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The Art of Customer Retention – It’s a Big Deal No Matter Where You Are

By Matt Walstatter

If you have ever read a book on marketing, you probably know that it costs a great deal more to find a new customer than it does to hold on to an existing one. This fact is included in so many marketing texts for two reasons: It’s true — and it’s incredibly important.

Why is customer retention so important? Let’s begin with the obvious; precisely because it’s less expensive. Yes, much less expensive. Commentators claim that snaring a new customer costs anywhere from two to five times as much as keeping an existing one.

For a young business (and at this point all cannabis businesses are young), with a limited marketing budget, it is crucial to use those marketing dollars efficiently.

I’m not suggesting that you ignore new customers. What I am saying is that with limited resources, it makes sense to allocate some of your marketing spend to keeping the customers that you already have.

Cost is far from the only factor here. In Oregon, we have more than 300 dispensaries serving approximately 70,000 cardholders. To say our market is saturated would be a substantial understatement.

Most of these potential customers have been to dispensaries before. Many have regular spots, and very few remain up for grabs, so holding on to our existing customers is of paramount concern.  This is a larger issue in the medical system, where the number of potential customers remains strictly limited, but the recreational market has its own issues.

On Oct. 1, Oregon will begin allowing limited recreational sales. Non-cardholders may purchase up to seven grams of flower per day. We are looking forward to this opportunity to significantly expand our customer base. But the limited amount of flower available for recreational customers causes some customer retention issues.

Let’s say a non-cardholder wants an ounce (1 ounce) of cannabis. She can’t just come in and buy it at our store, even if that is her first choice. Instead, she can buy seven grams at our shop and seven grams at another shop and so on until she has visited enough shops to fill her order.

Our shop is on a stretch of Sandy Blvd. in Portland known as the “Green Mile.” The name derives from the high concentration of dispensaries populating this particular thoroughfare (our shop is one of five in about a one mile stretch). It would be very easy for someone to bop down Sandy Blvd, hitting one shop after another.

This makes customer retention both more difficult and more important. I have to provide enough value that customers will keep returning, even though they may visit several shops each day.

Next year, limits will increase and recreational customers will be able to buy their entire ounce in one shop. When that day arrives, I want as many of those people who have been Green Mile customers to become exclusively Pure Green customers.

So how do you hold on to your customers? By finding ways to distinguish yourself from your competition.  The products that you carry can help a little here, but not much. Every dispensary has cannabis and cannabis products. Many have high quality products, low prices or both, so it will be hard to set yourself apart based on products alone.

At Pure Green, all of our efforts toward customer retention stem from one core principle: People do business with people that they know like and trust. This is especially true in the cannabis industry, where everything has been done on a handshake for the last 50 years.

1 – Knowing who we are

People need to know who we are in order to do business with us. We use our marketing budget, along with a strong PR push, to help people get to know us. We speak, write articles and host and attend industry events to get our names out. We engage in community service so that people understand that that is a part of who we are.

2 – Liking us

This is all about customer service. We have friendly, personable budtenders who know our customers by name and remember what they like. We have an easy, no questions asked return policy so that people are always satisfied with our purchases.

It may sound silly, but we want people to leave Pure Green feeling happy, satisfied, and a little warm and fuzzy. If we do our jobs well enough, just seeing our branding should trigger that feeling and make them want to visit our store.

3 – Trusting us

Trust is often the hardest part. In business transactions, many people assume that counterparties aim to take advantage, so we have to dispel this. One of our mantras here at Pure Green is to “overdeliver value.” It means give your customer more than what they buy and pay for.

At Pure Green, we overdeliver value by providing information and education. We have found that people trust people who teach them. We pride ourselves on being able to answer any question our customers bring, whether it’s about rules and regulations, industry trends, products, matching strains to ailments or anything else. If we can’t answer the question immediately, we will find the answer and get back to the customer.

The speaking, writing and industry and community events that I mentioned earlier represent another means to overdeliver value. These are more opportunities to provide our customers and potential customers with more than what they pay for.

Overdelivering value can take more traditional forms as well. We run all sorts of sales and specials and promote them heavily. We also do giveaways. This year, our second annual 4/20 raffle included more than 50 prizes worth a total of at least $5,000. On July 1, in honor of cannabis becoming legal in Oregon, we gave every customer a free gram of flower.

We use our loyalty program to build that trust and hold onto our customers. Everyone is automatically enrolled. We award one point for every dollar spent, with the points redeemable for prizes and store credits. On the first Sunday of each month, we host Patient Appreciation Day. We run some extra specials and offer double loyalty points.

For many companies, marketing is about finding new customers. This is one key aspect of marketing, but customer retention is equally crucial. It is easier and less expensive to keep the customers that you already have.

Remember that people do business with people that they know, like and trust. Use your marketing to help people get to know you. Use your customer service to establish mutual approval. Find both simple and creative ways to overdeliver value and your customers will reward you with their trust and their business.

Matt Walstatter

Matt Walstatter

Matt Walstatter and his wife, Meghan, are the owners of Pure Green, a patient owned and operated dispensary in Portland, Oregon. They have jointly owned and operated cultivation centers since 2001. Their dispensary opened in 2013. Matt can be reached at (971) 242-8561 or [email protected]

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