How to Design a Cannabis Loyalty Program

In the ever-evolving cannabis market, dispensaries face the challenge of not just attracting customers, but retaining them. HiRelations brings a fresh perspective on how cannabis dispensaries can build customer loyalty and drive repeat business through well-structured loyalty programs. This blog will help dispensary owners and their marketers demystify the intricacies of designing effective cannabis loyalty programs and monitor the results. Learn how to make your dispensary stand out in a crowded marketplace. 

Loyalty Program Design: Crafting the Blueprint for Success

Rewards Points Architecture

At the heart of any loyalty program is its rewards system. HiRelations emphasizes a points-based structure where customers earn points for every dollar spent. This direct correlation between spending and rewards ensures that your most valuable customers feel recognized and appreciated, encouraging continuous business. Offering rewards solely based on how often customers visit overlooks the value brought by high spenders, potentially leaving your biggest sources of revenue underappreciated. Refining your loyalty program to cater to diverse customer spending habits creates an engaging experience. Points based loyalty not only increases foot traffic but also encourages higher spending, as customers are motivated to elevate their spending levels to unlock appealing loyalty rewards.

Tier Structure

Implementing a tiered system adds an exciting layer of engagement. Customers progress through different levels based on their spending, unlocking increasingly attractive rewards. This not only incentivizes higher spending but also makes customers feel part of an exclusive club. 

When creating your tier structure, it’s essential to map out a progressive customer journey that drives customers through the tiers. 

A simple yet effective 3 tiered program architecture has been proven to work best

1. The lowest tier offers quick rewards like pre-rolls or lighters—items with minimal cost to the dispensary but high perceived value to the customer. This tier targets low spend but high visit customers, encouraging frequent visits.

2. As customers make their way to Tier 2, the focus shifts to rewarding higher spenders who may not visit as often but make significant purchases when they do. This strategy ensures that when these customers consider their next purchase, the immediate reward available at your dispensary becomes a compelling draw.

3. The leap to Tier 3 must be carefully calibrated; if customers perceive this tier as unattainable, engagement could stagnate. The key is to set realistic milestones that keep customers motivated without feeling discouraged. 

Customizing Rewards Based on Data

What works for dispensaries in Washington might not work for dispensaries in Massachusetts. Dispensary loyalty programs should not be designed with a cookie-cutter approach. Dispensary owners and marketers must carefully analyze their customer’s behavior and shopping habits in order to accurately gauge what type of rewards will entice them the most. Leverage customer data to personalize rewards and create realistic tiers that will guarantee engagement with your customers.

Loyalty Program Performance: Keeping Customer Engagement High

Tier Management

Once you’ve done your due diligence and created your dispensary’s loyalty program, it is crucial to monitor the health of each tier. Industry trends can shift, your competitor down the block could introduce something new that draws customers away. One of the clearest signs of a loyalty program in need of revitalization is tier stagnation. Tier stagnation occurs when despite having a multi-tiered structure, customers remain static, showing little to no progression through the tier journey. 

This indicates a disconnect between the program's offerings and customer expectations. Addressing this issue requires a thorough reassessment of the program's structure, rewards, and the milestones.

Solutions might involve enhancing the value proposition of each tier, making the progression more attainable and rewarding, or introducing new benefits that resonate more closely with customer desires and behaviors. By reinvigorating the program with targeted adjustments, dispensaries can rekindle customer interest and encourage active participation. Ensuring the loyalty program fulfills its potential as a powerful tool for customer retention and brand loyalty.

Analyzing Reward Redemption Rates & Points Balance

Understanding and refining your rewards program is crucial for success. By examining the redemption rates both overall and across different tiers, you can discern which rewards are effective and which may need to be reevaluated. If an entire category of rewards are not being redeemed it may be worth offering new ones to see if customers respond better.  In addition to redemption rates, analyzing the outstanding points balances can also shed light on the effectiveness of your customer loyalty program as well. 

If members are not utilizing their points, it could indicate that they do not perceive the points as valuable. This can be due to multiple issues like a simple lack of awareness, difficulties in redeeming them at the point of sale, or a lack of urgency due. 

Opportunities for Improvement

HiRelations has seen many dispensary loyalty programs fail just due to these issues. But we also know how to resolve them, and turn them into opportunities. 

• To address lack of awareness, proactive communication strategies such as personalized email and text message marketing campaigns and push notifications can be implemented.
• Making the redemption process as seamless as possible at the point of sale, by integrating it smoothly into the transaction flow, can alleviate difficulties in redeeming points.
• Introducing expiration dates for points can create a sense of urgency, encouraging customers to use their points more promptly. 
• Offering periodic promotions or bonus points for redemptions within a certain time frame can further incentivize the use of accumulated loyalty points. 

HiRelations is ready to help you transform potential challenges into compelling reasons for customers to engage more deeply with your brand.

Conclusion

In the competitive cannabis retail landscape, a well-designed loyalty program is not just a nice-to-have; it's a must for dispensaries aiming to thrive. HiRelations brings a comprehensive approach to loyalty program design and management, ensuring that your dispensary not only attracts customers but turns them into loyal advocates. With a focus on data-driven customization, engaging tier structures, and strategic retention tactics, HiRelations is poised to elevate your dispensary's customer loyalty to new heights.

Stay tuned for the next blog where we’ll dive into proven strategies and tactics in promoting your loyalty program. Or contact us now to hear it directly from us!