How to Create a Cannabis Customer Loyalty Program

Regardless of the industry, all retail operators want to retain customers. That’s where customer loyalty programs often come in. Loyalty programs are ubiquitous in retail, and many cannabis retailers have one because it’s a cost-effective way to attract new customers and retain current ones. This marketing strategy rewards customers for purchases made at a business through incentives like price discounts, access to exclusive inventory, insider perks, free merchandise, and more.

But do they work? According to a Headset 2020 industry report, loyalty customers spend more money and buy more products. Baskets among loyalty customers are 35% larger on average than non-loyalty transactions. The average loyalty basket size is about $40, whereas non-loyalty consumers spend only $30. If you’re thinking of starting a customer loyalty program for your cannabis business, you’re in the right place.

The three types of popular cannabis loyalty programs:

1. Points-based programs

In this basic program, customers accumulate points each time they make a purchase. Once they’ve accumulated enough points, they can trade them in for discounts or other benefits — think the Starbucks app reward stars program. But visit frequency doesn’t always equal a positive ROI. Since the cannabis industry offers such a wide variety of products, purchasing habits vary just as much.

For example, if a customer gets 25 loyalty points for each visit to your dispensary, and one customer spends $20 while another spends $100, your customers are getting the same benefit regardless of what they spend and you’re not making as much money as you can for that benefit. The Starbucks reward program does just that — users get two stars for every $1 spent. The more money spent, the more rewards. Rewarding your customers on dollars spent vs. transactions gives your business a much greater return on investment and rewards your most important, high-value customers. And it works, too! Starbucks has over 16 million members in their rewards program.

2. Quick rewards

Everyone loves free rewards. Credit card companies often offer instant cash rewards or points to incentivize new customers to sign up. When setting up your loyalty program, consider offering a bonus reward when customers initially join the program, such as extra points if you’re using a points-based system, or a free item with purchase. You can also offer rewards that vary based on amount spent, points accumulated, or purchasing habits. Also consider spicing up the reward-pot with easily redeemable, non-cannabis items like branded merch. Customers will love the new threads and your brand and logo will get in front of more potential customers at the same time.

3. Cross promotion

Connect with local businesses in your community — like a restaurant, bar, or neighboring shop — to encourage return customers to visit your dispensary. When a customer buys a beer or sits down for a meal at a partner establishment, they can bring that receipt to your shop to trade in for a reward. Not only does it drive business for both your shop and your partners, but it also creates good will and helps you build a valuable relationship with your retail community.

Promote your rewards program early and often

Once a customer joins your new loyalty program, you don’t want them to forget about it. Prompt your budtenders to remind each returning customer of their current loyalty points balance at the beginning and end of each transaction, to keep the customer excited. Bonus points for getting the customer to spend some loyalty points on an item they earned during that visit.

Keep your loyalty members informed beyond the shop through email marketing programs and SMS text-based communication. Create custom distribution lists for your members using data from a CRM system. When that system is integrated with a POS, the system automatically collects the information you need to build valuable email distribution lists so you can get the word out to your loyalty members about new benefits or rewards. GrowFlow now integrates with springbig CRM so you can identify your best customers, optimize your customer loyalty program, and increase retention rates — all while staying 100% compliant.