PriceClubCBD.com is the first CBD marketer to launch a membership program that gives CBD consumers steep discounts in purchasing the more-popular CBD products online. The online CBD marketer provides member access to its entire library of products and the higher the enrollment, the more members save.
The Company says its products are all high quality due to its own CBD grow facilities and manufacturing, which allows Price Club CBD to pass along the savings to its loyal members. According to Price Club CBD, members can buy a 300mg tincture of CBD for $19.95, compared to prices ranging from $25 to over $100.
Loyalty Program Marketing
While loyalty programs themselves aren’t a new concept, bringing it to the CBD market is. And Price Club CBD believes what it gives up in gross margin it will make up through customer loyalty.
Loyalty360 says 4 out 5 persons are more likely to engage with a brand that offers incentives. Yet consumers want clear, straightforward benefits. “Cash is still King,” says Loyalty360, and the new club agrees. “CBD buyers want quality – but at a price good enough to warrant paying a monthly membership fee,” said a Price Club CBD spokesperson.
But loyalty itself for CBD consumers comes from continued use. In fact, marketers say it usually takes 3 to 5 orders before customers devote themselves to a brand.
According to a survey by Yotpo, 64% of consumers said fair pricing motivates them to try a new brand, followed by free shipping (61%), reviews (57%), word of mouth (46%), great shopping/buying experience (37%), loyalty perks/rewards (35%), ads (15%) and influencer endorsement (4%).
Marketing Industry Viewpoint
But is the CBD market large enough to benefit from a membership program? According to Nielsen, the CBD market will grow to in excess of $6 billion by 2025, banking in large part to the Food and Drug Administration in Washington, which currently regulates CBD eatable products.
“This potential legalization of edible CBD from hemp could have a major impact on the U.S. consumer packaged goods (CPG) industry – particularly for the snack and confectionery category,” said Nielsen.
While Nielsen’s CBD market forecast is focused on the Snack and Confectionery categories, Forbes took a broader look, forecasting $20 billion by 2024, quoting a study by BDS Analytics. That forecast takes into account products sold through licensed dispensaries, pharmaceuticals and in general market retail, which includes cafes, smoke shops, grocery stores and pharmacies.
Investment banker, Cowen & Co, called the market at $16 million. Of those findings, one of the most intriguing was that nearly 7 percent of the 2,500 polled, said they had used CBD, which surprised the analysts at Cowen.
Although CBD is technically legal as a result of the Farm Bill that passed late last year, the legal marijuana economy is still fragmented as a result of the federal illegality. Currently, 33 states and Washington, D.C. have legal medical markets while 10 states (plus D.C.) permit recreational use.
Regardless of whose forecast is more accurate, the demand for CBD products continues to rise. This may be credited to a growing mix of CBD products being manufactured and sold.
Range Expansion and Pricing
Price Club CBD says their catalog of CBD products meets growing consumer demand with tinctures, soft gel capsules, topicals and gummies being the most popular. Still, competition is stiff, but the company believes its quality and discounted pricing is the win-win consumers are looking for.
The International Council of Shopping Centers’ (ICSC) survey says 92% of loyal customers rank price and value as the top driver for loyalty to specific retailers, followed by product/quality at 79% and variety/selection at 71%.
“Consumers want the best experience and the best value, in turn rewarding brands and retailers with their loyalty,” said ICSC President, Tom McGee, in referencing retail stores, though McGee also says marketers need to pay attention statistically to Millennials, something Price Club CBD have as an advantage over ‘big box’ retailers.
While millennials tend to show loyalty to brand and retailers, prices would have to be at least 10% lower to get millennials to switch, according to Dinesh Gauri, a professor in the Department of Marketing and head of the University of Arkansas Retailing Research Initiative.
Dr. Gauri, Nielsen and the ICSC all agree on one aspect of a loyalty program … the lower the price, the greater the loyalty and Price Club CBD appears to understand the value of discounting its pricing enough to attract new membership – and its value in garnering market share.
Price Club CBD seems to be on target with its recent launch and what it is giving up in gross margin it believes it is making up in garnering repeat business and customer loyalty as a result. So within the CBD industry, Price Club CBD could be building itself into double-digit market share, giving way to more CBD products while passing the savings through to its loyal members, not unlike how Costco grew into the largest member-driven retailer in the nation.