There a is big issue plaguing retailers – half of all customers don't return. When customers don't come back for a repeat purchase, it is known as customer churn. Out of all industries, retail has the highest customer churn rate. Due to this alarming number, bringing customers back is one of the most important initiatives that a dispensary can focus on today.
Companies can go out and acquire all of the customers in their market, but without a sound strategy in place for retaining customers, their efforts will be fruitless.
To help visualize customer churn, think of a business as though it is a bucket collecting water, and customers are the water inside the bucket. The only issues is that there are holes at the bottom of the bucket that cause the business to lose customers. Some reasons customers churn are: a poor shopping experience, price increases, or competition.
Each time a company acquires a new customer, they add a drop of water to the bucket. In the cannabis industry there are many different strategies for acquiring customers: print advertising, cannabis deal sites, social media marketing, sponsoring events, etc. Yet, every day customers leave to go off to competitors, never returning.
To keep a business growing, one can continue to collect more and more water, but it is expensive. In fact, it’s 6x times more costly to get new customers Than to keep existing ones. Sealing leaks and turning visitors into loyal customers is a lot cheaper and easier than getting new customers in the door.
Retaining and growing relationships with customers is the top focus of the most successful companies in the world. Only 18% of retailers focus more on retention than acquisition, but the ones that do are the most successful, such as Amazon and Nordstrom --- who earn 80% of their profits from existing customers.
As a business matures, customer retention quickly becomes a top priority. It’s never to early to think about sealing the holes, and keeping existing customers coming back to increase profitability. Talk to Baker to see how we can help you today.