Dispensary KPI #2: Acquisition Marketing Efficiency Ratio (aMER)

Your dispensary's Acquisition Marketing Efficiency Ratio (aMER) is a vital metric that measures how effectively your customer acquisition spending converts into revenue from new customers.

Based on our analysis of single-store, multi-store, and multi-state dispensaries across the United States, this key performance indicator helps optimize new customer acquisition strategies and budgets.

Acquisition Marketing Efficiency Ratio (aMER) measures the revenue generated from new customers for every dollar spent on acquisition marketing.

For example, if your dispensary generates $30,000 in monthly revenue from new customers while spending $10,000 on acquisition marketing, your aMER is 3.0 ($30,000/$10,000 = 3). Based on our proprietary BNCHMRK dataset, here's how we categorize dispensary aMER performance:

• Great: aMER ≥ 20.0

• Average: aMER between 10.0 and 20.0

• Needs Improvement: aMER < 10.0

Author Note: this target will evolve as our dataset grows. An individual aMER score highly depends on the maturity of the location's market, their monthly fixed and variable expenses, how much they choose to allocate to acquisition advertising and the average first-time purchase value of their customer base.

Our latest data from October 2024 shows significant variations in aMER across dispensaries in our dataset. We currently have data from dispensaries in 9 U.S. markets; below is the performance distribution by percentage:

Dispensary Performance Distribution

• Dispensary's Scoring Great: 0% of dispensaries scored in this range

• Dispensary's Scoring Average: 28.57% of dispensaries scored in this range with an average aMER of 14.8

• Dispensary's Scoring Needs Improvement: 71.43% of dispensaries scored in this range with an average aMER of 7.6

To accurately calculate your dispensary's aMER, follow these steps:

#1. Calculate New Customer Revenue

• Track first-time purchase revenue

• Include all sales channels (in-store, delivery, online)

• Exclude tax revenue

• Account for returns and adjustments

#2. Sum Acquisition Marketing Expenses

• New customer acquisition advertising costs

• First-time customer promotions

• Agency fees for acquisition campaigns

• Marketing staff time allocated to acquisition

• Event marketing expenses targeting new customers

• Local advertising aimed at new customer acquisition

#3. Formula

aMER = Total Monthly New Customer Revenue / Total Monthly Acquisition Marketing Spend

Several key factors influence your dispensary's aMER:

Market-Specific Variables

Competition Density

Areas with high dispensary concentration typically see lower aMER due to increased competition for new customers. Dense urban markets often require higher acquisition spend to stand out. Successful dispensaries in competitive markets focus on:

• Unique first-time customer offers

• Distinctive brand positioning

• Superior new customer experience

• Community engagement initiatives

• Strategic location-based marketing

Local Advertising Restrictions

• Cannabis advertising regulations vary significantly by state and municipality

• Markets with stricter advertising limitations often focus on:

  • Organic growth strategies

  • Community partnerships

  • Educational content

  • Referral programs

  • Local event sponsorships

Market Maturity

Each stage of market maturity presents distinct challenges for new customer acquisition:

New Markets:

• Higher focus on education

• Emphasis on brand awareness

• First-mover advantage opportunities

• Community acceptance building

Growing Markets:

• Increased competition for new customers

• Need for differentiation

• The balance between acquisition and retention

• Market share establishment

Mature Markets:

• Higher acquisition costs

• Need for sophisticated targeting

• Focus on specific customer segments

• Innovation in acquisition strategies

Operational Factors

New Customer Experience

The first interaction with your dispensary is crucial for acquisition success, shaping a customer’s perception and increasing the chances of retention. Key areas of focus include:

Staff Training for New Customers

• Comprehensive first-time visitor protocols

• Product education frameworks

• Need assessment procedures

• Questions handling guidelines

• Menu navigation assistance

Leading dispensaries invest in tailored new customer training programs, regularly refining them based on performance data and customer feedback. By enhancing the first-visit experience, these stores increase the likelihood of turning first-time customers into loyal patrons.

First-Time Purchase Programs

Offering incentives for first-time purchases can significantly impact aMER by enhancing the initial experience and encouraging future visits. Key areas to focus on include:

Offer Structure

• Welcome package design

• First purchase discounts

• Product trial programs

• Educational materials

• Follow-up communication plans

Top-performing dispensaries regularly test and optimize their first-time purchase programs based on the following:

• Redemption rates

• Average first purchase value

• Return visit data

• Customer feedback

• Cost efficiency metrics

Well-crafted first-time purchase programs are powerful tools in customer acquisition. They provide value to customers while offering insights for ongoing program enhancements.

Menu Design for New Customers

An organized, easy-to-navigate menu is essential for a positive first-time experience, helping new customers confidently find products. Important considerations include:

Menu Organization

• Clear category structure

• Beginner-friendly sections

• Staff favorites highlights

• Educational content integration

• Price point variety

Product Selection

• Entry-level options

• Popular starter products

• Value-based bundles

• Sampling opportunities

• Educational kits

A well-thought-out menu not only simplifies the shopping experience but also increases the likelihood of converting first-time visitors into returning customers.

Technology Integrations

Leveraging modern technology enhances the new customer experience by personalizing service and improving operational efficiency. Key areas include:

Systems Integration

• First-time customer identification

• Purchase history tracking

• Communication preferences

• Feedback collection

• Performance analytics

Digital Experience

• User-friendly online menu

• Easy registration process

• Educational resources

• Clear first-time buyer guides

• Mobile optimization

Effective technology integrations create a more personalized experience, helping dispensaries build stronger connections with new customers and set a solid foundation for loyalty.

Based on our experience working with dispensaries across multiple markets, several key strategies can help improve Acquisition Marketing Efficiency Ratio:

New Customer Journey Optimization

Creating a seamless journey from pre-visit to post-visit can significantly enhance the new customer experience, boosting acquisition and engagement. Key areas include:

Pre-Visit Experience

• Clear location information

• Easy-to-find operating hours

• First-visit preparation guides

• Online pre-registration options

• Parking and access details

In-Store Experience

• Dedicated new customer hosts

• Streamlined check-in process

• Educational materials

• Clear wayfinding

• Comfortable waiting areas

Post-Visit Follow-up

• Thank you messages

• Feedback requests

• Next visit incentives

• Educational content

• Community invitations

Optimizing the customer journey from start to finish helps dispensaries make a lasting impression, increasing the likelihood of customer retention.

Marketing Channel Optimization

Effective channel selection and targeted messaging help dispensaries improve their Acquisition Marketing Efficiency Ratio by reaching new customers efficiently. Key focuses include:

Digital Channels

• Targeted local advertising

• Search engine optimization

• Social media engagement

• Online directory management

• Website optimization

Traditional Channels

• Local event participation

• Community partnerships

• Print advertising

• Radio/podcast sponsorships

• Billboard placement

By leveraging a balanced mix of digital and traditional channels, dispensaries can effectively target and attract new customers, maximizing their reach and impact.

First-Time Purchase Value Enhancement

Increasing the value of first-time purchases can boost acquisition efficiency by providing customers with comprehensive and appealing product options. Core strategies include:

Product Bundle Strategy

• Starter kits development

• Multi-product incentives

• Category sampling programs

• Educational packages

• Value-based offerings

Staff Training

• Need assessment protocols

• Product knowledge systems

• Educational conversation guides

• Cross-selling techniques

• Follow-up procedures

Enhancing first-time purchase value provides new customers with a memorable experience, encouraging higher initial spending and increasing the likelihood of future visits.

To get a complete picture of new customer acquisition performance, monitor these related KPIs:

• Cost Per Acquisition (CPA)

• Return On Ad Spend (ROAS)

• Conversion Rate (CVR)

• BNCHMRK Monthly Reports: Access the latest insights on dispensary performance.

• Marketing Performance Scorecard: Get your free BNCHMRK scorecard to assess your marketing efficiency.

• Consultation with Growth Experts: Schedule a free consultation with one of our cannabis growth experts for personalized advice.

Improving your Acquisition Marketing Efficiency Ratio requires optimizing the entire new customer journey, enhancing first-time purchase value, and effectively managing acquisition marketing channels. Successful dispensaries invest in staff training, targeted marketing, and high-quality first-time customer experiences to maximize new customer revenue.

Last Updated: November 10, 2024. Data sourced from BNCHMRK's proprietary database of dispensary performance metrics.

What is a good Acquisition Marketing Efficiency Ratio for a Dispensary?

A good aMER for dispensaries depends on numerous financial inputs specific to the individual retail location. In reality, a good aMER allows owners and operators to budget and allocate marketing-related expenses to enable a location to hit its desired new customer goals while maintaining a target net margin percentage for a given level of advertising spend.

How do you calculate the Acquisition Marketing Efficiency Ratio for a dispensary?

Calculate aMER by dividing total new customer revenue by total acquisition marketing spend. For example, if monthly new customer revenue is $40,000 and acquisition marketing spend is $10,000, your aMER is 4.0 ($40,000/$10,000 = 4.0).

Which marketing costs should I include in aMER calculations?

Include all acquisition-focused marketing expenses: new customer advertising, first-time buyer promotions, acquisition-focused agency fees, marketing staff time dedicated to the acquisition, and new customer event costs. Exclude retention marketing expenses and general operational costs.

How often should I calculate my dispensary's aMER?

Track aMER monthly to identify trends and adjust acquisition strategies. Calculate quarterly and annual aMER to account for seasonal variations and evaluate long-term acquisition program effectiveness.

How does aMER differ from overall MER?

While MER measures total revenue against total marketing spend, aMER focuses explicitly on new customer revenue and acquisition marketing spend, helping you evaluate the effectiveness of your new customer acquisition efforts separately from retention marketing.

Last Updated: November 10, 2024. Data sourced from BNCHMRK's proprietary database of dispensary performance metrics.