It’s easy to keep the cash rolling in if you’re the only game in town, but time has a way of levelling the playing field. With increasing competition as more licensed cannabis stores roll out in major cities, it doesn’t take a fortune teller to predict a buyers’ market as both the cannabis industry and general public become more comfortable with the plant.
When the market becomes more saturated, how will cannabis retailers keep consumers coming back to the shop?
“They’re handcuffed,” says Brad Poulos, who teaches entrepreneurial cannabis at Ryerson University in Toronto. Poulos laments Health Canada’s strict rules about “inducement,” which leave little to no wiggle room for Air Miles-style customer loyalty programs – or any loyalty program, for that matter.
To keep a customer’s fancy, Canadian outlets either have to keep it “old school” or get creative.
1. Focus on personalized service
Canadian retailers should focus primarily on the in-store experience.
“Obviously there are things that any good retailer will do at the time of sale,” Poulos says. “Lots of patrons are confused about the plant, and having a large, knowledgeable staff on the floor to enlighten them and address their needs as best they (legally) can is the touchstone of repeat business.”
2. Keep consistent inventory
“To the highest possible max, you need to be keeping the same products on the shelf, making sure you have a consistent set of SKUs available,” Poulos says. No operator wants a consumer’s second visit to fall short because they had to settle for one strain when they wanted another.
3. Partner up
“You’re seeing a lot of partnerships between retailers and bigger brands like Aurora or HEXO, wherein retailers host activations or give away branded swag,” says Daniel Davidzon, director of strategy and education with CANNVAS, a digital cannabis analytics and education company.
Davidzon says retailers would do well to look at complementary neighbouring businesses to help build customer loyalty. For example, “a receipt from your local cannabis shop could be exchanged for a discount at a cafe or restaurant in the same area,” he says.
4. Educate customers
It’s fun to play teacher sometimes, and there’s no better time than now to educate clientele who may be new to cannabis.
“Go beyond the basics and into all aspects of the plant,” Davidzon suggests. “This is a unique substance with properties and applications across many industries and sectors beyond recreational and medicinal usage.”
He says the more contextualized information customers have about its many uses, the more empowered they feel to make purchase decisions.
5. Make cannabis feel ‘safe’
Cannabis and its surrounding culture may still feel “dangerous” to a number of people. Fair or not, customers form judgments based on appearances.
“Most of the legal Canadian stores are nicely done inside,” Poulos says. If they’re not elegant, they should at least be themed. “It should be a visually pleasing environment. Some of the illicit dispensaries don’t conjure up those images.”
Springing for an inviting cannabis store design that exudes professionalism and security (which may entail literal security guards) is a small price to pay for smoothing over your clientele’s preconceptions about weed.
6. Ask for customer feedback
While comment cards may seem the height of feigned, corporate-approved friendliness, they do serve a purpose.
“You can do a customer survey … you’re allowed to communicate with customers once they’re part of your ecosystem,” Poulos says, adding the caveat that any promotional content is verboten. “Especially if you’re responding to negative comments and changing things, that engenders loyalty.”
U.S. vs. Canada cannabis marketing
Conversely, retailers in the United States are adopting many standard strategies to play to consumer preferences.
“American retailers can do points, [product] bundling and all kinds of typical promotional programs,” says Poulos. “‘If you buy this vape today, we’ll give you 50 per cent off your first cartridge.’ That kind of thing is completely off limits here.”
Jake Crow is the CEO of BudTender, a mobile app and cannabis-specific customer experience platform with Canadian clients such as Tokyo Smoke and Prairie Cannabis.
Through working with clients on both sides of the border, he’s noticed the striking difference between how they’re able to build a lasting relationship with consumers. Crow points to one “loyalty power play” that he hopes will surface in Canada given time.
“Some have used software which allows customers to receive push notifications on deals when they’re close to a store,” he says. “It allows the retailer to pull more foot traffic off the street and into the store with targeted offers.”
In the U.S., there are retailers who offer frequent buyer cards, discounts on products and in-store celebrity appearances to increase attention and awareness of their shops. Though Davidzon expects this model will move to the Canadian market eventually, “retailers in this country will have to rely on outstanding service and in-store atmosphere.”