The e-cigarette and vape market is currently valued at $2.85 billion annually, and is projected to surpass the traditional cigarette and tobacco industry within the next decade. Smoke shop owners are eager to secure a share of this growing market.
According to analysis conducted by the Truth Initiative and Information Resources, Inc. that reviewed data from 2014 to 2020, e-cigarette sales rose from 7.7 million units per month to 17.1 million units per month.
Adding e-cigarette, vape juice, atomizers, and other vaping paraphernalia to your retail shelves is no longer enough to attract new customers and retain old ones. Any smoke shop in town can do that. The competition is steep and growing, and with ecommerce also on the rise, the new motto in the tobacco industry has become "keep up or get left behind".
Savvy tobacco shop retailers are implementing customer loyalty rewards programs in an effort to creatively retain customers, increase brand awareness, and encourage brand loyalty from their customers.
In this blog post, we will describe specific ways to build customer loyalty at your smoke shop with a loyalty rewards program that will help you attract millennials, sell more e-cig products, and boost traditional tobacco sales.
In order to implement any customer loyalty rewards program, you'll first need to figure out the rewards structure or structures you want to include. There are three main structures that businesses tend to use, which are a points-based system, a tiered system, and a VIP benefits system. While we aren't going to cover this foundational ground here, you can learn more about these basic rewards structures in our blog on Different Types of Loyalty Programs.
Assuming that you already have your rewards structures in place, let's look at how you can incentivize shopping by allocating rewards points when your loyalty members:
- Enroll in the loyalty program
- Make purchases
- Interact with your social media accounts by liking, sharing, and hashtagging
- Post product reviews online
- Bring you referrals that enroll
OFFER AN UPFRONT ENROLLMENT INCENTIVE
Give away a cigar? Offer 50% off a first-time vape juice purchase? Award 100 rewards points? Why would a smoke shop hand out free products before their customers buy anything? It might seem counterintuitive, but giving away a freebie or some other kind of perk to customers just for signing up for your loyalty rewards program is an extremely effective way to generate instant enthusiasm and start a long term relationship with your brand-new loyalty members.
56% of brands automatically enroll customers into their loyalty program if and when they sign up for a store account or credit card.
Yes, that statistic is true, which has resulted in the average consumer holding nearly 18 loyalty cards. But this doesn't mean that automatically signing shoppers up for a loyalty program will cause them to use the program and become loyal to a smoke shop. If you want to make a big, positive impression, then offering an upfront enrollment incentive is a surefire way to stand out from the "auto-enrolled" crowd.
CUSTOMIZE PRODUCT RECOMMENDATIONS
As a smoke shop retailer, you know that every customer has their favorite tobacco brand and they aren't too likely to deviate. The same can be said for e-cigarette customers, who quickly become very particular about their vape juice PG vs. VG ratios, or have learned they'll only vape "salt" liquid. Have you been collecting this kind of data about your customers? If not, it's time to start, and your customer loyalty rewards program will be your most valuable tool to accomplish this.
Existing customers will spend an average of 67% more at your store than those who are new to your brand.
Your loyalty rewards program might need to upgrade into the digital sphere if it doesn't already have web-based and mobile app capabilities. If your smoke shop's POS is currently storing and managing your customers' accounts, you've definitely made a step in the right direction. But offering your loyalty members an app, too, will provide an additional layer of convenience that can encourage them to browse, shop, and earn and burn points at your store from the comfort of wherever they happen to be at the moment. This kind of technology makes collecting customer data a breeze, which you can then use as you set up fully automated personalized product recommendations.
GAMIFY YOUR VAPE LOYALTY PROGRAM
Think you can't gamify your loyalty program? You can. These days, a retailer can gamify anything. In fact, consumers expect it at this point. If you're unfamiliar with the term, "gamifying" is defined as taking an ordinary task or process and making it fun by adding gaming components, i.e. turning the task into a game. You've probably seen fitness centers "gamify" certain workouts, or segments of employee training exercises that are "gamified" to add fun to the goal of remembering policies and procedures as a group. Well, "gamification" is incredibly useful when applied to loyalty programs, too.
Since 2014, e-cigarettes have been the most commonly used tobacco product among U.S. millennials, as reported by the Centers for Disease Control.
The sale of e-cigarettes has been on the rise and those sales could surpass real cigarette and tobacco sales. Millennials have been at the helm of popularizing the vape industry, and since millennial consumers are also the most likely to both expect and want to play "games" as they browse, shop, and get to know a brand, it would be wise if you launched a few loyalty games of your own via a loyalty program mobile app. For more on the subject of gamifying your loyalty program to attract and engage millennials, check out How to Gamify Your Loyalty Program.
REWARD MEMBERS FOR THEIR REVIEWS
Creating new, fast, and fun rewards incentives for your loyalty members by initiating call-to-action opportunities is a great way to increase customer engagement and give your loyalty members more reasons to return to your smoke shop. For example, you could offer members 100 points for completing an online review of your smoke shop. Offering 100 points is the incentive that will motivate your members to follow through with the call-to-action of actually writing and posting a review for you.
Increasing customer retention by 2% is equivalent to cutting costs by 10%, according to Emmett & Mark Murphy, authors of Leading on the Edge of Chaos: The 10 Critical Elements for Success in Volatile Times.
When customers leave positive reviews about your smoke shop and the tobacco and vape products you sell, additional business will flow to your store as a result. One of the best forms of marketing is word-of-mouth marketing. It's free and effective, and well worth the cost of whatever kind of reward you choose to offer.
OFFER FUN REWARDS FOR REFERRALS
Speaking of word-of-mouth marketing, customer referrals are just as valuable, if not more so, than positive online reviews for your smoke shop. In today's highly competitive retail market, consumers are interested in more than finding great products at affordable prices. They are actually looking for memorable shopping experiences whenever they venture into a store, and your smoke shop is no exception. The great news for you is that if your location includes a vape lounge, then you've already got a leg up. You can start by approaching your customers who like to make themselves at home in the lounge area. Offer them an exclusive percentage discount, a freebie item, or some other reward for every referral they make that enrolls into the program.
73% of members are more likely to recommend and say positive things about a brand that offers a good loyalty program.
Extending rewards opportunities for your customers who make successful referrals doesn't have to be a solely in-store effort. With the right digital loyalty rewards program in place, you can send out an e-newsletter blast to your current members to let them know about the referral incentives. If you put a time limit on the rewards as well, you will see an even larger push as your customers tell their friends and family about the loyalty program. For example, try a three-month incentive period, where successful referrals done within the first 30 days will earn the member a 50% discount on their next order; successful referrals done within the second 30 days will earn the member a 30% discount; and successful referrals done within the last 30 days will earn the member 10%.
E-cigarette sales increased by 122.2% between September 2014 and May 2020, according to the Centers for Disease Control.
By developing fun loyalty rewards program incentives like the ones in this article, smoke shops can attract millennials, widen their customer demographic to include e-cigarette and vape lovers, and develop deeper relationships with their long-standing traditional tobacco customers.
This article was written by Loyal-n-Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.