How to Increase Dispensary Sales with Automated Loyalty

By Koushi Sunder, CEO of Stemless 

Standing out in the cannabis industry requires more than offering a quality product. It requires building robust customer relationships through effective customer retention strategies. As a cannabis retailer, a critical question to ask yourself is, “What makes a customer loyalty program successful?” 

This article focuses on the power of automated loyalty programs designed for the cannabis industry. Learn how implementing these programs can be a game-changing approach for your dispensary sales. 

Why Loyalty Program Members Spend More

The answer lies in the Pareto Principle or the 80/20 rule. It suggests that approximately 20% of customers account for about 80% of the revenue. This principle highlights the importance of focusing on retaining existing customers.

Implementing your customer loyalty program is not about pleasing everyone. Instead, it’s about building and nurturing relationships with your top customers. These customers are your VIPs, and treating them as such can significantly increase customer retention and revenue.

Dispensary Loyalty: A Tool for Revenue Generation and Customer Retention

Rewarding customers based on their spending habits encourages repeat business and increases customer loyalty.

Why Choose a Loyalty Program?

• Revenue Generation: Rewarding customers based on their spending habits encourages repeat business and increases customer satisfaction.
• Purchase Frequency: Loyalty program members spend more and visit more often, broadening their purchases over time. 
• Customer Retention: Offering a members-only experience attracts new customers and starts their journey with you. Simultaneously, a rewards program for existing customers boosts their loyalty.

Stemless’ Loyalty Program Features

• Reward customers easily with automated points and POS integrations.
• Use your loyalty program for real-time marketing, targeting top customers.
• Boost customer engagement with our loyalty mobile app—perfect for in-store or at-home.

Traditional Customer Loyalty vs. Cannabis Dispensary Loyalty 

Navigating the restrictions on marketing in the cannabis industry is a challenge that dispensaries face in building customer loyalty. Advertising restrictions can limit where and how dispensaries promote their business and what words they can use. 

Understanding the impact of cannabis marketing restrictions

Dispensaries encounter strict regulations on cannabis marketing due to legal and societal concerns. Many platforms, such as Meta, prohibit cannabis-related advertising, limiting dispensaries’ reach to potential customers.

Some markets’ privacy laws prevent dispensary CRM and POS systems from storing customer details for email and SMS marketing. Stemless has a dedicated electronic signature application that allows customers to opt-in to data storage. This approach allows dispensaries to maintain contact with customers and comply with cannabis marketing regulations.

Learning from a traditional loyalty program

Harvard Business Review reports that increasing customer retention rates by 5% can boost profits by 25% to 95%. Loyalty programs are instrumental in enhancing customer retention, leading to substantial gains in ROI. Businesses in a traditional setting, like Starbucks, have shown the potential of loyalty programs in driving customer retention and increasing revenue.

A look at a successful loyalty program

Starbucks rewards customers with personalized suggestions based on their likes, making them feel valued and appreciated. Laxman Narasimhan, CEO, stated that loyalty rewards members contributed to 57% of the U.S. operating revenue in the second quarter. This is the highest contribution ever recorded, showing a 3% growth compared to last year.

Driving ROI in the cannabis retail space

Linking your dispensary loyalty program with your POS system enhances the program’s power, boosting opportunities for upselling and cross-selling. Here’s how integration can enhance your loyalty program and boost revenue:

Personalized Recommendations:

• With access to customer data, your loyalty program can analyze purchase patterns and preferences.
• You can provide customers with tailored product recommendations based on their previous purchases to increase the chances of upselling related items.

Real-Time Upselling Opportunities:

• When a customer makes a purchase, the integrated loyalty program can instantly identify potential upselling opportunities.
• If a customer purchases a certain cannabis strain, the loyalty program can recommend related products or strains.

Cross-Selling Benefits:

• Integrating your loyalty program with the POS allows you to identify suitable cross-selling opportunities.
• By recommending products frequently purchased together, you can encourage customers to add more items to their cart, thus boosting overall sales.

Improved Customer Engagement:

• Personalized recommendations and real-time offers make customers feel valued and understood.
• This increased engagement strengthens the relationship between customers and your dispensary, fostering loyalty and repeat business.

Data-Driven Decision Making:

• The integration of customer data with your loyalty program enables data-driven decision making.
• Analyzing purchase trends and customer behavior helps you optimize your loyalty program and marketing strategies for better ROI.

Communication is Key: The Role of Text-Based Loyalty Programs

Launching a rewards program at your dispensary does not guarantee customer participation. According to Headset, almost 40% of customers sign up for one initial transaction and never return. This drop-off in participation occurs because of a poor customer experience.

Using text-based loyalty rewards programs helps keep in touch with members. Loyalty SMS, or text-based loyalty programs, offer several unique benefits:

• Direct Communication: Text messages have an open rate of 98%, making them a powerful line of direct communication with your customers.
• Instant Rewards: Send and redeem rewards almost instantly to foster a sense of appreciation that stimulates repeat purchases.
• Personalization: Text message marketing allows for personalized messages, increasing the likelihood of engagement.

Dispensary loyalty program success depends on regular, effective customer communication. The often-overlooked role of text-based loyalty programs proves crucial in retaining members and fostering repeat purchases. 

Ready to Implement a Text-Based Loyalty Rewards Program?

Running a successful loyalty rewards program is a surefire way to increase customer retention and maximize revenue at your cannabis business. Text marketing automation with your POS makes creating targeted campaigns easy with just a few clicks.

Ready to elevate your cannabis business with an effective text-based loyalty rewards program?

Click below to schedule a no-obligation, free demonstration of the Stemless platform today. Experience firsthand the simplicity and effectiveness of our system, and explore the possibilities for your business.

Start Your Journey