January 18, 2022

The fundamentals of data in cannabis

By
Jared Barrett
March 5, 2021
January 18, 2022

As the Director of Enterprise Solutions at Dutchie, a very large percentage of my day is spent thinking about data within the cannabis industry. We all know that data is important in cannabis, however, knowing where to start can be a little overwhelming, but we can dissect this together.

In this series of blog posts, we are going to adventure into the land of data applications in a customer-facing cannabis business.

Where to begin?

Purchase data

Guest/Customer frequency segmentsโ€”one of my favorites.

To start you look at how often your customers are visiting your establishment.

Since most cannabis sales require that you show/scan an ID at some point, you should know how often your customers are coming in. I have always thought of this in terms of frequency, recency, and spend. This data allows you to see who your best customers are, and what their purchasing behavior looks like.

I typically built segments by 30, 60, 90, and 120 days of purchase and then segment by the dollar amount spent and number of visits within the measured period. This will yield segments of customers that tried your store/location and never came back, groups that shop every so often, and your highest value loyal customers.

Letโ€™s build a segment exampleโ€”this is just a made-up example.

  • Try-outs: Visited 1โ€“2 times in the last 120 days
  • Benchwarmers: Visited 4 times in the last 90
  • Starters: Visited 4 times in the last 60 days
  • MVP: Visited 4 times in the last 30 days

Try-outs

How is this segment acquired?

Can you pinpoint the channels that drive them into your store?

Even if you canโ€™t, we can take a look at the first item they purchased and make some observations. Maybe these people are coming in because of a special youโ€™re running.

This segment is typically very value-oriented and makes buying decisions based on the available deals. Can you convert these people into regulars? Maybe. Iโ€™d venture to say the people purchasing based on a special come in once and only return if/when another special is run.

This segment is perfect if youโ€™re in a tourist destination. Maybe a guest in the segment purchased an item that a social influencer was promoting. Maybe they bought an item youโ€™re pushing on social media.

These are excellent indicators of an opportunity to convert these segment users into bench warmers. Go back in your data historically to see if you can find your โ€œtry-outsโ€.

Benchwarmers

Benchwarmers have visited 4 times in the last 90 days.

Hopefully this is a large segment for you. This group has likely opted into your messaging. If they havenโ€™t, shame on you for not driving that engagement.

This group seems to like your store and keeps coming back. What are they buying? Is it consistent? If itโ€™s a special (like the above example) that you run consistently (munchie Monday), then you have identified the โ€œlow hanging fruitโ€ to activate when you need to capitalize on this specific type of special.

Say you want to clear a product off of the self or if sales are lagging, hit them with the discount to drive the extra visit. Look for additional segment members that are not basing the purchase decision solely on specials.

Look for the commonalities in the data. Do they all buy a specific brand or type of product?

Are there any commonalities in the type of items that are in the order together E.g. vape and battery? A word cloud can be a very powerful tool here.

Get creative with pivot tables in excel. Try creating targeted cohorts of specific customers inside your segments. Base it on the purchase history. Use these groups to send meaningful content that drives the extra visit. These people are primed to be starters. Come on coach, put them in!

Starters

I think every kid in the midwest grew up wearing a starter jacket. I had a few of them. I can still hear the commercialโ€ฆ Starterโ€ฆ.. You just heard it too. This segment is your bread and butter.

These people love you and are your advocates. Incentivize these people to get their friends in the door. Give them some type of referral code to use for their friends.

Make them feel connected Reward them without them having to โ€œwork towardsโ€ it. This is often called Surprise and Delight and itโ€™s highly effective. Give them merch and turn them into walking billboards. Everyone wants to rock a dope hoodie.

Stop sleeping on these peopleโ€™s ability to add new guests to the try outs segment. Build a 1:1 feeling relationship with these people. Make them feel like they are part of your crew.

Look in the purchase history for trends. Did they all follow a common purchase path? (meaning they all bought the same types of items as they were moving across segments).

This is a great way to tell if there is a specific product or products that are driving this guest funnel across segments. If there are common themes here you can start to have your staff and digital push these types of products?

Youโ€™ve now identified something specific that brings in highly sought after guests. Start to target these products as your way to get people in the store. They will convert very fast if you continue to execute excellent & data driven operations.

MVPs

We all know the MVPs. They are in the store all the time. Itโ€™s sometimes your friends and family. Your staff knows their name and they spend a lot of money. They donโ€™t show up just for specials and they likely come in on your off times so they donโ€™t have to wait in line.

Iโ€™m super guilty of this.

I will drive right out of the dispensary lot if the line is out the door. These people wear your merch (or would if you had been smart enough reward them with it) and tell their friends about you. They feel connected to you (or youโ€™re the only game in town). They seek you out.

This segment is on autopilot. Just keep executing the level of experience they crave and you win. Reward them with surprise and delight to drive the extra visit. Donโ€™t try to drive too many extra visits out of this segment. Youโ€™ll walk a thin line of connected or intrusive.

The previous 2 segments are where I would focus my marketing resources and money. Reward this segment in unique and special ways. Do something creative and members of the other segments will want to get on this level.

Maybe a members-only event or item? Make them feel elite. Make them feel connected.

Whatโ€™s the final score?

These basic segments are a great way to start thinking about how to take action with the data you have today โ€” Activate your guests, know them, know how they want to be communicated with.

Learn how to drive just a single additional visit per guest and you will see your customers move forward in your segmentation.

Reward them by turning them into walking advertisements for your brand. They will love it and you build the personal connection driving the meaningful interactions for you both.

I know I love my branded hoodies. I wear them all the time. Let me close with an example from my past weekend. If you know me you know I love Woodward. I go out of my way to buy any new Woodward product I havenโ€™t tried. Last weekend my local dispensary did a drop of Woodward products. I had no idea and now Iโ€™m upset.

My irritation opens my mind to patronizing other dispensaries. Dispensaries that deploy communication systems that effectively communicate with me.

I am a MVP at my local dispensary. I tip the staff well. I buy lots of products and know what I want when I get there. Iโ€™m one of the people you want spending money in your business.

In all fairness, there are not many dispensaries where I live (3) and they donโ€™t need to target me to sell their productsโ€ฆ.. todayโ€ฆ Donโ€™t slip or Iโ€™ll open up a shop in the next town over to make sure I know when the Woodward is dropping.

Hell, Iโ€™ll even give myself a hoodie.

In next Monthโ€™s data post I will talk about your data sources and how you might combine them to be useful.

Stay tunedโ€ฆ..

About the author
Jared Barrett
Sr. Product Marketing Manger