data.
Do Loyalty Program Customers Order More Often?
While members spend more per visit at dispensaries with customer loyalty programs, it does not mean they make more monthly orders.
Cannabis customers in dispensary loyalty programs, on average, returned to make their next order after 19.41 days. Regular customers averaged 19.1 days.
Program members ordered on average 19.41 days after their previous order. This was 0.40 days greater than customers in non-loyalty-based rewards programs.
The takeaway here is that loyalty programs alone might not influence how often your customers order. They require retention marketing tactics in order to be effective.
What happens if have a loyalty program without marketing behind it? See our findings below.
How Bad Loyalty Programs Cost Your Dispensary
A loyalty program is a tool your dispensary can use to engage customers. However, you must be careful that loyalty program rewards don't cost you in the long run.
Our data shows that loyalty programs don't influence cannabis consumers to order more frequently, so you should also prepare retention marketing tactics to win them back again.
Otherwise, cannabis loyalty program discounts will take away from your revenue. Here's what our data shows.
Orders from loyalty programs accounted for 5% of total sales. Orders with regular promotions accounted for 16%.
We now see the downstream impact of poorly managed or designed loyalty programs. They can decrease revenue up to 3x.
Based on our data, we'd guess this is due to a lack of retention marketing for loyalty program customers. If you don't have a marketing plan for your loyalty program, just run regular discounts.
It should help your dispensaries revenue in the long run.
How to Improve Your Current Loyalty Program
If you have a loyalty program at your dispensary, you can take a handful of steps to improve its performance. Always remember that the goal if your loyalty program or any channel is to generate more revenue.
Audit Key Metrics
Look at the average order value (AOV) and order frequency of enrolled customers. Compare these metrics between customers that aren't enrolled in your program.
This will tell you if your loyalty club positively influences customer retention.
Create Segments of Customers That Don't Use Their Points
In this activity, you should find audiences that you can potentially win back or influence into making another retail purchase.
You can create these segments by product or brand preference. A simple text reminding them of their points balance along with the offer should be enough.
Send Targeted Promotions to Customer Loyalty Program Members
Aside from customers that don't use their points, make sure you're investing in retention marketing for those that do.
Target offers within the rewards program to their buying interests, such as products they bought when signing up or buy somewhat frequently.
Like this post? Book a demo with us for Polaris. Our platform can help you target your loyalty program customers and increase customer retention in ways your current platform can't.