Around the world, authorities place unfair and burdensome restrictions on how cannabis companies can market and advertise. But in a fiercely competitive industry, the brands that succeed focus on what they can do, not what they can’t.
Here’s why customer retention is the biggest opportunity missed by most cannabis brands in the global market, and how to fix it.
Key Takeaways:
- Advertising restrictions and finite market size limit customer acquisition in the cannabis industry.
- Retention rates are the true drivers of growth and long-term differentiators of success.
- Customer retention requires a thoughtful strategy with multiple pillars of communication.
- Success in the global cannabis market over the next decade will be built through a retention strategy and owned channels.
Acquisition Is Limited Everywhere
Despite the rapid expansion of the legal cannabis market, the stigma pervades. Every country imposes massive limitations on how cannabis brands can market, and global platforms like Meta and Google still refuse to allow paid media. Combined with location-specific limits on billboards, public advertising, and brand marketing, cannabis companies around the world struggle to acquire new customers or patients.
Additionally, in any given market where cannabis is legal, medically or recreationally, there is a finite audience to entice.
Just as the alcohol industry will not capture the sober market, cannabis is not for everyone, which creates an inherently limited number of buyers.
Retention is the Growth Engine for Global Cannabis Companies
For cannabis operators, attracting new customers is exciting, but retaining them is the true growth engine.
Customer retention is the long-term differentiator as the global cannabis industry grows and evolves. Brands with a loyal audience will rise to the top, while those constantly attempting to attract new customers will struggle.
When customers repeatedly choose a brand, a specific dispensary, or a cannabis clinic, their loyalty creates stronger lifetime customer value. Since it costs less to retain customers than to attract new ones (in any industry), repeat customers offer more value for cannabis businesses.
Tourists and the canna-curious may visit once, or shop around. Loyal customers who return week after week, month after month, present a much more valuable opportunity for brands.
What Retention Actually Looks Like: 4 Strategies
Businesses need a carefully thought-out strategy with multiple pillars to create the conditions for high customer retention rates. A successful customer retention strategy includes:
CRM
Strategy requires organization. A well-built CRM helps cannabis brands stay on top of personalized customer touchpoints, follow up on specific purchases, and reach out when someone hasn’t visited in a while. CRMs are great tools for managing multiple customer touchpoints, from emails to text messages.
This marketing staple still works in the cannabis industry. Brands can reach out directly to customers with sale notifications or personalized discounts to stay top of mind.
Patient Education
Helping patients and customers fully understand the possibilities of cannabis requires education. Most people still don’t know about their endocannabinoid system, or cannabinoids outside THC. Education helps customers understand the breadth of possibilities and gives them more products to try.
Segmentation
While every patient or customer is unique, most people fall into a few specific motivational categories for buying cannabis. Understanding these and tailoring your communications to them makes people feel seen and supported.
Why Most Operators Ignore It
Customer retention doesn’t happen by accident. If operators work from a place of short-term thinking, worrying about day-to-day metrics rather than building a lasting foundation for long-term success, they often neglect the effort required for customer retention.
To increase customer retention rates, businesses must implement systems that enable more personalized communication. Businesses need customer data to properly segment audiences and understand buying motivations.
All of this takes time and dedicated team effort, which can be hard to spare in a competitive market.
The Compounding Effect of Customer Retention – Or Not
Whether you focus on customer retention or not has a lasting impact on your business’s long-term success.
Brands that dedicate the initial effort to creating customer retention systems see it pay dividends, with lower customer acquisition costs and higher lifetime customer values. Audience loyalty creates strong brands; just look at the success of companies like Cann and Miss Grass in the United States.
These tactics hold true for any cannabis brand in the global market; personalized customer touchpoints and a strong focus on retention drive long-term growth.
Marketing and advertising opportunities may be restricted, but cannabis brands still have options. If you’re ready to build a solid foundation in the cannabis industry through owned channels and loyal audiences, PufCreativ is here to help.
Reach out to our team today to discuss what a new website, email marketing campaign, or robust SEO strategy can do for your brand.
DISCLAIMER: The contents of this blog are intended for informational purposes only. Always seek the advice of a physician or other qualified healthcare provider with any questions you may have regarding a medical condition.
