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The Psychology of Cannabis Retail

How The Way We Think Affects Buying Behavior

Since 1996, when California first legalized medical use, there has been a revolution in the cannabis retail industry. Is your dispensary keeping up with the changes? 

A few things have changed since cannabis first went legal. Both medicinally in California, back in 1996, and recreationally in Colorado in 2012. In the very beginning, there were few dispensaries, so customers made their purchases wherever they could. It was enough to have the product and be willing to sell it.

As someone that's worked with clients in over 20 different states, we see the same pattern – at first, consumers flock to every dispensary with its doors open. As time goes on, licenses are granted and competition springs up. When availability is no longer limited, consumer expectations begin to rise. Meanwhile, the face of the cannabis consumer changes as well. The target market diversifies as senior citizens and 'soccer moms' begin to frequent dispensaries.

Eventually, these circumstances require dispensaries to up their game when it comes to marketing and merchandising. 

Successful dispensaries are 1) able to keep up with consumer expectations as they grow, and 2) market to the rising cannabis consumer and patient types. The best practices for achieving this bring us back to the psychology of purchasing behavior. Below, we look at the psychology of marketing as it applies to the cannabis retail industry and analyze how to leverage this in your dispensary.

 

Why Do People Buy Things?

Ultimately, a successful cannabis retail business is characterized by its ability to sell cannabis products. So, the question becomes, "how do I influence cannabis consumers to come in and buy my product?" 

Why, when you go to store for a new winter jacket, do you pick one brand over another? When you go to the grocery store, why do you choose one brand of bread over another? 

Why would a 25-year-old college student choose one brand or form of cannabis, while a 34-year-old stay at home mom chooses another? This quote by Margo Aaron wraps up the psychology of why people buy: 

"We don’t buy things. We buy how things make us feel." 

What feeling is your dispensary selling? Are you paying attention to how your store, your packaging, and event the messaging of your text campaigns make people feel? And more importantly, is your brand keeping up with the changing face of the cannabis consumer? 

The target market for cannabis is shifting, and you may be losing out on customers because your store is still solely marketing to 'stoners,' and not paying attention to the new face of the cannabis consumer – the general public.

Evaluate who you are selling products to, and what feelings they might want. The busy professional mom – I bet she'd like to feel relaxed at the end of a long day. Some of the rising markets include seniors, 'soccer moms' and middle-aged professionals. 

When More Is Less 

In 2005, economist and psychologist Barry Schwartz gave a TED talk about the paradox of choice. Many of us assume people want more choices. We don't just want black or red socks; we want to be able to choose red or yellow or orange, too. 

However, choice is only appealing in theory. In reality, people don't want more choices. It causes them to become overwhelmed. According to this grocery store study, people want an average of six choices or product options. 

The paradox of choice is particularly interesting in the cannabis retail industry, where offering tons of options means your customers can choose their experience. 

Does this mean you shouldn't be offering brownie bites and gumdrops...and bath bombs, and vape pens, and prerolls?  

Not necessarily.  

But, it does mean you should consider what you offer to new customers that are not yet familiar with all the new cannabis products out there. Instead of rolling out your list of three dozen products, coach your budtenders to start with a few, and then tailor your recommendations based on their interest. Another great way to capture what your customers' interests are is through the Baker Checkin and Loyalty dispensary software. 

Using Reciprocity to Increase Brand Loyalty

In 2002, four researchers performed an experiment where servers at a restaurant gave varying quantities of mints when they delivered the check. What they discovered was that the server's tips correlated to the number of mints they gave. That is, their tips grew in proportion to the number of mints they left. 

This idea of reciprocity can also be applied in dispensaries... though likely not through the use of dinner mints. 

Consider using customer loyalty programs to reward buyers and encourage them to stay. Reward them for signing up, coming into your dispensary, ordering online, or even spending a certain amount. Here's a great resource for building a loyalty program, designed for dispensaries. 

 

Our research shows that loyal customers will spend 60% more per purchase, visit your location more, and spend, on average, over $15,000. Perhaps this is due to the feeling of community and belonging that loyalty programs evoke.

Final Thoughts on Psychology in Cannabis Retail 

The cannabis retail industry is unique in many ways. However, that does not require reinventing the marketing wheel. We can use standard marketing ideas, such as how psychology affects purchase behavior –  we just need to tweak it to apply to our industry. 

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Want to see more articles and tips for dispensaries? Subscribe to our blog!

 
 
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