With the increase in cannabis legalization across the United States, industrious entrepreneurs are already looking for ways to claim and retain their customer base. As both state and federal laws undergo change, however, cannabis dispensaries can often find themselves operating on the edge of legality in an effort to gain a competitive advantage in the wild-west of marijuana retail. Playing it fast and loose with loyalty programs can land dispensaries in hot water. Those that mess up could get stuck with heavy fines, license suspension, or worse. Business owners must monitor legal developments and update their loyalty programs on the fly to remain competitive without contradicting active legislation, which is easier said than done. Here are five ways dispensaries are building long-term relationships with their customers while staying on the right side of the law.
Discounts On Soon-To-Be Expired Products
As flowers and edibles approach their best-before dates, resourceful dispensaries are offering substantial discounts to help clear the way for fresh product. It’s an effective and perfectly legal tactic made famous by grocery stores. Not only does it cater to the more bargain-hungry customer segments, but it also reduces the amount of waste produced by the business. Cannabis marketing publication Leafly suggests implementing some tried-and-true merchandising strategies in order to move products even faster, including product bundles and high-visibility placement in ecommerce or brick-and-mortar storefronts.
Marijuana’s transition into mainstream culture constitutes one of the biggest marketing land-grabs in recent history, but there are still limitations to the channels dispensaries can use. Radio, television, print, and digital marketing channels are all subject to strict limitations when it comes to advertising drugs of any kind. That said, forward-thinking cannabis marketers know that a well-defined brand identity is crucial for differentiating themselves in what has almost instantly become a commodified industry. Branded merchandise is a fantastic way of expressing a unique corporate identity without running afoul of advertising laws. Victoria-based dispensary FARM offers customers a free t-shirt featuring their sleek, minimalist design on purchases of $50 or more. As a result, the business owners enjoy legal brand exposure and customers leave knowing they’ve gotten extra value for their larger purchase.
For many, cannabis is a social indulgence. So long as all parties involved are of legal age, referral programs are an ideal way to expand a business’s customer base while simultaneously building loyalty. The Colorado-based Silver Stem dispensary offers customers a hefty $100 in-store credit in exchange for every new customer referred. Theirs is a unique approach, in that referred customers must be retained for at least 90 days before the referring customer can earn the credit. Conditional referral programs like these are often developed using analytical insights, especially as they relate to average customer lifetime value. Silver Stem’s commerce data likely suggests that customers retained for more than 90 days consistently generate more than $100 in revenue, ensuring that their referral program remains an ROI-positive initiative.
Allowing customers to accumulate points as they spend is an effective way of building loyalty while delivering extra value to customers at every sale. Depending on the level of sophistication, points systems can be especially effective when integrated into a digital CRM. By making contact detail ingestion part of the sign-up process, dispensaries can develop a customer database that can then be segmented according to point balance. This allows for targeted marketing campaigns that speak directly to each customer’s unique options and preferences.
Ensuring the math adds up is crucial to an effective points program. Urban Greenhouse in Phoenix, AZ allots customers five points for every $10 they spend. Points can then be redeemed at a rate of 10 to $1. Customers aren’t able to redeem their points, however, until at least 250 points have been earned. This works out to customers being incentivized to spend at least $500 before they’re entitled to $50 in savings, resulting in higher overall customer LTV.
The omnipresence of internet-enabled tablets in modern brick-and-mortar sales environments have made it even easier for dispensaries to promote opt-in loyalty programs. Check-in bonuses incentivize customers to offer up their contact details while simultaneously verifying that they’re of legal age. To further incentivize participation, many dispensaries offer incrementally greater rewards for more frequent check-ins. Mobile apps like E-Sign MD, by point-of-sale software provider IndicaOnline, are “designed to help retailers create customized digital check-in forms that save time while collecting valuable information.” Unlike the shady practice of list-buying practiced furtively by many businesses looking for growth shortcuts, opt-in contact collection is 100% legal and even aligns with upcoming international changes to data management laws like the EU’s General Data Protection Regulation.
As the cannabis retail gold rush continues, there will inevitably be risk-tolerant business owners willing to operate outside of the law to stake their claim. It’s an unfortunate circumstance that puts pressure on law-abiding entrepreneurs to do the same. As the US and other countries continue the complex transition to marijuana legalization, let’s hope that local authorities do their part to promote lawful marijuana retail practices while cracking down on those determined to slander this emerging industry’s reputation.