Why Everyone Loses with First-time Patient Deals

In the burgeoning cannabis industry, entry-level buyers are a hot commodity. With stigmas and laws softening around recreational marijuana use, more and more people are willing to give it a shot. How are you, the enterprising cannabis startup, to attract this lucrative and ever-expanding sect of the market?

The most common solution, at least among dispensaries, seems to be offering “first time patient” deals that are too sweet to pass up. These deals are offered exclusively to brand-new visitors, and can include everything from heavy discounts to complimentary meds to branded paraphernalia. In order to avoid exploitation, these offers usually involve a minimum purchase amount.

At first glance, first time patient deals seem like a good idea. What better way to attract new customers? Unfortunately, the practice gives rise to two problems. One, it fosters an environment where customers are encouraged to cherry-pick for new deals, instead of building loyalty and rapport with a few favorite businesses. Two, when everyone is jockeying to have the most attractive deals, it creates a collective race to the bottom that leaves everyone with lower margins and a fickler customer base.

The Problems With a Race to the Bottom

In the business world, a race to the bottom is defined as “a situation in which companies compete with each other to reduce costs by paying the lowest wages or giving workers the worst conditions.

With regard to cannabis marketing, the race to the bottom entails businesses competing against one another by promoting increasingly enticing first-time patient deals. The result is a market in which everyone is attempting to underbid their competitors, which often results in a poorer quality of service for returning patrons.

That’s right—the biggest losers of a mass race to the bottom are long-term customers and participating businesses. What a tragedy; it seems like everyone loses! With the number of cannabis businesses about to explode, dispensaries and other entities should seek more creative ways to entice new customers.

recreational marijuana on a scale

Racing to the Top: Solutions for Retaining Customers

While new customers are the lifeblood of a business, it’s common marketing knowledge that retaining old customers is cheaper than pursuing new ones—roughly five times cheaper, in fact.

That said, there is logic behind the philosophy of first time patient deals (and other race-to-the-bottom techniques). After all, expanding your customer base is pivotal to successfully maintaining and growing your business. The problem lies with priorities. How much effort should you put into retaining cannabis customers versus finding new ones? And, once you decide that, how do you actually retain customers?

The solutions will vary depending upon your target audience and marketing personas. But that doesn’t mean you can’t find inspiration in other companies’ ideas.

Take True Meds Delivery, a delivery-only dispensary operating out of San Diego. While their claim to fame is excellent products and sterling service, they take another step to ensure their customers will be excited to come back.

Their solution to customer retention is to include complementary rewards with each transaction, tiered by the purchase amount. Customers who spend over $50 receive a free collectible Clipper lighter, customers who spend over $100 will find a small medical brownie with their order, and the incentives only increase from there. Essentially, the more customers spend, the more free stuff they get, instilling satisfaction and, hopefully, loyalty. These emotional bonds will pay dividends in the long run.

This isn’t the only solution. Other ideas for encouraging return visits include:

  • Offering happy hour deals
  • Offering different deals depending on the day of week
  • Running raffles or other giveaways
  • Offering a game with prizes (spin the wheel, trivia, etc.)
  • Providing text-based points and awards systems

And the list goes on. Ultimately, there are a thousand and one creative solutions to retaining your customer base. What matters is that your cannabis business has a plan in place for customer retention, as well as one for customer acquisition. First time patient deals are fine, so long as it’s not your focus. And there are more ways to entice new customers! We believe that the most successful ganjapreneurs will always be thinking ahead of the curve.

Launch Your Cannabis Business into Success

Looking for innovative solutions to succeeding in the cannabis industry? Let 4Blooms put our marketing acumen to work for you. We’ll help guide your fledgling idea from seedling to success story with competitive marketing strategies and insights gained from years in the digital marketing sector.

2018-10-05T22:36:40+00:00November 4th, 2016|Cannabis Marketing|