+ 2.73
+ 0.92%
+ 0.63
+ 0.21%
+ 1.22
+ 0.34%
+ 1.54
+ 0.97%

Why Points Matter: Setting Up A Loyalty Points Program For Cannabis Dispensaries

August 30, 2019 12:34 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

By Jeffrey Harris.

Loyalty—in friends, pets, and in customers—is something to strive for. In fact, for businesses, loyalty marketing is one of the best ways to encourage repeat customers and drive sales.

However, there can be roadblocks when it comes to deciding how to best structure your loyalty program. And choosing the wrong application can turn staff loyalty into staff negativity real quick.

It’s understandable, then, that some dispensaries just don’t want the hassle. They might also opt out, feeling that they don’t have time to train their staff properly.

So how important is customer loyalty? Is it worth the investment for your dispensary?

Consider this finding from Bain and Company: A 5% increase in customer retention can increase a company’s profitability by 75%.

Loyalty Facts and Figures

Bottom line: it can cost up to 25% more to find a new customer than it does to retain an existing one. Additionally,

  • Harvard Business School found that a mere 5% increase in customer retention can boost profits between 25 and 95%
  • Invesp found that the probability of selling to a loyal customer is 60-70%, while the likelihood of selling to a new customer is 5-20%
  • Loyal customers are 50% more likely to try new products
  • A loyal customer spends 67% more than a new one

Studies show there’s really very little to lose when it comes to creating loyal customers. But how best to structure your program?\

Two Paths To Loyalty: Points vs. Presence

There are two different ways to structure a loyalty program – either on how much money your customers spend or how many times they visit your store.

Visit-based rewards program count every time a customer walks into your store. The problem with a visit-based rewards model is that it doesn’t offer good ROI. It’s like offering a punch card for a restaurant bill, except that the customer who buys a complete meal and dessert gets the same number of punches as someone who just buys a cup of coffee. In that way, there isn’t really much of an incentive for repeat customers to spend a lot of money. In fact, the opposite is true: It rewards people to spend as little as possible.

On the other hand, a money-based rewards system counts the actual dollars a customer spends in your store and then grants awards at certain levels. For instance, Nordstrom gives customers 1 point for every $1 they spend. At 2,000 points, loyalty members earn a $20 reward note. In this way, people could be persuaded to spend just a little bit more than they normally would. With a money-based rewards systems, it could take 2 trips or 10 to reach the reward amounts. You’re also able to calculate your ROI easily with this structure. For instance, Nordstrom’s loyalty program rewards costs them a mere 1%.

SMS Gets To The Right People

Once you have your rewards program in place, make sure that customers can check their balances to measure their progress. Did you know that 69% of customers feel disconnected if they cannot access rewards points on a smartphone?

You can also send loyalty updates via smartphones. Text-based APIs integrate with your customer’s existing purchases, sending them personalized messages about great deals on products they already want to buy. And while a text from their dispensary may seem out of the blue, a study by Single Point found that 99% of people customers in a loyalty program actually do interact with their text messages (as opposed to push marketing messages, which go largely ignored).

Push messages are sent from within an application, like when you get a notification on your lock screen that someone in Snapchat sent you a message. As opposed to a text message, which is something you probably voluntarily check throughout the day. And while a text message from your ISP or your bank might not be welcome, getting a text message telling you you’ve got a $5.00 coupon for pre-rolls is a different story.

Text-based APIs integrate with your customer’s existing purchases, sending them personalized messages about great deals on products they already want to buy.

If you want to implement this kind of marketing technique, choose a digital communication platform that connects you to your customers in the way they want to be reached—on their mobile device, through text.

An Easily Integrated API

There’s no need to reinvent the wheel. Look for an API that can be integrated with the POS system you already have. You don’t want to annoy your employees by making them learn an entirely new interface just to take your marketing to the next level.

Choose a system that uses your existing POS data to help your customers get relevant sales information. You decide what the reward amounts are, then the customer is sent a text message with a link to use their rewards points.

The best applications let the customer access sale prices just by clicking the link and entering their phone number. In this way, you don’t lose sales when people can’t remember their passwords.=

Loyalty Programs Help You Track and Increase Sales

As the dispensary, you’ll immediately be able to see which new brands are getting the most clickthroughs, and which ones are resulting in final sales. You already know they are purchasing the product, so how much of an incentive would they need to purchase just a little bit more of it?

Repeat loyal customers are what every business strives for. With strict rules on cannabis marketing, it’s ultimately word-of-mouth marketing that dispensaries rely on to thrive. That word-of-mouth begins with loyal customers.

Jeffrey Harris is Founder & CEO at springbig. Harris also founded SHC Direct and serves as its President & CEO. He has 15 years+ of marketing, sales, sales management and client services and operations experience in incentive and loyalty marketing. 

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Related Articles

5 Fun Facts You Might Not Know About Mike Tyson

Mike Tyson is known by nicknames like “Iron Mike,” “Kid Dynamite” and “The Baddest Man on the Planet.” He is well known in the sports world and has ventured into the business world as well. Here are five facts you may not know about Mike Tyson. read more

Cannabis Movers & Shakers: Cannabis Growth Opportunity, Bhang, CanaFarma Hemp, Amfil Technologies

Here is a summary of the latest company shakeups within the cannabis industry. 3 Execs Exit Cannabis Growth Opportunity Investment company Cannabis Growth Opportunity Corporation (CSE: CGOC) has parted ways with several executives. read more

Her Highness Enters Nevada Market Via Body And Mind Partnership

Women-centric cannabis brand Her Highness is expanding into Nevada through a production licensing partnership with MSO Body and Mind Inc. (CSE: BAMM). Her Highness products are now available across Nevada dispensaries. read more

Tyson Hypes Smart Cups Ahead Of Jones Fight, Tells Benzinga It's 'Disrupting Beverage Industry'

Boxing legend Mike Tyson has inked a long-term, multi-million-dollar deal with Smart Cups, a company that makes 3D-printed, single serve drinks. In an exclusive interview with Benzinga, Tyson revealed he’s been using Smart Cups to train for his exhibition against Roy Jones Jr., scheduled to take place this Thanksgiving weekend on Nov. 28. read more

Social Equity Measures Are Crucial On Day One Of Legalization, Cannabis Advocates Say

While the cannabis industry celebrated five states passing reform initiatives on Election Day, advocates noticed that the bills lacked key parameters to address social equity. read more