reward program

As the cannabis industry continues to mature and become saturated as we head into 2020, customers have a variety of dispensaries to choose from and it’s becoming increasingly difficult for a dispensary to stand out among the crowd and convert one-time shoppers into repeat customers.

Having an effective dispensary loyalty program is the most effective way to create satisfied repeat customers and boost revenue.

Creating a successful loyalty program is one of the biggest challenges that dispensaries will face in 2020. In order to have a successful business, dispensaries need to have loyal customers. Loyalty programs play an important role in building brand awareness and a loyal customer base.

Loyalty programs work because of what’s known as the “Pareto Principle”—aka the 80/20 rule. It says that 20% of your customers account for 80% of revenue, and acquiring a new customer can cost as much as 7x more than retaining an existing one.

Because of this principle, sales teams and marketers must focus on turning existing customers into repeat customers. Dispensary loyalty programs are not supposed to please everyone. They are supposed to build relationships between you and your most loyal customers by explicitly treating them like VIPs.

But we didn’t just blindly follow this principle, we put it to the test. We ran the numbers on 10 of our biggest clients in the most competitive states in the cannabis industry and here’s what we found.


That said, when it comes down to the structure, not every dispensary loyalty program is created equally. Most can boost sales and help you create lasting relationships with your devoted customers, but it is important to structure your dispensary loyalty program in the most financially sound way possible

In other words, the ability to keep track of what your loyalty program is actually costing you is the best way to secure your business’ monetary success while making your customers happy.

The two most popular ways to structure a loyalty program are by rewarding customers based on how much money they have spent at a business, or based on how many times they have visited.

While many businesses employ points per visit loyalty program structure, a point per dollar loyalty program structure is infinitely more measurable and will enable you to completely understand what your program is costing you on a percent of sales basis and therefore allow you to understand the financial impact that your program is having on your business from both a cost and return on investment (ROI) perspective.

This is because a customer’s purchase habits at traditional retail stores, especially small businesses, are not likely to change drastically over time. The average purchase amount generally remains the same over time. At a coffee shop, for example, People tend to pick their preferred drink and stick with it only switching it up occasionally.

With a visit-based loyalty structure, your company can benefit from better customer retention and increased sales; however, this program will only allow you to track one thing successfully: customer visits. Because most loyalty programs are based on a percentage of sales, if you are distributing points to your customers by the visit, there will be no way to accurately correlate the ratio of points to dollars spent.

With a spend-based model, you could create promotions offering more points the more you spend on the said product. Customers would not only visit in order to find their favorite brand but also try to spend as much as possible on that visit. Because they are being rewarded for each dollar they spend, not just for just showing up.


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