January 13, 2023

5 Customer Acquisition Strategies for California Dispensaries

Lilly Raney
March 15, 2023
January 13, 2023

In California’s competitive cannabis market, the cost of turning people who know your brand into loyal customers is more challenging than ever—with previously underutilized channels having become over-saturated since adult-use legalization in 2016.

As the U.S. slowly marches towards federal legalization, more brands, dispensaries, and cultivators are popping up each day. This means that California cannabis consumers have an endless array of options when it comes to purchasing their favorite products—including continuing to support the illicit market.

To maintain growth and success, dispensary operators need a customer acquisition playbook that will help them find, engage, and convert prospective customers. Unfortunately, like nearly everything else that falls under the umbrella of branding, marketing, or advertising, it’s a little harder to do in the cannabis industry.

In this article, we’ll cover:

  • What is customer acquisition?
  • Why is customer acquisition so challenging for California dispensaries?
  • 5 strategies for finding (and retaining) new dispensary customers in California

What is customer acquisition?

How do you make sure a customer who wants to purchase a cannabis product doesn’t go to your competitor when they’re ready to shop? Simply put, customer acquisition is the process of getting potential customers to buy your products. Essential for dispensaries of any age and size, cannabis customer acquisition allows your business to:

  • Make money to meet costs, pay employees, and invest in growth, and;
  • Show evidence of growth for outside parties such as investors, partners, and influencers

Being able to systematically attract and convert new customers keeps any business healthy and thriving.

Why is cannabis customer acquisition so challenging?

Since cannabis is still federally illegal in the U.S., all plant-touching businesses are banned from traditional marketing and advertising practices. Facebook and Instagram in particular have strict rules regarding cannabis and cannabis-adjacent brands, which makes it difficult (but not impossible) for retailers to reach a younger demographic. Just last year, a legislative bill was vetoed by the Governor to allow cannabis billboards on highways that dissect state lines that also limited the marketing potential where many dispensaries are located throughout the state.

Pro tip: You can use your existing loyal customers to do social media marketing for you with user-generated content. More on that here.

Prop. 215 legalized the medical-use of cannabis in California back in 1996. Twenty seven years later, there are over 800 brands and 12,000 active licenses to cultivate, manufacture, distribute, retail, and deliver. But the most inexpensive hookup still comes from the illicit market, with the average eighth costing anywhere from $10-$40 (compared to $40-$80 in the regulated market).

It’s not the “old days” where dispensaries were far and few between with a get-what-you-get product offering and customer experience. Today, customers are looking for:

  • Knowledgeable budtenders. Customers want budtenders to be friendly, patient, respectful and knowledgeable. If yours aren’t, chances are that first-time shopper will be a one-time shopper.
  • An accessible product menu. Customers aren’t about to waste their time locating your dispensary’s website or navigating an overwhelming menu.
  • Fast and easy cash-free payments. In keeping with the traditional retail experience, customers are now seeking out dispensaries that accept debit cards or digital payments routed with ACH.

How to acquire new dispensary customers in California: 5 strategies for success

1. Offer cashless payments

It’s no secret that customers’ attitudes directly affect the size of their purchases and where they shop. If you make shopping (and paying) for cannabis more convenient for your customers, you could likely encourage them to keep returning.

Providing your customers with a modern retail experience is a crucial competitive advantage in the cannabis industry. Secure dispensary payments like PIN debit and ACH transfers allow your customers to escape the cash trap while boosting your sales volume and reducing the security risks associated with operating in all-cash.

Doug Rodewald, Head of Payments at Dutchie, recently joined us for a webinar to discuss how how cannabis consumers are using cashless payments today:

Watch the full on-demand webinar here!

Pro tip: Did you know that 70% of shoppers who use Dutchie Pay at a dispensary return to that dispensary within 90 days? It’s true! See it in action.

2. Optimize your ecommerce experience for acquisition

Pablo Paez, Sr. Customer Success Manager at Dutchie, joined us for a recent webinar to review three important components of optimizing your ecommerce site for customer acquisition:

  • Identify goals: It sounds simple—you're just trying to sell a product, right? But it's a little more complicated than that. The most common goal we hear is, "we want to make more money" or "we want to increase our sales from last quarter". These are great goals, but how are you going to get there? Focus on speed and simplicity.
  • Understand SOPs, frameworks, and tools: Having a solid framework depends on having effective technological tools. The goal should not be to have a multitude of tools from multiple providers; instead, focus on mastering the tools you currently have.
  • Research and development: This is where looking at your data and analytics becomes extremely beneficial, opening the door to UX optimizations.

Watch the full on-demand webinar here!

3. Use your POS analytics to gather customer insights

Cannabis Point of Sale (POS) systems are so much more than checkout software. They provide data about your dispensary’s inventory, hold customer records, and generate reports that help you analyze customer behavior. If used correctly, your POS can be a valuable resource for customer information that can help you acquire and retain customers.

Your POS data can tell you a lot about your customers. From the products they buy, to average spend, favorite brands, and preferred shopping times, it gives you access to a wide range of insights. From here, you can segment your audience and deliver personalized shopping experiences, based on individual purchase histories and shopping habits.

4. Brush up on your SEO skills

Because dispensaries are local businesses, ranking in Local Search and Maps is key to being discovered by new customers. And while SEO is more of a marathon than a sprint (you won’t see results overnight) here are three action items you can take right now.

1. Claim your dispensary’s Google Business Profile

If you haven’t claimed your dispensary’s Google Business Profile, stop everything you’re doing and head over to Google Business Profiles ASAP. Complete it thoroughly, and keep it updated. This is step one for appearing in Google Local and Maps results.

2. Get noticed in other online directories

Next, claim and complete your dispensary’s profile on Yelp, Facebook, Apple Maps, Bing, Foursquare, Better Business Bureau, and other regional directories you’ve identified.

Make sure your location data (address, phone number, etc.) is exactly the same across all directories, too. If your address is 123 High Street on your Google profile, use that (and not 123 High St) on other directories. This will help your dispensary’s rankings on Google Local Search.

3. Start collecting rave reviews

Google reviews are essential as the quality, quantity, and freshness of your Google reviews factor into your Google Local rankings. Yelp is crucial, too, since Yelp ranks in Google’s top 5 positions for 92% of search queries containing a city name + business category, e.g. [san diego dispensaries].

Looking for a more in-depth lesson on dispensary SEO? Check out our 15 SEO tips for dispensary websites.

5. Be considerate in how you onboard and train your budtenders

A well-rounded training in customer service will serve your budtenders well. Here are some of the skills they’ll need:

  • General friendliness. General friendliness is essential. Your budtenders should smile and greet customers. They should have a positive and upbeat demeanor throughout the interaction to ensure the customer has a remarkable experience.
  • Cross-selling. Your budtenders will probably be the last person to speak to the customer before the sale is officially closed, meaning they have a crucial chance to confirm the customer has found everything they need or to add-on to the sale.
  • Handling angry customers. In any retail environment, storefronts are the first stop for returns or concerns, and therefore, angry customers. Equip your budtenders with the skills (mainly active listening skills) to diffuse situations and turn your angry customer into a happy one. Get them up to speed on popular phrases of courtesy, too.

Check out our Dispensary Guide to Budtender Training and Onboarding for more staffing and hiring best practices.

Let’s grow together, California

Dutchie is an all-in-one technology platform powering the cannabis industry with Point of Sale, Payments, Ecommerce, and Insurance solutions. Through our technology, we’re helping cannabis businesses of all sizes start, operate, and grow with confidence. Get in touch today.

About the author
Lilly Raney
Regional Sales Director, West