High Retention: Eight Ways to Keep the Cannabis Customers You Have

It used to be a universal truth that if you had cannabis to sell, someone would buy it. 

But our choice as consumers is ever-expanding, and we’ve become more demanding. Obviously, we want high-quality strains at decent prices, but we also want to support brands that align with our values and to experience stellar customer service. 

One thing that remains true is that it will always be cheaper and more efficient to keep a loyal customer than it will be to try to find a new one. What can we do to make sure that we retain our hard-won community?  

What is a churn rate?

The churn rate is the rate at which customers stop doing business with you. It’s sometimes referred to as the rate of attrition. 

Churn analytics measures the number of customers whose business is lost over a particular timeframe. There are different ways to work out or express your churn rate depending on your industry and data. It can be trickier to measure a consumer packaged good (CPG) brand’s churn rate, than, say, a subscription brand, because of changing seasonality, and people’s unpredictable consumption habits. 

Knowing whether and how much your growth rate (your new customers over time) exceeds your churn rate will help you to predict your future sales.

How do you calculate your customer’s lifetime value?

When you lose a customer for any reason, you’re not just losing the next sale, you’re losing out on their potential future sales, too. It’s useful to know your customer’s lifetime value, so that you can work out reasonable goals and objectives for retaining customers. It can also help you to quantify how much is reasonable to spend on marketing to gain a new customer. 

An in-depth customer lifetime value analysis can take into account a wealth of different variables, but Stitch Data suggests a basic formula is: 

your average order value / (1 − your repeat purchase rate) − your customer acquisition cost = customer lifetime value

“Let’s say that the value of an average order at your business is $50. Also, anytime someone makes an order, whether it’s their first or their third, they have a 10% chance of coming back and making a repeat purchase. Finally, let’s assume that it costs you $15 to acquire each new customer.

The total revenue you can expect to get from each customer is your average order value divided by one minus the repeat purchase rate, or $50 / ( 1 – 0.1) = $55.56. Subtract your customer acquisition cost from that, and you get a customer lifetime value of $40.56.”

How can you increase your repeat purchase rate?

Set up a system to identify lapsed customers
We don’t just need to know how often our customers stop shopping with us, we need to identify when their habits change so that we can intervene with an attractive email offer, tips and support, or a request for feedback. Most CRMs will have a feature that tells you the length of time since a customer’s last purchase automatically so that you don’t have to comb through your data to search it out. 

Listen to customer feedback and act on it
Knowing what drives customer satisfaction allows us to create customer loyalty. Setting up a customer feedback loop can be as elaborate as analyzing engineers’ user testing or development teams’ focus groups, or as simple as a goldfish bowl at the register with feedback cards customers can write in-store. 

Personalization
What and how we consume cannabis is so personal to each of us and as our choice increases, we’re looking for brands that acknowledge our individual needs. If you lean into first-party data and insights from the customers you already have, you can get granular in your personalized strategies, and create micro-segmented audiences (where you group small numbers of customers into extremely precise segments). You can give them the content they need and identify new people who will feel engaged by your brand. 

Make it easy for people to shop with you
Regulations have made it more difficult in the past for brands to match the hyper-convenience and availability of other CPG products. But there are tenets of personalization that you can use to make life easier; your customer should know where their package is, when their favorite product is back in stock, and receive tailored offers.

Offer customer education
Every piece of content we create should deepen our customer’s trust in us. Customer satisfaction can soar when we properly equip people with the knowledge to get the most out of our brand, especially in such a nascent and misunderstood space as recreational cannabis. Programming can be in a range of different channels or media but should meet your customers where they are, get ahead of any concerns, and leave them feeling good about relying on you for guidance.

Give your staff continuous learning and development
Most people will be more moved by conversations they have with a person who is the face of your brand than your marketing materials. But it has been a tough work year for many of us, particularly those in customer-facing roles, so your staff might not be feeling their best. Do they feel supported with health and safety training, sexual harassment training, diversity and inclusion training, as well as being on top of cannabis regulation and across your brand and values? Turnover in the cannabis space is relatively high, and keeping good people around will allow you to retain customers, too.

Take trends into account
Because of the changing landscape of CPG, brands’ profitability can be dependent on how they cater to industry trends and the needs of consumers. Right now, customers are used to brands bypassing retailers and want a great direct-to-consumer experience, they’re zeroing in on sustainability, and want to keep contactless shopping even as restrictions are lifted. 

Live your values
We not only have more choice than ever, but we have more access to information—about brands’ treatment of their workers, other people’s experiences of the brand, the socio-environmental issues in the industry, and where brands stand on important topics. This is paired with a high expectation from businesses that they should put people and the planet before profits. Whether it’s about your product quality, the way you treat staff, the great service you offer, or your commitment to sustainability or cannabis reform activism, your customers will respect you and stick by you when you keep your promises.