Loyalty programs have become a common tool for attracting and retaining customers. Yet despite these efforts, a surprising number of customers never redeem their accumulated points. While dispensaries continue to invest in reward systems, they often overlook a key metric: redemption rates. So, why are some customers sitting on unused rewards—and what can dispensaries do to change that?
The Redemption Gap
First, let’s address the elephant in the room: just because a customer joins a loyalty program doesn’t mean they’ll use it. According to data from Paytronix and industry case studies, up to 60% of loyalty points in retail industries go unredeemed. In cannabis, that number may be even higher due to regulatory hurdles, customer education gaps, and system usability challenges.
For many cannabis customers, the roadblock begins with awareness. Some are unaware they even earn points with purchases. If point accrual isn’t clearly communicated—either at checkout, through receipts, SMS, or the dispensary’s app—they may never know the value they’re sitting on.
Lack of Transparency and Value Perception
Even when customers are aware of their points, many don’t know what they’re worth. A vague message like “You’ve earned 200 points” means little without context. Is that $2 off, or is it enough for a full eighth of flower?
When dispensaries fail to clearly define the dollar value or product equivalency of rewards, it reduces the program’s perceived value. Customers want to feel they’re getting something tangible in return. Without that clarity, they may ignore the program entirely.
Clunky Redemption Experiences
Ease of use is another barrier. If redeeming points requires logging into a separate app, remembering a code, or navigating multiple menus, most customers won’t bother. In-person staff might forget to mention eligible redemptions, or worse, be unsure how to apply them within the POS system. These friction points turn a potentially delightful reward into a hassle, especially for time-sensitive or impulse buyers.
Regulatory Limitations
In some states, cannabis marketing regulations restrict how dispensaries can advertise or apply loyalty rewards. For instance, certain jurisdictions prohibit offering discounts on cannabis products directly or require age-gated platforms to display promotional content. This often leads to convoluted workarounds that confuse customers or limit promotion reach altogether.
How Dispensaries Can Boost Redemption Rates
Fortunately, dispensaries can take strategic steps to fix this gap:
- Simplify the Message
Instead of just showing point totals, communicate value in simple terms: “You have $10 off waiting for you” or “Redeem your points today for a free pre-roll.” - Train Budtenders
Empower in-store staff to educate customers at the point of sale. Budtenders should be aware of current reward offers, how to check point balances, and how to suggest redemptions based on customer preferences. - Offer Immediate Redemptions
Allow customers to redeem points in real-time at checkout. Prompt them: “Would you like to use your $5 credit today?” That creates a seamless, frictionless experience that builds loyalty. - Automate Reminders
Use SMS or email marketing to alert customers when points are close to expiration or when they’ve reached a threshold for a meaningful reward. - Gamify the Experience
Incorporate tiers, badges, or surprise bonuses to keep the program engaging. This adds a layer of excitement and motivation to return. - Measure & Adjust
Track redemption rates and experiment with different reward formats or thresholds. Customer data can reveal what motivates action.
When designed and executed properly, loyalty programs should reward—not frustrate—your customers. By making rewards clear, simple, and immediately beneficial, cannabis dispensaries can boost redemption rates and foster deeper, longer-lasting relationships.
