The evolution of cannabis marketing is accelerating. One leading factor… middlemen from distributors to budtenders disrupted by the growing role of e-commerce.
I recently asked Jon Lowen, co-founder of the cannabis marketing solution firm Surfside, to update us on the impact of these changes.
Paul Talbot: What’s working for successful cannabis marketers right now?
Jon Lowen: The most successful cannabis marketers are experts in data mining and owning the customer experience. As the level of access to data and technology continues to evolve rapidly in the space, top-performing cannabis brands that leverage granular and personalized strategies when targeting consumers have proven the most successful.
Companies invested in educating and informing the current and prospective consumer about their brand positioning are leading the charge for customer data and insights.
We’ve seen those using custom micro-segmented audiences based on specific attributes such as income, visitation patterns, psychographics and spending habits excel.
By allocating their time and resources as efficiently as possible, they have a leg up on others in the space. It will be tough for other companies to catch up as the market evolves and e-commerce becomes more prevalent.
Talbot: What’s the toughest aspect of customer acquisition for cannabis marketers?
Lowen: There is a lack of inventory where customers are in the ‘buying’ mindset, which is a hurdle unique to the cannabis industry. With regulations in place that limit advertising capabilities on Facebook, Instagram, Google and Amazon, where customers search for products and shop, cannabis marketers experience low conversion rates. Consequently, they have difficulty influencing buying decisions.
Influencing buyers to choose your product over another or generating customer loyalty is heavily weighted on product quality. With the growing access to data and technology, brands are now equipped with the proper tools to reach the right consumers.
That said, it’s not enough to just have these systems in place. It’s essential for businesses to leverage the data properly to best market to specific audience segments.
Talbot: There is a perception that it is difficult to establish brand loyalty for cannabis brands because of the consumer’s interest in exploring and experimenting with different products… does data support or dismantle this perception?
Lowen: Surfside’s data supports the perception that it is difficult to establish loyalty for cannabis brands because of consumers’ inclination to explore and experiment with different products. Beyond the obvious issue cannabis businesses face when attempting to receive national or even statewide distribution, we tend to see customers test products across product categories in conjunction with brands.
Customers who have just entered the market or are near-market have a greater tendency to remain consistent within a product category early on but show no brand loyalty. They are easily influenced by recommendations from others and desired outcomes of consumption.
This presents an interesting opportunity for brands to cultivate a connection with new consumers before they explore additional product categories and before making decisions regarding brand preference.
Talbot: How is consolidation within the cannabis industry impacting cannabis marketing?
Lowen: Recently, we have seen many MSOs (multi-state operators) and cannabis brands consolidate services to increase reach and footprint. Before doing so, cannabis businesses prioritized the race for distribution, placement and scale. As companies have undergone consolidation efforts, their focus has shifted to boost sales and growth through increased marketing efforts.
Marketing is a key force used by cannabis businesses to reach new consumers and patients. The impact on marketing has been positive as the competition to attract incoming and current consumers has grown. Consolidation has increased the need for brands to build out efficient customer acquisition purchase funnels via digital channels. As e-commerce continues to thrive, marketing efforts in the cannabis industry show no signs of slowing down.
Talbot: Any other insights on cannabis marketing strategy you’d like to share?
Lowen: The best way to acquire new customers is to understand your existing customers. After all, people-based marketing starts with knowing your consumer.
By leaning on first-party data and insights from known consumers, as well as broader purchase behaviors of the mainstream consumer, cannabis brands can identify and target those most likely to buy their products.
We suggest finding out why current consumers purchase your products or visit your store, then replicating that success by marketing to lookalikes and building out brand experiences tailored to unique brand differentiators.
By making this data actionable and personalizing messaging across all marketing mediums, brands can successfully reach different buyer subsets.