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5 Tips for Diversifying Your Cannabis Customer Base

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May 28, 2019

Market analysts estimate that there are about 272 million cannabis consumers worldwide. Twenty four million of those consumers live in the US.

Despite the seemingly wide base of potential customers, many cannabis operators in the legal, adult-use market struggle to make a profit.

There are many reasons why cannabis companies struggle to grow– high barriers to entry, complicated and restrictive state regulations, high taxes, etc.

But one way successful operators have managed to handle the industry’s challenges is to diversify their customer base. The ability to have different types of customers means your business can weather everything from a bad online review to a product shortage caused by supply chain issues.

Here are our five tips for diversifying your cannabis customer base.

Understand Your Existing Customers

To diversify effectively, cannabis operators need to start by understanding who their existing customers are.

We’ve written a guide to California’s cannabis market in the past, but every state and local jurisdiction is different.

Here are some broad trends in the US cannabis market to keep in mind:

  • Don’t forget about Baby Boomers: 67% of Boomers consume cannabis for health and medical reasons. They also spend more than millennials or Gen Zers.
  • Women are becoming cannabis consumers at higher rates than men: in 2018, the growth of women entering the market outpaced men. Women are now 38% of cannabis consumers.
  • Veterans and the disabled account for 3% and 11% of cannabis consumers, respectively.

Many point-of-sale systems will keep track of your customer data for you.

Dive into your loyalty program data, sales data, and social media marketing dashboard to see who is responding to your existing product offers.

Pay attention not only to the demographics of your customers, but their cart size and the product mix: this can tell you a lot about whether they’re first timers, or seasoned veterans.

For example, an insight that you may see is the difference in frequency between particular age ranges, or specific products that move better with different genders.  At a few shops we visited, it was strikingly obvious that women purchased nearly 1.7-3x the amount of pre-rolls compared to men at their chops.

Diversify Your Product Mix

If you want to attract different types of customers, try offering different types of products. Research has shown that cannabis consumers demand variety.

According to BDS Analytics, “the market share for the top-selling edibles products in Colorado, Arizona and California does not rise above 4 percent, and in Oregon it doesn’t get beyond 6.5 percent.”

Unlike other industries, there’s no one dominant product. Customers in the cannabis market are willing to explore, try new things, and add new products to their repertoire.

Looking for a quick win? Dispensaries should explore adding CBD oil to their shelves because it is all the rage and awareness of its benefits are gaining wide-spread notoriety. Early reports predict sales of CBD to hit $22 billion in three years. With the legalization of hemp, there are many new possibilities available for consumer seeking natural, legal, low-dose cannabis products.

Now it's not simply about adding new products, but you need to put up point-of-purchase materials to promote them. 

A simple idea is to put a piece of paper in every takeaway bag that says new products you added this month/week.  You can also have them bring that same paper in for a discount which could lead to increased buying frequency.

Look into Delivery Options

Delivery is a great way to reach new customers and diversify your sales.

The regulations on cannabis delivery vary by state, but California’s new permanent regulations make it legal to deliver cannabis statewide – regardless of whether a customer lives in a municipality that prohibits cannabis locally.

If adding vehicles and drivers isn’t in your budget, work with a third party to make the runs for you. Eaze and Hip Joynt are two partners who can help you reach new customers, all while providing market insights for your business.

We believe it is paramount that you add delivery to your retail business simply because it unlocks so many potential customers with little to no extra effort on your part.  An in-person dispensary can only serve so many clients per hour, but adding delivery can double your throughput.

Don’t Forget About Medical Customers

The adult-use cannabis market grabs most of the headlines these days. But, for many states, medical cannabis is still king. And, more importantly, in states where there is a legal recreational market, many customers don’t differentiate between the different uses.

According to BDS Analytics, “Relatively few consumers use cannabis for single purposes; even among people who use cannabis for pain management, 73 percent of them also enjoy marijuana for recreational and social reasons.”

It’s no longer feasible for a cannabis operator to focus on one type of customer (social vs. medical). The lines are blurred, and as a result, diversifying your customer base means diversifying your marketing message.

And this is where delivery can also be helpful.  Some of those medical clients don't have the energy or stamina to come into your store, but would love to enjoy your products.  

Spend Time Networking

One of the best ways to diversify your customer base? Get out there and meet new people.

Go to trade shows, speak to different suppliers, and join community events to let people build trust in your business. As Inc. Magazine describes,  “It is easy for someone to forget an email, but it is much harder for someone to forget you, especially if you make an impression.”

You can also network with your customers, and reward people who bring in new business through a referrals program.

If you're not one to go out to conferences, then throw a customer appreciation day at your shop every quarter and promote heavily through social media.  You can center it around education about products and build that trust with your past and new clients.

To help off-set the costs associated with the event, reach out to product companies to sponsor the event, in full or partly.  Give them time to chat about their products, put their logo on promo materials and build that long-term relationship with them for recurring collaboration.


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