The End of Discounting to Death: How to Build a Cannabis Brand that Lasts
We all know that 4/20 is the biggest cannabis sales day of the year. No matter the line, no matter the day, people around the country - around the world! - find a way to buy and consume cannabis. That’s why cannabis sales on 4/20 are more than 150% higher than average compared to the daily cannabis sales.
People definitely buy cannabis on 4/20. But most businesses want to stay competitive, so they rely on huge discounts. The average discount on 4/20, according to research shared by Ad Week, is around 65%.
When you’re building a cannabis advertising strategy, it can be tempting to focus on cheap prices. But that makes it harder to turn a profit from your ads. If you always rely on discounts, you have to make a lot more money from advertising to reach a positive return on ad spend (ROAS).
According to recent research from YouGov, there are three things to consider about regular cannabis consumers (those who consume 3 times a week or more):
1. Price Isn’t the Most Important Factor.
Research shows that, when it comes to cannabis, price isn’t everything. When asked about what’s most important, among regular cannabis users:
Key Takeaway: Price is only one of the factors in a consumer’s decision. The right campaign can convert without big discounts. If you know your audience and build an ad strategy, you could win business through product drops, new locations, exclusive brands, and values-based messaging, not just big deals.
2. 38% of Regular Cannabis Consumers Still Don’t Buy Legally.
In a world where taxes make a eighth in Chicago cost up to $80 at a dispensary, it’s no wonder the illicit market is still thriving. While regular cannabis consumers mostly buy legally, more than a third (38%) told YouGov that they bought illicility. Not all the time, though - 51% said they also visit dispensaries.
Key Takeaway: If you can’t compete with price, you can compete with branding, convenience and quality and safety. The question is how you create that experience, both digitally and in-person, and tell consumers why it’s important.
3. Retail Matters.
When New Jersey legalized cannabis, lines wrapped out the door and into the woods. The first day of legalization drove more than 12,000 customers who spent just under $1.9 million at twelve dispensaries. These cannabis consumers may have wanted to check out the retail experience because of the novelty, but the expertise of budtenders and range of products also matters. One survey found that more than two-thirds of cannabis consumers take a budtender’s recommendations into account.
Is there another industry where in-person matters so much?
Most regular cannabis consumers told YouGov that they visit dispensaries:
- 41% of regular cannabis consumers buy cannabis at dispensaries
- 21% of regular cannabis consumers buy cannabis online
- 12% buy from a specific brand website
But what’s the experience in the store? How can you reduce waiting time and make it as easy as possible to find products? How do you display different options and prices? How do you get customers into and out of the store with a smile on their face?
And, if you’re a cannabis brand, how do you make sure that your ad campaigns are as helpful as an in-person budtender?
Everything makes a difference and, in retail, the experience is what builds loyalty.
Key Takeaway: The real news of this survey is that so few regular cannabis customers buy cannabis directly from brand websites. Instead, brands should run co-marketing campaigns with dispensaries that carry their products. By advertising your products with a well-known dispensary, you can reach consumers at their favorite places to shop.
Completing the Cannabis Consumer Journey
With the majority of regular cannabis consumers visiting dispensaries, the right experience and the right recommendation can make all the difference. But that experience should start before consumers even get through the door and continue after an initial purchase. Dispensaries and brands both want repeat customers and, by making sure each customer journey is personalized, you can ensure that people keep coming back.
Want to learn about how Surfside can help you start building highly targeted, personalized ads? Sign up for a demo today!