Diego Pellicer-Colorado sees about 350 customers each day, says Nick Jack, chief retail officer. Customers can participate in weekly or monthly raffles. Upon providing the dispensary with their phone number and email, those customers will receive two to three text promotions per week and are entered for a chance to win a prize, such as an ounce for $1.
Diego Pellicer-Colorado has grown its customer database to more than 18,000 people. “Gosh, if even 10% of them respond, it's an effective tool for us,” Jack says.
In addition, Diego Pellicer-Colorado utilizes print advertising. Readers of magazines like Westword can respond to one of the dispensary’s ads and text to enter to win tickets to a concert or entry to a budtender educational event.
We spoke with Jack about how Diego Pellicer-Colorado incentivizes customers to participate in loyalty programs, the types of data it collects about customers and their shopping habits and avoiding text and email fatigue.
Cannabis Dispensary: What's the best way to foster customer loyalty?
Nick Jack: We believe in—I refer to it as the “three-legged stool.” If you have all three legs, you should have a customer for life. Competitive prices, high-quality products and customer service: If you maintain all three of those aspects, there's no reason why you shouldn't have a customer for life. We do have competitive pricing; we do have the highest quality products the Colorado market has to offer. But where we really pride ourselves, and [what] our whole business model is based around, [is] customer service. I know it sounds simple and easy, but a lot of these cannabis dispensaries do not hone in on customer service. It's more of a, “What can I get you? Welcome to the pot shop.”
Let me say this: Diego Pellicer and our business model is focused around relationship-based transactions, as compared to a lot of our competitors. They just kind of have a business model based on transactions. We take a personal approach. We like to know our customers on a first-name basis. The first thing we ask them every day isn't, “What do you want?” or “What are you shopping for?” It's, “How's your day? Welcome to Diego-Pellicer.” … [It’s] a relationship-based approach to all of the transactions and focusing on the consumer journey and all of the touchpoints in that consumer journey, from the guy who greets you at the door all the way down to your checkout and being at the checkout counter. Fostering customer loyalty, for one, is just growing our database and advertising and promoting to them in a way that gets them to come in the store. But maintaining that relationship through hospitality and eye contact and firm handshakes—a lot of that stuff you don't see in the cannabis industry.
CD: How many different verticals does Diego Pellicer have, and how are they defined?
NJ: Something we struggled with for a while is just being able to have actionable data based on our consumer shopping habits. Back to fostering customer loyalty—we have been able to use an internal software platform that we developed—it's called Posigent—and it analyzes consumer shopping habits. A lot of the point-of-sale systems have that, but this is a lot more detailed, and we're able to break it down based on when you scan your ID, your age, your sex, the location that you live in or that the driver's license has—the zip code—state and of course, shopping habits, once you get down to the register. From this information that we gather through the process, we're able to segment it into ads for females; ads for 25- to 35-year-old males focused on concentrates; ads for 45- to 55-year-old adults who are just getting their feet wet with cannabis, and we know that because all of their transactions were based off of a topical or a salve or something. It's been a really helpful tool to us, and we've been able to utilize it to send out. We analyzed this data, and it showed us, for example, women buy more edibles than men do. That's just a fact at our retail locations. When we focus on an edible market, the targeted demographic is women, it's a lifestyle ad, and we try to just kind of speak to the consumers' shopping habits. And we do that based on actionable data that we've been able to analyze through internal software.
CD: Do you do email marketing as well as text marketing?
NJ: Yeah, we do. We do email marketing through our customers and also to our wholesale buyers, so we've got a couple different databases. The same database that we utilize for all of our text messages, we utilize for the email blast because when you sign up for the raffle at the registers, you're signing up with your name, your email and your phone number. We try to spread them out—like we're not going to hit a text blast on Monday followed by an email blast on Monday. We normally do a Monday text blast and a Friday text blast, a Wednesday email promotion and maybe a Thursday email promotion or something like that, or maybe just one email production a week. But we absolutely do. To be honest, the email blasts are not as effective. You have to be really careful, too—there's a lot of words that trigger spam filters, and a lot of it will just kind of go into people's spam. It's been interesting, but with Posigent, too, a lot of the carriers … Verizon, T-Mobile—they're finding ways to filter a lot of these ads, so it's been a little tricky. But we've been able to make it work.
CD: How much print advertising do you do, and do you do other traditional marketing and advertising, like billboards?
NJ: Denver is just getting ready to roll out permitted billboard advertisements. They're still kind of strict, like you can't be a blatant cannabis ad, but I could have a Diego Pellicer billboard, for example, and if you know what it is, you know what it is. But we're getting there out here in Denver. I do four print ads a week, and we utilize our local cannabis magazine, I guess you could call it—it's the Westword—and it has all the cannabis advertisements. We run a full-page insert every single week, and it drops on Thursday. That's really the only print ad that we do. We have participated in some other print advertising, such as magazines—DOPE Magazine, Sensi Magazine, et cetera. But out here in Denver, really the most critical print advertising is done through the Westword. Everybody just kind of grabs the Westword every Thursday, checks it out in the back and does their shopping. That's where we focus most of our print marketing dollars.
CD: When it comes to loyalty programs, some states have some more stringent regulations about product discounts. How can dispensaries in those states can navigate those?
NJ: Compliance is always No. 1. As long as we're being compliant, we can have some fun with it. Nothing is free in Colorado. There's no free transactions. A penny transaction is acceptable, but in my opinion, it's too close to the line. We just do it for $1. Gosh, it really works for us … because for me to give an ounce away for $1 at the end of the month—and to get every customer who comes into Diego Pellicer to shop—they're entered into the raffle to win an ounce for $1. That ounce costs me $43 to grow it, and to give that out for $1—that's about as good of an ROI investment as I can make in marketing—and to the customers, “A $1 ounce? Holy shit.” Everybody signs up, everybody plays. I see a lot of cannabis dispensaries in Colorado doing similar strategies, just cheap promotional products. Some dispensaries do it by the day. We do it more monthly. You don't need to do it every day; you don't need to give your business away.
CD: How do you gear your customer interactions in the store so that you can get people to come back and be loyal customers?
NJ: We incentivize them. We have customer loyalty points in our point-of-sale software, so it's basically for every $100 you spend, you get a $1 redemption, or for every $1 you spend, you get a penny redemption. And these people build up their loyalty points. A lot of them like to save up their loyalty points to be able to buy an ounce or something [at a heavily discounted rate]. It’s customer loyalty points through Flowhub, and then we utilize simple strategies, too—punch-card systems—get eight punches, come back and get an eighth for $1. Back to your last question, that's how a lot of these dispensaries are utilizing the $1 approach, or the no-free-product approach, is through the punch-card method. Then, a third technique that we have utilized is we sell an annual VIP membership card for $100, and it comes with a whole list of deals on the back, kind of like when you were in high school, if you bought a card from your football team and you could go to McDonald's and get a free Coke every time you shop, et cetera. We have our premium VIP loyalty card—for $100 annually, it gets you things like an eighth for $1 on your birthday, an eighth for $1 every month, a gram of concentrate for $1 every month, 20% off an exotic flower strain every month. It's a physical card that they can keep in their wallet. It's been pretty effective for us as well. We have a few different tiers. We have one that we give out to all of the vendors as well so that we can get cannabis industry workers to shop at Diego Pellicer. Then we have a friends and family one also that has some unique discounts on it.
CD: What do you hope attendees will bring back to their business from your session at Cannabis Conference 2020?
NJ: I will be at the conference in April just sharing some tips and tricks that have worked for Diego Pellicer, some tips on how to grow your database organically without spending a lot of money. I won't go too deep into customer service, but I will take the “three-legged stool” approach on how you should be able to retain a customer for life if you focus on those three areas. I will be there talking about things like what we just talked about—building a loyalty point system in your store, whether it's through your point-of-sale software or through a physical punch card promotional program, et cetera, et cetera.