We all want to expand our business’ customer base, and turn those new customers into regulars. But what is the best way to do this? Social media marketing, text message marketing, search engine marketing etc…? All of these methods have their value, but there is a much simpler and more direct type of marketing that is often overlooked: referral marketing.
While each form of marketing has its own strengths, and while in order to grow your business effectively you will undoubtedly use more than one form of marketing, referral marketing boasts the highest return on investment (ROI) of any other form of marketing according to Forbes. On top of this, customers who are referred by friends are 25% more profitable according to Wharton. But what makes them so effective? Before we discuss this let’s first nail down exactly what referral marketing is and why it should be part of every dispensary marketing plan?
Referral marketing is a form of marketing that consists of encouraging your customers to tell their social networks, etc., about your business. This can be especially effective in the cannabis industry where various government regulations restrict the way cannabis dispensaries can market to their customers. While referral programs may come across as simple, they are extremely underutilized and often done wrong. So, what makes them so effective?
Referral marketing is special because as opposed to traditional business to customer marketing, this is a customer to customer marketing. Moreover, it is a friend to friend or colleague to colleague marketing. This means each referral is accompanied by the trust the individual has with the referrer. Because of this additional trust factor, customers referred by a friend are five times more likely to actually make a purchase, according to the same Wharton study. This trust and personal connection are what make referral marketing able to provide such high-quality leads for such a low investment. So what practices lead to a successful cannabis referral program?
At springbig, we took that question and ran with it until we came up with a system to streamline the creation of a referral program for all clients: Budz. With unique referral links for each customer and easy to understand analytics to help you track the effectiveness of your referral program, Budz is an essential addition to any dispensary marketing platform. In its soft launch at Clear Choice dispensary, they generated 105 new customers from the 335 people who made a referral in just 2 months!. Those customers’ ensuing purchases resulted in a 9x return on investment!
While these are impressive numbers, they can only be produced when the referral program is implemented in the right way. So how can a company effectively use a dispensary referral program like Budz to build their client list?
In effectively utilizing a cannabis referral program, especially Budz, that is part of a cannabis marketing platform like springbig, it is important to adhere to the following steps:
First, strike while the iron is hot. That is, don’t wait to ask a customer to refer a friend or a client to you. Instead, ask them when they are most excited: right after they purchase a product from you. Using springbig’s automated after-visit messages, a customer will automatically receive their unique referral link and information on the incentive they receive for using it, this is the best way to secure the most referrals.
That brings us to the second step, creating incentive, is arguably the most important step if you are looking to gain a large number of customers quickly, and can even be used to turn your customers into affiliates if they are willing.
In creating incentives, it is important to offer something to both the referrer and the referred. For example, for every successful referral, the referrer and the referred may receive 20% off their next purchase. This gives both parties a reason to do what you are asking them.
Springbig’s cannabis referral program makes this process extremely easy and even lends itself well to the use of influencer marketing if desired. With Budz’ unique links, utilizing influencers to increase your reach on social media and build your client base is effortless. Cannabis affiliate programs are all the “Budz” these days, so there should be no problem finding willing customers. Not only does this benefit your dispensary, but it also benefits the affiliates by allowing them to earn commission on each customer they are responsible for adding to your clientele.
In utilizing influencers, it is important to not limit yourself to the idea that influencers can only be on social media. There are other people who reach a wide audience without social media such as taxi drivers, Uber drivers, and Lyft drivers. If you’re located in a tourist hotspot, rideshare services are a perfect place to look for affiliates to promote your company and products to potential consumers.
The third step may seem obvious, but it is important. Along with rewarding both parties for the referral, you should also simply thank both parties. Everyone likes to know that they are appreciated, so let the referrer know that you appreciate them referring their friends to your dispensary and let the referred know that you appreciate their business. With these new customers, you can restart the loop by asking them to refer one of their friends to the shop. It is truly a beautiful system.
In doing all of this, it is important that the process is integrated into the core of your business strategy in order to see substantial results. Budz is not an isolated feature, it is part of springbig’s full suite of dispensary marketing tools that are designed to complement each other in order to keep the customer engaged and coming back to your business.
Once you are able to effectively integrate this practice into your day-to-day dispensary practices, you’ll not only see an influx of new customers, but customers who are likely to spend more and be more loyal.