The recreational cannabis market is expected to overtake the medical market in revenue in 2019. So if you’re not already thinking about it, it’s time to consider how you will make the transition from a medical dispensary to recreational.
This med-to-rec transition comes with new regulations that will continually change. It will require shifts in marketing, inventory, staffing and even your customer retail experience.
At Baker, we routinely help our medical marijuana dispensary clients convert into recreational retailers. We’ve learned that if the switch to recreational is in your future, it’s never too early to get started. Here are a few things you can do to ensure a successful transition and a fruitful future.
Modify Marketing Techniques
As soon as you begin selling recreational cannabis items, you will target an entirely new audience. The buying habits and preferences of recreational consumers are quite different from the patients that you’re used to serving.
Their needs are different, too. Suddenly, instead of asking your patients what kind of pain they experience, you’ll ask them if they need rest or energy, a calm body or a calm mind. The product recommendations that follow will be based on the individual’s desired experience, as opposed to a specific ailment.
If you plan to continue serving your medical patients (as many do), then you will need to cater your dispensary marketing strategy to both types of consumers. In many cases, you will need to consider how to continue accommodating your medical patients, while you also market to your new, rec customers. Some examples where changes need to be made are:
- In-Store Experience: Your dispensary’s med users — whose orders are typically 18.5% larger than those of the adult users — drive more revenue for your dispensary. As you expand your offerings, these patients are likely to to experience longer wait times to get their orders. To avoid medical patient churn, you’ll need to provide alternative purchasing methods to keep transaction times down. Some of these methods include online ordering or in-store express ordering. This enables them to avoid standing behind the rec patients with a million questions, when they know exactly what they want.
- Promotions: To retain your med patients, you can design promotions that make them feel special and not forgotten amongst the new rec customers. For example, you can send them a special offer to receive advanced product reservations before it’s made available to your recreational customers. You can send them a text message that says “X product is back in stock, and we’re letting you know first! Reserve it now at www.yourdispensarymenu.com.” For recreational users, you’ll need to design targeted promotions that excite them. First, you’ll need to determine what products they typically buy and how frequently – then use this information to send them deals for those specific product types. So if they like to vape, then whenever you run a concentrates promo, you know to send it to that person. Some promotions will also be more powerful for rec customers as a whole For example, pre-rolls are four times more popular among adult-use than with med users — so you might want to promote those heavily with rec users.
- Communication Frequency and Strategy: Though medical customers usually place larger orders, they do so less frequently. Recreational consumers, on the other hand, are known to make impulse buys and in smaller quantities, as they’re more like to be “just trying things out.” So they are more likely to click your link in a pre roll promotion to buy it right away. Based on these differences in purchasing behavior, you can fine-tune your communication strategies for each consumer type. You might decide to message your non-med customers each time you run a weekly flower promo, but just the occasional product restock notification to your med customers. To learn more about communication tactics you can check out these Customer Communication Tips for Dispensaries.
- Loyalty & Rewards: Regular customers (regardless of if they are medical or recreational users) bring in more revenue than one-off customers. Establish or enhance loyalty through tiered loyalty programs. Provide loyalty benefits and perks each time they walk through your door or make a purchase – not just for your rec customers. Just keep in mind that your med loyalty program may have different rewards. For rec customers, a good loyalty reward is a low margin, but popular product – such as a pre roll. You should also ensure that you build in a referral-style loyalty programs to both sets of customers. The intent of this is to drive their friends to your dispensary.
Ensure You Have the Right Software
The right cannabis software can take a lot of headache out of the med-to-rec transition — from collecting and accessing customer data to making more informed marketing decisions, to ordering product. The right tools will make a big difference for you, your staff and your customers.
Collect More Customer Data
Medical patients come to a dispensary with a medical card, fill in a patient intake form and provide you with a ton of data that can be used to personalize your communications with them.
In contrast, recreational users are not required to give you all of this information. So you typically know very little about them, unless you ask. It’s important to ask your customers what products they like, the experience they’re looking for and so on. But simply asking them is not enough. You may have to 1. Provide an incentive to do so and 2. Record this data in a usable format to assist you in your marketing efforts.
Checkin makes this process seamless for you and your customers. It provides both the incentive and the ability to use the data for smart targeting. When customers enter your dispensary or make a purchase at the register, a Checkin tablet prompts them to check in for loyalty. This is the incentive component. It also eliminates their risk by allowing them to simply sign up with their cell phone number. You can still send them promotions, and they can still access and use your loyalty program.
But most consumers actually prefer to have a personalized experience. Thus most of your customers will continue to build their profiles. They will select their product interests or hobbies, and any other information you have chosen to collect. The platform then tracks this profile data, which you can use in smart targeting to filter communications based on preferences and product interests.
In-Store Customer Experience
A dispensary’s traffic is expected to grow by about ten times once it starts offering recreational products. But as more and more customers start walking into your dispensary, one-on-one time with a budtender comes at the expense of other customers. Even the patients that have shopped with you for years and know exactly what they want to buy are required to wait around for an available staff member to make their purchases. In a recent med-to-rec transition, this will take a long time as rec consumer typically have a lot of questions for the budtenders. They may not be aware of all the different types of products available, methods of use, potency levels or strain effects – this may even be their first time in a dispensary.
To provide the best possible experience to both your med and rec customers, you can turn to software. Look for solutions that provide faster transaction times and even an alternative method for sharing product information. Some features that these solutions can provide are:
- In-Store Express Ordering: This can be set up through touchscreen Kiosk tablets that you place throughout your store. It allows customers to both browse and place orders from the device. They may choose to just explore while they wait for a budtender to assist them. Or, with detailed descriptions and search capabilities, they may find what they’re looking for before they even meet with the budtender. Alternatively, they may know exactly what they want – they will place their order and go to your designated express pickup zone. Either way, you will provide an enhanced retail experience and create operational efficiencies for your staff.
- Online Ordering or Product Reservation: This is an e-commerce solution that allows users to place their order from the convenience of their own personal device. Depending on your state’s compliance regulations, you may be able to offer online ordering for pickup or delivery. If not, you can at least implement online product reservations to confirm product availability and enable express pickup. An addition perk that Baker offers is a two-way chat capability. So when a customer places an online order, they can send your staff a question that they can respond to immediately.
- Menus – Website and Interactive In-Store Menus: Even if you choose not to offer online or express ordering, it’s important to let customers explore your available product at their own convenience. They should be able to learn about each product you have in stock, see pictures of the product and find out what specials you’re running. This menu can be on your website, or on a Kiosk tablet that customers can use to navigate on their own.
Technology to Build Customer Relationships
As we previously mentioned, customer data is vital to creating personalized shopping experiences. While some POS solutions help you track customer sales data, it is important to understand that this capability is limited. Any dispensary marketing strategy, medical or recreational, should implement a customer relationship management (CRM) solution that is centered around customer-centric marketing. In today’s retail environment, a hyper-personalized experience is expected. You can learn more about how to find the right marketing solution or dispensary CRM for you in the Ultimate Guide to Dispensary Software.
As you transition into a recreational cannabis retailer, you will of course carry more inventory. You will also order different types of products at different quantities than you did when you strictly served medical patients.
It’s best to add a mix of popular and profitable recreational products – drive customers to your store with the popular options and generate more revenue by upselling the profitable products.
Through Baker online Shop and Kiosk order data, we have identified the top five recreational product categories. The products with the greatest number of units are:
- Pre Rolls
Keep in mind that although flower is popular, it’s popularity is decreasing and there are other categories on the rise. It’s smart to always offer a variety of product types to cater to a wider audience. Accessories are also a hit with recreational users and make for great dispensary loyalty rewards. These can include pipes, vaporizers, rolling papers or even branded dispensary swag.
For more product insights you can refer to cannabis sales reports like this one to discover the best products to order. You can also refer to cannabis analytics software, such as Headset to learn more about the most popular cannabis products. They will help you discover recreational cannabis buying trends and insights such as the rise of the popularity and profitability of vape pens.
Conclusion — Work out the Logistics
Transitioning to an adult-use dispensary requires careful consideration and planning in almost all areas of business. This includes wholesale purchasing and manifestation, increased staffing needs, product merchandising, compliance regulations and seed-to-sale tracking, marketing and your customer retail experience.
At Baker, we know that transitioning from a medical dispensary to a recreational dispensary can be intimidating. That’s why our cannabis retail solution is designed to assist you with the needs you have as a medical dispensary – to help you through the transition to rec, and to help you expand your recreational customer base. Our customer success team works closely with our medical dispensary clients to ensure their success through the transition and expansion phase. We’ve helped dozens of dispensaries make the switch. If you’re looking to make the med-to-rec move, get in touch, or request a customized demo to see how Baker can help support your marketing and customer needs as a medical dispensary and as a recreational dispensary