How to Measure Cannabis Dispensary Loyalty Program Performance?

A successful loyalty program should be a constant work-in-progress. You start with a pilot program and make continuous improvements based on the latest program metrics. As a result, it is crucial to make sure you are measuring the right metrics. 

There are two sets of metrics to measure, one for the near-term program health and the other for the long-term program effectiveness:

General health monitoring

Metrics (over a specific period):

  • Total loyalty points earned
  • Total rewards redeemed
  • Total discount offers used
  • Total member event attendance
  • Total referrals
  • Total new signups
  • Total loyalty app downloads
  • Total active loyalty members
  • Total first-time redemptions

Program objective monitoring

Ultimately, a program is successful if it achieves the objectives you have set up in Step 1. Here are our suggested metrics for measuring different program objectives:

ObjectiveMetric
Increase retentionPercentage of customers who made a purchase in the past 90 days
Increase average basket sizePurchase dollar amount per visit
Increase purchase frequencyAverage days per purchase over the past 90 days
Increase revenueRevenueΔ = UΔ * PwhereUΔ = total increased unit sales as a result of the loyalty programP = effective price per unit 
Increase profitabilityGain/LossΔ = UΔ * M – R –  AwhereUΔ = total increased unit sales as a result of the loyalty programM = effective profit margin per unit R = cost of redeemed rewards and other incentivesA = administrative cost of the program
Receive valuable market research dataAmount of actionable insights created by the collected data

Time horizon and segments

When analyzing metrics, it is important to keep in mind the following two dimensions:

Short-term vs. long-term

When determining the cost effectiveness of any loyalty program, you need to select the proper time horizon. The time interval should be sufficient to realize the program’s objectives based on the time necessary to communicate the new program, enroll members, and for members to accumulate sufficient points.21

All members vs. segments

A loyalty program’s profitability can vary significantly by the customer segment. For example, a program can be very profitable through restoring sales for a customer segment that was close to leaving the program. The same program, on the contrary, could be very costly in serving light users whose volume cannot be increased.8 In these scenarios, if the program as a whole is not performing, the solution may not be to slash the entire program, but to restrict it to the profitable segments.

If you continuously experiment and take corrective actions, the program will become increasingly effective over time.

Monitor all metrics in one place

Use a dashboard to conveniently check all metrics in one place. If you use Toka’s loyalty management software, the dashboard will be readily set up for you.

By Nora Chen