Creating a Cost-Effective Loyalty Program in Canada

How Canadian Cannabis Retailers can Drive Customer Loyalty and Retention

Before we dive in, let’s take a brief look at the current climate of the Canadian cannabis market. In the Canadian cannabis industry, as you probably already know, we are limited in the ways we advertise cannabis and design dispensary loyalty programs. It’s a difficult point for retailers to overcome and that is why springbig is here to help.

The Current Canadian Cannabis Market

Looking at the playing field for the Canadian cannabis market can be daunting, but if you dive deep into the data and truly understand your compliance limitations, any cannabis store can find success and break through the general hurdles of cannabis marketing in Canada.

Challenges such as; stringent government margins, marketing regulations, retail restrictions and legislative ambiguity between provincial and federal branches have plagued our humble industry with doubt, dwindling margins and fear for the future of competitiveness between retailers. Discover more from our webinar with Canndelta here.

One of the worst aspects of Canadian federal regulations is that simply reading them only brings more confusion. Take section 17(1)(e)) for example which states that it is prohibited to promote cannabis.

“by presenting it or any of its brand elements in a manner that associates it or the brand element with, or evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.”

However, springbig provides a compliant marketing and loyalty solution that satisfies the regulatory requirements of the government while giving you, the dispensaries operator, an opportunity to overtake your competitors without over-discounting and relevantly communicating directly with your loyalty customers.

Using Loyalty to Incentivize & Exchange Consumer Data

If you’re looking to enroll cannabis consumers, be aware that it’s more difficult than with other industries. Simply asking for a phone number or outlining a loyalty program is more likely to overwhelm new and existing customers. The most rational response and question you’ll receive is, how do I benefit from your program, or a brief, no thanks.

Customers are looking for relevant rewards, offers, speed, and ease of use. With NFC, Text to join, native apps and over 30+ POS and E-Commerce integrations, springbig can provide a streamlined enrollment process.

Incentivizing your consumer to join a program that benefits them with targeted discounts on products they enjoy and points they can accumulate for tiered rewards is one way to overcome this hurdle, retain more consumers and generate customer loyalty.

In-Store Experience and Staffing

The first thing your consumer will discover on their customer loyalty journey is the in-store experience. Your budtenders, store aesthetics, and digital presence are the front lines for cannabis consumers to enjoy or avoid the experience you are providing. Budtenders can be effectively sourced from other areas of customer service, specifically hospitality.

With the hospitality industry still recovering, many extremely hospitable employees are available and eager. Educating them with Spiffy on cannabis products, which contains free-to-use modules on cannabis from; Sativa to Indica and everything in between, including data-onboarding techniques will be vital to your customer journey.

Compliance & ‘Points per visit’ Models

This is when things get a bit trickier, as each province has its own set of legislation for loyalty programs and the ambiguity from the Inducement section in the Federal Government’s Bill C-45 only muddies the water.

Excluding BC & YT (Sorry, reach out to your MP!), every other province can run a loyalty program on the ‘points per visit’ model. This allows retailers to reward their consumers with points every time they make a visit.

Generating Viral Low-cost Tiered Rewards

Now your loyal consumers are enrolled, shopping, and generating points toward rewards. Let’s take a look at what retailers can offer in terms of redemptions. Unfortunately, our government has strictly limited redemptions to non-cannabis accessories, however, that doesn’t make them irrelevant. Branding your own swag around ancillary marijuana products that are low-cost and can easily spread word of mouth about your brand to look-alike consumers is one way to generate additional referrals.

Products like branded rolling trays, rolling papers, hats, beanies, shirts, headbands, and sweaters, etc. can act as walking marijuana billboards carrying your brand to other marijuana consumers locally. However, cannabis retail programs must take the cost of these items into their calculations and see if the cost of acquiring a new customer is worth the spend.

Cutting Costs, But Not Corners.

Before generating your loyalty program, or updating your current one, it’s best if you think about trending product styles that fit within your selected low-cost ancillary products. Alibaba is the most cost-effective place for all of these products however, there are some downsides to using the globalized platform.

Lead time is usually 6 weeks or more depending on supply chain issues, sizing is usually smaller than North American and B2B communication can be a challenge. But with proper planning and execution, you can massively improve your margins on these loyalty reward programs, lower your cost per acquisition and create an incentivization system that keeps customers engaged and retained.

How Can I Tell if I Am Generating ROI on My Customer Loyalty Program?

In the context of loyalty programs, rewards are your most powerful tool for motivating customers to complete their purchases and become repeat customers. Customer retention is the name of the game and leveraging your existing customer base to find look-alike marijuana audiences through referrals can be the pillar on which your business’s acceleration thrives.

Instead of offering heavy discounts or other tangible goods, you can use your own reward point system more effectively by using loyalty points as a currency within your ecosystem. If your marijuana consumers are invested in your cannabis loyalty program, they may be more likely to provide feedback on products or services offered on your platform boosting your store’s SEO. This information will help enhance the overall user experience and allow them to find you easier.

Allowing you to be easily discovered, maintain profit margins, and stay ahead of competitors by providing better products or services based on what customers want from your retail marijuana store. After calculating your cost per acquisition and the costs of your merchandise, it’s time to look at the data and refine your approach. Loyalty members spend, on average 10x, more than non-loyalty members.

Springbig ‘Impact Reports’ give you the best understanding of which promotions are running successfully and why, and which are not. Allowing you to A/B test promotions and discover what is working best.

The main benefit of having loyalty program members is the ability to understand their future purchase behavior, analyze the data and accelerate inventory clearance. Restock the shelves with what your consumers are looking for and reload that inventory for the next wave.

Unique Marijuana Loyalty Programs

Not all rewards need to be non-cannabis accessories, collaboration between local businesses that you are not affiliated with is another avenue to garner compliant engagement from your marijuana audience. 

Local yoga studios or cafes can collaborate and cross-promote each other’s business. 100 points earned at your marijuana store could earn you a free trial at the yoga studio or a coffee down the street. The retailer can place non-cannabis advertisements for these synergistic marketing collaborations wherever they please.

Another way to create unique marijuana loyalty programs is to attribute the points to an ethical cause. For example, a retailer in British Columbia used reward points as a way to give back to the community after a series of devastating wildfires, for every 10 points the retailer would charitably pay to plant a tree.

Now the cost of that reward might seem to outweigh the profit margins, but the retailer had such a positive PR reverberation through news channels that any cannabis & eco-logical supporter made it their mission to shop at that location.

Monitoring the CLTV of Your Customers

As cannabis retailers, having the ability to monitor the Customer LifeTime Value (CLTV) is hard to discover in the cannabis industry. With springbig, you can easily see when the last time a loyalty member shopped with you and encourage a repeat visit through SMS, Native Apps and Email. Generating long lasting customer loyalty, entrenched with tiered rewards and targeted messaging can solidify your cannabis market.

Using Your loyal Champions to Refer Friends

Your most loyal customers can champion others, so avoiding any negative feedback and accelerating your inventory management with daily deals or special deals (that are universal and compliant) can aid your CLTV and solidify your cannabis business.

Customer data is the end goal of any loyalty program, as you can further understand the needs of your local market, not the entire marijuana industry. Provincial reports are okay, but they do not give you a deep data dive into your local market. Understanding each loyal customer and their cannabis needs is the key to success as a cannabis dispensary operator.

Reach out for a demonstration on our loyalty platform and integrated marketing communications today!