Dispensary tips

How Canadian cannabis retailers can drive customer loyalty and retention

By
Shahbaaz Kara
July 23, 2021
January 18, 2022

With more and more retailers opening every single day, earning customer mindshare becomes the most critical piece to thriving in any retail business. This is especially true for the booming cannabis industry.

Ask yourself:

  • How smooth was the buying process at the last store you visited?
  • How did you choose what to buy in the store?
  • How did the buying experience make you feel?
  • Did you leave with more knowledge than you had before?
  • Would you join the loyalty program?

Creating customer loyalty is challenging. Not only are there countless channels to reach your customer, but chances are also there are many competitors battling for the same mindshare. Starbucks, Apple, and Nike are three fantastic examples of brands that have found a way to build loyalty with their audience and create a direct, continuous emotional engagement. They both have excellent retail value propositions, curated customer experiences, and drive a significant long-term value for their customer. If you are a regular customer of theirs, they continuously reaffirm that your life will become better the more you interact with their brand. The best part is that they leverage technology to get you the info you need quickly and conveniently.

Canadian cannabis retailers can learn from Nike, Apple, and Starbucks’ “secret sauce” and use these foundational pieces to build loyalty with their customers. However, before we discuss how they can make a framework for success, let´s first set the stage and address the challenges they face.

Current challenges:

  • Differentiation: How do you get a customer into your store/onto your website? Current Health Canada regulations limit the ability to advertise and incentivize, resulting in a perceived ‘sea of sameness’ at stores.
  • Experience: How do you get a customer to buy? Everyone is selling many of the same products to the same consumer.
  • Loyalty/Evangelism: How do you get your customer to come back? Redeeming earned points for cannabis or cannabis derivative products is prohibited.

West Paschal, CRO at Alpine IQ (a Dutchie partner), says that Canadian cannabis consumers are hungry for experience and sentiment:

Customers want the right promotions at the right time, and they want technology to help them achieve this.

To successfully capitalize on this, you need to have a retail value proposition (RVP), a customer experience, and the ability to create long-term value for your customer.

Retail Value Proposition

Starbucks wasn't the first company to create coffee, but they were the first company to make coffee for you. They took an extremely saturated market and became a leader because of their retail value proposition. They continue to position themselves as a place where coffee lovers can have an individualized and unique experience while enjoying their coffee. Walking into Starbucks becomes about more than coffee; it becomes about you, your day, and your moment.

Your retailer value proposition will ultimately define how you differentiate from your competitors. Your RVP won’t fit every customer, but it should be unique and easily definable by your customers and competitors. Your operating model, and your customer experience, should all follow your RVP. It needs to be the reason customers come to your store.

When a customer is thinking about buying cannabis, why are they coming to your store? How does your value proposition speak to them? An excellent example of a current retailer with a strong RVP is Shopcori, with its curated collection of canna-curious, women-focused wellness brands. From the moment you walk in, the store is aesthetically pleasing and purposefully designed to guide you in your cannabis journey. The lighting is soft and warm, and matches the energy of the staff. The various topical lotions, teas, and bath bombs speak to an audience that is looking to experience cannabis as part of a healthier lifestyle, and gives them a pleasant, guided introduction to cannabis.

Customer experience

The RVP helps establish the baseline customer experience from the first visit. Apple is an excellent example of a brand with a reliable customer experience. Suppose you accidentally break your Macbook while traveling. In that case, you can find comfort in knowing that you will get the same prestigious experience in Mexico City as you would in Toronto or Tokyo. Why?

Product Experts

Apple associates will undergo extensive training to ensure they have an in-depth knowledge of everything in inventory. They are given internal education and walked through extensive product demos to ensure they are experts in their field.

Curated Experience

Apple associates will ask you a set of discovery questions to understand the problem you are trying to solve. They use their extensive knowledge to recommend a computer or accessory based on your specific needs.

Premium Service

Apple makes you feel like a million dollars from the moment you walk into the store, onto the white carpet, all the way down to the high-quality bag that goes home with you. You also know if something goes wrong, or you didn´t get the product you anticipated, you can have your needs addressed and remedied quickly. The Apple Store Return Policy is made accessible on their website so that you can trust the customer care involved in each purchase or return.

Self-evaluate:

  • What type of service are you trying to offer, and are you communicating it well?
  • How are you ensuring you are making your team product experts?
  • What is a customer's experience in-store and online?
  • How do they go from a place of cannabis curiosity to actually purchasing cannabis, and what role does your experience play in that?

The cannabis buying experience today is extraordinarily challenging and overwhelming. From the moment a customer walks in, they are on high alert and observing everything. Having a consistent, reliable, curated customer experience allows you to build trust and ensure they know what to expect every time.

Creating long-term value

Nike helps you live your life better. When you align yourself to Nike, not only do you get great shoes, you get the opportunity to align yourself with like-minded people and connect with those people at Nike running clubs. You can track your stats and improvements against your goals on the Nike fitness app. You can use their nutrition blog to get healthier. Their slogan, “Just Do It,” incites an emotional connection. It makes you feel like you are part of something that makes you challenge yourself to be better. Nike isn't a product. It’s a way of life.

Nike also communicates exceptionally well. They help you learn more through text messages, blogs, emails, and Instagram. They are an omnichannel brand, but they make sure to communicate to you differently on each channel.

Because Canadian cannabis is so nascent, retailers need to ensure they are helping consumers become smarter shoppers through education, experiences, and community. Some notable industry examples make retailers and brands stand out. The cannabis retailer Shivaa´s Rose does an excellent job educating their consumers on the ongoing regulatory environment through their blog. The cannabis brand Superette creates a stronger community with its recycling and food program. The shop Sticky Nuggz does a great job educating consumers on products through their Instagram stories. Numo is another that is constantly opening its customer's minds through its engaging Instagram feed. From internal programs to social media, all these channels are ways to express your brand to your community.

Self-Assess:

  • Does your brand create a lifestyle perception like Nike’s does?
  • How are you helping consumers get more educated, more balanced, and more motivated every day?

Technology

Each step of the process is helping you create loyalty. Once you have built that loyal customer base, leveraging technology to capture and tap into that loyalty is the next step. Starbucks, Apple, and Nike all capitalize on their engaged audiences by using loyalty programs.

The first step in using any piece of technology is ensuring you have the right inputs. Whether it's via emails or phone numbers, you need a way to reach your audience consistently. Once you've built your audience, you can then use different platforms for email and text marketing. A loyalty program in Canadian cannabis isn't technically allowed because you cannot use earned points as a legal tender to purchase cannabis. But cannabis retailers can still take advantage of some powerful platforms, such as Dutchie’s partners Alpine IQ and SpringBig. As West from Alpine IQ states, ¨applying loyalty in Canadian cannabis is all about finding the proper tolerance for creative compliance.¨

  • How are you using technology to take advantage of earned loyalty today?
  • Have you tried win-back campaigns for lost orders?

In summary

To fully understand brand loyalty, you must acknowledge that it weighs heavily on brand trust. Follow the above steps to self-evaluate your RVP, customer experience, long-term value, and the technology that can help build your brand. Consider the channels through which your brand communicates and how they can grow loyalty as well. Find a method similar to these retail models that suits your brand so that you can stand out among the rest.

About the author
Shahbaaz Kara
Canadian Sales Manager