Maximizing Customer Loyalty: The Key to Thriving in the Cannabis Retail MarketJul 03, 2023
Many retailers struggle to answer a fundamental question: What makes their customers loyal?
Could you confidently list the top three reasons why your customers are loyal to your brand? And convenience doesn’t count as a reason because it’s more of a habit.
If you find it challenging to answer this question, you’re not alone. Many retailers face the same dilemma, and it’s a concern for the future of cannabis retail.
The reality is, customers, can easily switch to a competitor, especially when they are attracted to something new and shiny. So how do you tackle this challenge?
In this blog, we will explore the significance of loyalty programs and delve into the strategies that can help you unlock the full potential of customer loyalty.
What are customer loyalty programs?
Customer loyalty programs for retail stores are strategic initiatives designed to incentivize and reward customers for their continued patronage. These programs aim to build long-term relationships between the store and its customers by offering various benefits, exclusive offers, and personalized experiences. The primary goal is to enhance customer loyalty, increase customer retention rates, and encourage repeat purchases.
What are the benefits so having a loyalty program?
Before we dive into the strategies for successful loyalty programs, let’s understand why they are so crucial. We often refer to the 70/30 rule, where 70% of your revenue comes from 30% of your loyal customer base.
While it may be tempting to only focus on acquiring new customers, it's important to think about the long-term value of each person who joins your program and the incentives you offer to encourage their regular return.
Loyalty programs play a vital role in improving customer retention and lifetime value. They also allow you to analyze customer buying behaviour, enabling you to create personalized experiences, differentiate from competitors, and build stronger relationships between customers and your budtender teams.
By tracking key metrics such as average basket, days between visits, annual ‘lifetime’ value, and percentage of revenue, you can gain actionable insights to refine and optimize your program.
By tracking customer data and preferences, retailers can gain valuable insights into consumer behaviour and tailor their offerings and marketing strategies accordingly. Loyalty programs also foster a sense of appreciation and exclusivity, making customers feel valued and more like to choose the store over competitors.
Overall, customer loyalty programs provide a mutually beneficial relationship between retail stores and their customers. Stores benefit from increased customer retention, higher average spending, and valuable data insights, while customers enjoy rewards, personalized experiences, and a sense of loyalty and belonging to a preferred brand or store.
How to make your customer loyalty program successful
As mentioned above, successful programs leave your customers happy, while benefiting your business.
To succeed, you must design a loyalty program that offers compelling value and benefits, keeping customers coming back for more.
Taking inspiration from successful loyalty programs, such as Sephora’s, can provide valuable insights.
Sephora offers its members the opportunity to join an online community, fostering engagement, knowledge-sharing, and emotional connections that strengthen their relationship with the brand. This is on top of member perks, such as birthday gifts, access to member-only sales, and point collection. Sephora also is able to encourage its members to leave product reviews for points.
Retailer & Brands: Unlocking Loyalty Potential
Now, let’s explore some tips for retailers and brands to unlock the full potential of customer loyalty:
- Offer personalized, inclusive rewards: Recognize and celebrate the unique differences of your customers, whether it’s their age, race, LGBTQ2S+ status, or other characteristics. Most consumers, especially those aged 19-25, value companies that acknowledge and appreciate their individuality
- Implement loyalty tiers based on spending behaviour: Create tiered structure that customers can rely on for months or even a year, providing tangible goals to strive for. This approach adds excitement and motivation to the loyalty program.
- Consider partnerships: Extend the reach and impact of your loyalty program by inviting partners to participate. Collaborating with like-minded brands can provide experiential and value-driven rewards, expanding the appeal of you program and attracting a broader customer base.
- Think outside the box for rewards: While discounts and free merchandise are always appreciated, consider offering something experiential that resonates with your local community. Organize events, workshops, or collaborations with key partners that provide unique and memorable experiences for your loyal customer.
Staying compliant and profitable
We understand that the cannabis industry comes with its own set of restrictions and regulations. However, this shouldn’t limit your creativity when it comes to loyalty programs.
Embrace a “let’s dream big” mindset while ensuring compliance with the necessary guidelines. By operating a strict “no purchase necessary” basis, you can still reward your customer in ways that keep them coming back for more.
Customer loyalty programs are not just a trend; they are a necessity in the competitive cannabis retail landscape. They offer a strategic advantage by fostering strong customer relationships, increasing retention rates, and driving repeat purchases.
If this blog has you starting to believe in the power of loyalty programs make sure to subscribe to our newsletter. We help our subscribers tap into industry insights and recognize the signs of success to drive your business into higher profitability.
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