Is your dispensary data-driven?
I visited two dispensaries a few miles from each other in Las Vegas after attending MJBizCon. After presenting my ID upon entering, I told the budtenders what I wanted and that I was a first-time customer. One gave me a 10% discount, and the other didn’t. Neither asked for additional information, like my email address or phone number, or attempted to upsell or cross-sell me on other products.
I left satisfied with my purchases and budtender interactions. However, in the current cannabis climate, is good customer service enough to sustain a competitive advantage when dispensaries are on every corner? Was there a golden opportunity missed?
“Data is the new oil” isn’t just a catchphrase. It should be one of the cornerstones of your business. Failure to heed this can be the difference between your dispensary succeeding or failing.
BI Versus AI
Most dispensary owners or managers dutifully pull reports every day from their ERP, POS or e-commerce platforms. These reports typically employ business intelligence that gives them a historical perspective on who bought what or how many items sold. While this is a great starting point, only using this type of analytics could leave your dispensary at a significant disadvantage.
Artificial intelligence is the ability for a computer to think and act like a human. It empowers you to make predictions based on analyzing past patterns. Examples include Amazon’s product recommendations, Netflix’s movie recommendations and Tesla’s self-driving cars.
Think about the difference between a flip phone and a smartphone. Both do the same thing: make phone calls. However, one has superior capabilities over the other. The use of business intelligence can help you do well now, while artificial intelligence can help drive your dispensary forward to unprecedented heights.
Your Dispensary’s Superpower
Let’s assume that both dispensaries I visited in Las Vegas had 500 to 600 products, 10,000 customers and about 50,000 orders sitting in their POS. How can the dispensary owner leverage their data to drive growth?
AI thrives on data, and each retailer’s POS can provide a treasure trove of information for busy, established dispensaries to help drive repeat customers.
AI can help them predict: the potential profitability of each customer; what each of their 10,000 customers is likely to purchase; and how much of a given product will sell in a given day, week or month.
Why would a dispensary owner take time out of their busy day to learn about new technology? For starters, a Bain study indicates that improving customer retention by 5% can increase profits by 25-95%. Second, according to Deloitte, 80% of customers are likely to buy from a company that offers personalization. Third, a McKinsey article shows that improving forecasting can lead to a 65% reduction in lost sales due to out-of-stock challenges.
With the democratization of AI, dispensary owners can now gain a competitive advantage over their nearby competitors.
The Future of Dispensaries
There are now more than 7500 dispensaries in the United States.
As competition for market share increases, we are seeing prices and margins falling. Some of these smaller dispensaries or craft growers are steadfast in growing their operations for life. Others are building their business to position themselves for acquisition.
Regardless of your goals, technology like AI could be the tipping point to your success.
The opportunity in cannabis is massive despite its challenges. Consider the two dispensaries mentioned earlier. What if one of them took a little bit of time to learn more about my habits and leverage their data with the help of AI? Who do you think is going to win?
Jerry Abiog is the co-founder and chief marketing officer of Standard Insights, an AI as a service marketing platform. Standard Insights helps businesses leverage their first-party customer to drive growth and improve their market share. He can be reached at firstname.lastname@example.org.