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Understand the Metrics to Grow Value

What is CLV and Why is it One of the Most Important Metrics for Dispensaries?

Brian Metros, Founder & CEO Greater Green

Posted by Brian Metros

July 22, 2023

In the competitive world of cannabis dispensaries, understanding and optimizing Customer Lifetime Value (CLV) can be a game-changer for long-term success.

CLV is a metric that evaluates the overall value a customer brings to the business over the entire duration of their relationship with the dispensary. By focusing on CLV, dispensaries can make informed decisions about marketing, customer retention, and service strategies to boost revenue and build lasting customer relationships.

Calculating CLV is based on three key factors:

Average Purchase Value: This refers to the average amount of money a customer spends during a single transaction. For most cannabis dispensaries, we see a majority of customers spending between $60 to $100 per week, with a smaller portion spending under $20 per a once a month visit.


Purchase Frequency: This metric measures how often a customer makes a purchase within a specific period. For cannabis customers, purchase frequency can vary quite a bit based on imed but on average, monthly purchases are a safe estimate.


Customer Lifespan: The customer lifespan is the average duration of a customer's relationship with the dispensary. It can be calculated by determining the time gap between a customer's first purchase and their last purchase (if they have stopped visiting the dispensary). Grab a sizable sample size of this date, and let the math tell the truth.


Finally, to calculate CLV, you can use the formula: CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan

Why is CLV important for cannabis dispensaries?

Tailoring Marketing Efforts: Understanding your CLV helps you more deeply predict marketing campaigns that work and retain high-value customers. Increasing loyalty and revenue.


Budget Allocation: By knowing CLV, you can allocate resources in a much more strategic and educated direction, focusing on objectives with a higher impact on customer retention.


Upselling and Cross-Selling: CLV identifies opportunities to upsell and cross-sell, encouraging customers to try new products.


Enhanced Customer Experience: A higher CLV comes from satisfied and loyal customers. When you provide a seamless and personalized shopping experience, you inevitably drive retention.

Four Easy Wins to Grow CLV in Cannabis Dispensaries:

Ease the Shopping Experience: If your ecomm experience has customers bumbling through pop-ups, several repetitive age-gates, crowded & unfocused page content all while being super slow on a mobile device, it’s not hard to see that customer just giving up and going to the next site in the search results.


Take a minute and look at your digital presence through the eyes of the customer on the go and ask yourself, can a customer go from homepage to checkout in under 3 minutes?


Upselling and Cross-Selling: Many customers have a general personal preference when it comes to their cannabis purchasing habits.


Creating offers and incentives to ultimately convert customers who typically buy low profit margin items to being interested in products with much higher profit margins not only increases that customers scope of product understanding, but drives revenue up as well.


Budtender Recommendations: When shopping in person, it’s easy for bud tenders to strike up a casual conversation with a customer to provide them with their opinions and first hand knowledge on a product.


This personal connection is greatly undervalued in the digital landscape. Highlight personal recommendations and positive feedback from your knowledgable staff on products as much as you can. Put a name and a face to the testimonial. Out in the souls digital landscape, friendly faces should not be forgotten.


Follow-Up Communication: No brainer here. Send thank you emails. Include targeted offers in those communications. Don’t just hope the customer happens to wander through your door a second time. Call out to to them and let them know they are valued. Make them feel included and welcomed. In my experience, win-back campaigns are low-cost, low-impact objectives that have always led to quantifiable results.

Wrapping Up…

Understanding and optimizing Customer Lifetime Value can significantly impact the success of cannabis dispensaries. By employing strategies that focus on customer retention and satisfaction, dispensaries can create lasting relationships with their customers, leading to increased revenue and long-term growth.


Remember, putting customers at the heart of your strategy cultivates lasting relationships and drives long-term success. A personal touch goes a long way. Track your metrics carefully and let them guide you to the areas you need to work on.

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