Shifting Focus from discounts to value creation
Price wars are driving cannabis brands into an unnecessary race to the bottom, eroding profit margins and weakening brand value. To shift the focus toward rebuilding a sustainable path to growth, cannabis brands need to prioritize cultivating loyalty and long-term consumer relationships.
The Impact of Price Compression
As markets tighten, many cannabis companies resort to price cuts, eroding long-term brand value and investor confidence. Loyalty program participants, however, account for 60-80% of dispensary sales, offering brands an opportunity to drive revenue through loyalty rather than discounts. While discounts can generate short-term sales, they often harm brand loyalty, as customers may abandon brands once promotions end. By focusing on loyalty programs, brands have an opportunity to cultivate lasting relationships.
How Loyalty Programs Drive Growth
Lattice’s consulting services empower clients to implement strategies that reward repeat customers through tailored benefits, driving long-term engagement and sustainable growth. Customers in a loyalty program are 2x more likely to purchase from the same dispensary within 30 days, emphasizing how loyalty not only drives repeat business but boosts overall sales through deeper customer connections.
- Increased Customer Retention
Research from Bain & Company shows that a 5% increase in customer retention can lead to 25% or more in profit growth. Cannabis brands can cultivate loyal customers by offering personalized rewards, shifting the focus from one-time discounts to long-term value. - Boosting Sales with Gamification and Rewards
Loyalty programs that use gamification and tiered rewards lead to higher spending per visit. For example, NikePlus members spend 3x more than non-members, while Hilton Honors members spend 20% more per booking. Cannabis brands can mirror these strategies, offering rewards like access to exclusive products or early releases to incentivize repeat purchases and larger basket sizes. - Shifting Focus from Price to Quality
Loyalty programs create emotional connections with customers by offering personalized experiences, as demonstrated by Sephora’s Beauty Insider program, which drives 80% of the company’s sales. For cannabis brands, loyalty programs provide an opportunity to educate customers on the value of premium products, fostering a stronger brand connection.
Lessons from Other Industries
The craft beer industry provides a roadmap for success. Craft breweries capture 25% of U.S. beer sales by focusing on authenticity and customer loyalty, not price. Cannabis brands can similarly leverage loyalty programs to create deeper customer relationships, offering not just products, but experiences reflecting the brand’s values.
Loyalty as a Path to Growth
In a competitive market, Lattice empowers small cannabis brands to move beyond price promotions, leveraging loyalty programs designed to elevate customer experiences and build long-term brand value. By adopting successful strategies from industries like craft beer, wellness, and hospitality, cannabis brands can unlock sustainable growth, increase ticket sizes, and build lasting relationships with customers—all while maintaining a focus on quality. It’s time to shift the narrative from price wars to customer loyalty creating lasting success for both consumers and brands. Lattice is here to help you build that path.
