How to Manage Customer Experience Before, During, and After a Dispensary Visit

{}Introduction

Host: Hello everyone, and welcome to the MediaJel podcast, I'm your host, thank you for joining us today as we discuss how to manage the customer experience before, during, and after a visit, with Krista Ramer of the Vetrina Group. MediaJel connects brands and retailers with cannabis consumers through our ad network of mainstream publishers, mobile apps, games, and TV, we help cannabis companies advertise on Google, support SEO, and activate data with display advertising to support e-commerce sales. I'd like to introduce Krista Raymer, a cannabis retail strategist with us today.

Krista: Hi.

Host: Krista is an innovative, passionate business owner who drives top-line growth and profitability through unique business modeling within the cannabis retail space. Thank you for joining us today.

Krista: Thank you for having me, I'm really excited to be here and talk about customer journeys.

Host: Likewise, well, let's kick it off there — can you give us a little background on your career and how you entered the cannabis space?

Krista Ramer's Path Into Cannabis Retail

Krista: Yeah, so I actually got involved in cannabis kind of by accident — we had started Vetrina Group as a retail team, ready to help digitally native companies open up brick-and-mortar stores, and while that happened, rec stores in Canada opened up, and we went into the stores and saw there was a ton of opportunity in the way the retail experience was going for customers, so we said, we can help fix this. We got started with some first-round lottery winners, and now we work with cannabis retailers and brands, both in Canada and in the US.

Host: Awesome, awesome — and we know customer expectations are at an all-time high, and only growing, so what can business owners do to create an unforgettable cannabis dispensary customer experience?

Understanding Real Shopping Frequency

Krista: Yeah, you know, I think we first need to rationalize what the actual visit frequency to a cannabis store looks like — for the most part, if we talk to retail store owners or managers, they'll say our customers shop with us once a week, but in the data, when we dig into the frequency of purchasing in cannabis stores, Headset notes it's actually closer, on average, to about eight times a year — so the average customer shopping eight times a year, as opposed to that weekly occurrence. So, when we think about building our business or driving a more profitable environment, we can drive it in a couple different ways — one, acquire new customers, two, increase the number of visits current customers are doing, or three, increase sales while the customer is already in the store. If we want to think about creating unforgettable experiences, it's really about this retention game — instead of doing eight transactions a year, how can we get our most engaged customers shopping 9, 10, 11, 12 times a year? So, to create an unforgettable customer experience in a cannabis store, we need to create feelings of comfort and trust, and that they feel recognized for their participation in the retail environment — how are we developing relationships with our bud tenders, how does the customer feel about their transaction after they've completed it, and how are we retaining the customers shopping with us.

Host: Yeah, and these are all key, we're going to dive in deeper to each of these shortly, but all of these are key to growing your revenue and growing your dispensary as a whole. We're going to dive into strategies to actually influence each of these channels, and you have to remember that humans are social beings, so even with the success of online ordering, and leftover fear of the pandemic, cannabis lovers will happily drive to a retail store if they enjoy the in-store customer experience. So what can businesses glean from customers willing to walk into a retail store to purchase instead of using delivery, and how can they use that information to maintain a loyal customer base?

In-Store vs. Online: Reading Customer Context

Krista: I think there are two points I wouldn't necessarily totally differentiate the in-store versus online customer — like other traditional retail, it's pretty fluid, going back and forth, anytime somebody wants more additional information, that's usually when we see them visit a store. So those customers less familiar with products, or maybe trying a new product or format, are going to be more willing to come to the store — before they've even entered, they've probably done some exploration about who you are or what you're offering, so your online presence is probably one of the first touchpoints, whether through your actual website, or complementary sites like Weedmaps. Then it's about whether, when they get to the store, their expectations are met — this is a really important feature that most people don't think about, the customer comes to the store already having expectations about how this is going to go, so it's up to the store and the bud tenders to uncover what those expectations might be, and how we can make the magic happen, where the customer feels great while shopping, because their expectations are met and they're confident in their decisions.

Krista: When we think about where the customer is coming from, physically, or what they're doing, we're really shifting away from only thinking about demographics — not just age and gender, but the patterns and consistency in the activities our customer has in common. Are they coming to us on their way home from work, or do they stop in for fun on their way out to meet friends, do they have a dog, do they bring the dog because they're out for a walk — all of these give us ethnographic hints about who our customer is, and tell us a lot more about the purchasing behavior. For example, if a customer is driving home from work and stops in your store, they're probably more willing to purchase something less transportable, like concentrates or a dab rig — whereas if your customers are usually walking in, in transit to somewhere else, like a public park or the beach, we want to think about a product that's easier to move around and a little more discreet. So it's going to influence what purchases happen, and when — in the second example, we might see vapes, edibles, and pre-rolls sell at a higher cadence than the industry average, because we're thinking about how our customer is using the product, and where they are in their journey.

Host: Those are all great points, and I'm just thinking about the highest traffic times for dispensaries too — after work, people maybe stop off for happy hour, pick up some pre-rolls on the way home. I know Thursday evening through Sunday evening is typically high traffic in-store, so keeping in mind that people want to stop by on their way out with friends, that could be a big segment for you — and I know you had some great case studies around having a dispensary near a dog park, so, if that's your customer base, really curating your product catalog to speak to that audience — I remember there was a pre-roll made for that specific category, called "Dog Walkers."

Krista Ramer: Yes, yeah, so really speaking to your customers on that front is key.

Location-Based Product Strategy: The Dog Park Example

Krista: Anytime something feels like it belongs in your life, it's going to feel more familiar — people love things that are recognizable and feel like they already know them, so if we can align product pieces with their life, we're much more likely to create confidence in the purchasing decision, and see repurchasing rates increase for those specific products. That's why things with color or food names tend to sell faster and better in stores, they already have this common experience with the customer. And what sells through varies market to market — something that sells really well in Canada doesn't sell in California, and something that sells in California in January probably doesn't sell in Michigan in January, because the mindset of the customer is totally different — those are the ethnographic behaviors we need to think about with our customers when making purchasing decisions.

Market Intelligence and POS Data

Host: And understanding the market you're operating in is crucial for setting up successful dispensaries — for each state you operate in, you should be considering not only your total addressable market, analyzing demographics and preferences to attract new customers and build loyalty, but also exploring the cannabis data and reporting out there for your state's product preferences. What are some of your favorite platforms for gathering market intelligence and cannabis data?

Krista: I think it's really important to first differentiate the value of the data — market-level insights tell us something about the entire market, but not necessarily everything about our individual market. POS data is always my favorite, because that's exactly what's happening in our physical environment — the pesky thing about POS data, though, is it doesn't tell you what the opportunity was, only what was, because we can't get sell-through data on a SKU we never had in store to begin with. So we take POS data with a grain of salt, and this is where market-level data becomes important — I love Headset for that, to understand what the trends are in the market, and then test that, both in conception and strategy for our retail environment, and in execution, to see if that trend actually plays out in our retail environment too. Maybe there's a massive trend around concentrates growing in your local state — then we want to consider, does that apply to my specific customer base, and does my store support that? Both of those things define whether we go down and invest in that category. There are also really interesting market insights we can pull from non-cannabis data — being aware of trends happening in consumer behavior generally, are we shopping online, what are the trends around that, is there anything we can do from a merchandising perspective to support these, all become really helpful additional tools when building out our intelligence around cannabis data.

Building a Marketing Strategy From Quality of Sale

Host: That's all helpful, and it's great that you can gather data on the point-of-sale side, but what data should you actually be tracking, and how can you activate that data?

Krista: I think the first thing is understanding our quality of sale data — we've got a bit of a framework for understanding retail environments, first section is quality of sale, meaning average per basket, number of units, what types of products are purchased most frequently together, this tells you a lot about your current state. Then we look at inventory, then people, then marketing efforts — to really understand where we're going with a marketing strategy, we need to be aware of what our quality of sale and inventory look like, there's nothing worse than running a promotion and not being prepared from an inventory perspective. Your marketing strategy will be defined partly by what's happening with your quality of sale, and what you want to improve — are you trying to improve units per transaction, or add new customers? That builds the strategy of where to go and what to do, because communicating with an existing customer base is a different message than trying to gain new customers not already in your database. So, quality of sale, and understanding your goals, are the first steps to building out that marketing strategy.

Closing Product Assortment Gaps

Host: That's very helpful — another part of this is looking at product offering, right, so what can retailers do to pinpoint different product gaps, do you have any tips for selecting a good product assortment for the retail storefront?

Krista: I think this is where market-level insights become really interesting — we want to look at trends by category, and then dial back and look at our own trends in our retail environment, and say, do we think we could hit that, if the market is outperforming our location by category, or are we overperforming for a particular reason? Any variance from the market average, we want to note and understand why. What's really interesting is that the Pareto principle tends to play out in cannabis as well — 80 percent of revenue comes from 20 percent of your customers, in cannabis this plays out more like a 70/30 split, and when we specifically look at inventory, it's 30 percent of your SKUs generate 70 percent of your revenue. So, from an assortment strategy, we want to think about how many SKUs we're carrying to begin with, and which ones are generating the majority of our revenue, then look at the middle-performing SKUs, is there anything with an opportunity to perform better, or something that was trendy and is now losing momentum, hit a blip, and sell-through is dropping off. Then we look at bottom performers — anything that's been in store more than 60 days with no sales, we need to get out immediately, because you have cash flow locked up in that SKU, and you've probably already lost your ability to make any gross margin on it, given the operational costs of maintaining it, so it's about turning it around and reinvesting in one of those top-performing SKUs. Instead of being reactive, we want to be more predictive — test and iterate, bring things in in smaller quantity, and track them over 30 days, when a SKU enters the store, where does it show up on your online menu, your in-store menu, from a merchandising perspective, how does our team talk about this product, are we running promotions around it — all going to help us assess whether it's something that works for our store. If it doesn't, mark it down, get it out, reinvest in something else, if it does, figure out how much to reinvest to amplify those results. So thinking about assortment gaps really comes down to identifying your top-performing SKUs, comparing your middle performers to industry averages by category, identifying anything that sits outside the industry average, and testing how much more you can push that — if beverages outperform in your location, how many beverages do you need in store to continue to see that category grow, what's the total number of SKUs your customers need — what we all forget is that if a product completely sells out, we've missed the opportunity, so, in retail, selling out is one of the worst things that can happen, we want the inventory in store to sell without being over-inventoried and becoming a slow-moving SKU.

Host: That was a lot of great information — as a retailer, depending on the state, I don't know how many SKUs are at a retailer storefront in Canada, but in Washington state, California, they can have upwards of 500 SKUs — so, going through this whole exercise, of those SKUs, what 30 should you really focus on, and what can you do as a retailer to amplify and reinvest in those top brands, and then how do you de-prioritize the ones that aren't selling through and get them out of the store, note that on the purchasing behavior to not reorder — and you said you never want to sell out of anything, especially if it's part of that top 30, so how do you automate that whole process, do brands get automatic notifications when you're running low on product, how does that work, Krista?

Managing Inventory Velocity

Krista: It depends on the POS, there are other tools too that help you better analyze your inventory, like Headset and their retailer platform, a plug-in that lets you better understand your actual POS data, not just market-level insights, and what we're really looking at is velocity — how quickly a product sells over a period of time. I love to look at velocity day-to-day, do we sell one unit, two units, five units a day, that helps us understand our run rate, then we consider our repurchasing timeline — if our delivery period is a two-week window, we really need to initiate reordering on that SKU just before two weeks, so we don't sell out, thinking about the buffer, how many days of inventory we need on hand, while still doing first-in-first-out so we don't have aged inventory, but initiating orders early enough to allow for the timeline. That's where managing inventory with 500 SKUs becomes so hard, you have so many different vendors, all potentially operating on different timelines. Most retailers will say, "I need 500 SKUs to generate the revenue I'm doing," and I'd say, if we look at sell-through by SKU, it's often surprising data about what's actually our top-performing product. And I'll throw a wrench in this — sometimes it's not only revenue that defines our top-performing SKU, we also need to consider units sold — you might have a concentrate product that, because of its price point, generates a certain revenue that translates to, say, a hundred units a week, whereas a pre-roll priced at three or four dollars generates slightly less revenue, but, in units per week, is much higher — so we've actually impacted way more customers with the pre-roll than the concentrate, which is why it's important to analyze inventory to understand where revenue is coming from and how impactful different SKUs are.

Host: A hundred percent, and really, that impactful part is the most important — how impactful is that SKU, or product category, or brand, on the business as a whole. I know in the past, some of our retail partners have a more affordable product that's really a loss leader, we know we're not going to make money on that SKU, but the upsell or add-ons is what we're really doing to expand the average order value for that order — there are different strategies you can implement, based on compliance within your region, and how competitive things are in your city.

Krista: Yeah, absolutely.

The Pre-Opening Marketing Plan and the Rule of Seven

Host: You know it's known that a customer needs to see you a minimum of seven times before they make a purchase — how can you get in front of customers before they visit your store to get those seven touches in?

Krista: I'd turn that back to you guys too, because I feel like you're really great at this — but, for us, it's starting to think about where our customer is looking, when they're making a decision to purchase cannabis, where do they go first, and then we think about the decision trees — are they looking for a specific product, which leads to certain search results, or a location, which leads down other results — that's maybe the first step, I'd love to know what you think too, when thinking about online first.

Host: Yeah, the no-brainer is your website, that's the foundation of your overall online presence, making sure you have that set up with analytics installed, focused on either driving e-commerce sales to the menu, if you're a retail store, or sending people to where your product is available, if you're a brand. Social media is a no-brainer too, a lot of cannabis consumers are on Instagram and Facebook, I'd say LinkedIn is more for B2B audiences, so really focusing on Instagram is best for a brand. Let's look at marketplaces — depending on your region, you can focus on Weedmaps or Leafly, Yelp is another one to capture people through marketplaces. We always focus on search engines, about 70 percent of website visitors to a cannabis website are coming from Google, so SEO is going to be huge, that's really building your presence around people looking for a location, as you said, Krista — if someone's looking for a cannabis store in their area, you want to rank for those terms, if they're looking for a specific product, depending on your e-commerce menu, you can create product pages indexed by search engines, or landing pages for different brands and products that sell well. And paid search — if you don't have time to wait for SEO to pick up, invest in Google Ads or Bing Ads to jump to the front of the line for that sale. As you build brand trust and authority with potential customers, they'll start to see your brand and consider a purchase, so the pre-sale for your business should focus on building social media presence, creating SEO-keyword-focused educational content, building your brand and website, investing in paid search marketing campaigns to capture search intent, and using display ads for brand awareness at the top of the funnel — there are a lot of ways to connect with cannabis consumers through digital marketing, creating multiple touchpoints using those different strategies, and continuing to build your marketing plan and scale your budget as revenue grows.

Host: If you haven't opened your doors yet, focus on getting set up — on the marketing side, get your website set up, your menu set up, start building evergreen SEO-focused educational content, get your CRM set up, whether it's Alpine IQ or Springbig or other platforms, so people can sign up for your email newsletter, loyalty program, or text message list — you really want to start collecting that first-party data. On social media, you can build your following before you open, but be cautious, you don't want to promote the sale or use of the product, that'll get you flagged, potentially shut down, so proceed with caution. A couple numbers to highlight — about 75-plus percent of all website visitors are on their mobile device, so make sure your website and assets are built mobile-first, because that's what people expect, everyone has their phone in their pocket, it's an extension of themselves — making sure people can find you on their cell phone, get to checkout in as few clicks as possible, and make the whole process easy, because, with COVID and everything the last two years, customer expectations are really high, they expect an easy-to-use digital experience, and the checkout in-store should follow that same format, quick if they've pre-ordered, or, if they want to speak with bud tenders, well-educated and ready to answer questions.

Hyper-Local Digital Campaigns

Krista: You've identified two things that stand out for me on the website perspective — are they going to make a purchase while on the site, so reducing clicks and thinking about how easy it is to digest information becomes important, people don't like too many options, especially when online shopping, they think they want all the options, but when presented with too many, we can't make a decision and aren't confident about it. So sometimes it's about pairing back our online menu to drive additional sales, and, if a customer is also learning about you and coming to your space, thinking about how easy it is to find your address and link out to Google Maps, tracking that behavior through analytics helps us understand our path to purchase. With the seven touchpoints, it's about building an online presence, but also the most basic touchpoint is usually your signage and physical location — most customers in the US are purchasing at a store within three miles of their home or workplace, so your physical presence, and the touchpoint of someone driving or walking by every day, becomes really helpful. We've all driven by a million McDonald's over two days, and then all of a sudden you're thinking about your McDonald's order, and if you want McDonald's, it's because it consistently showed up in your life — we want to think about how we create that, McDonald's does it with strong signage evident from the highway even a mile away, so we want to think about what behavior we can create just by having physical presence with a touchpoint too.

Host: And that three miles from the storefront really stands out to me, it's really hyper-local — what percentage of stores did you say focus on that three-mile radius?

Krista: I'm not sure how many focus specifically on the three-mile perspective, but that's usually where the majority of revenue comes from, so, going back to that Pareto principle, 70/30 split for cannabis, when we're thinking about being that close, it's about how we service and understand the needs of those customers.

Host: And I'm thinking, anyone who walks within that three-mile radius of your store is going to be a highly qualified cannabis consumer, you really want to get in front of them — some digital marketing tactics that work for these hyper-local campaigns: display, or programmatic, advertising — you can draw a three-mile radius around your store, and anyone we know is a cannabis consumer who's walked into another cannabis dispensary in the past, or made a purchase, over the last six months, if they walk within that three-mile radius of your store, you want to make sure they see your brand, that's one way. Another is through paid search — if they're on Google Maps searching for a cannabis store on the way home from work, you want to be top of mind there, at least getting in front of them when they're within that three-mile radius with intent to purchase. On the SEO front, you can create landing pages for each neighborhood or zip code — if there's a high-net-worth area you want to focus on, let's say Hillsborough in the Bay Area, and you want to target that location with delivery campaigns, since there are no retail stores around there, you can target that same radius, anyone who goes within that frame will see your ads. And, one easy way to do this that's not digital, guerrilla marketing — flyers, anything to engage with the community on the local level, will get you exposure in those hyper-local regions.

Customers as a Touch Point

Krista: There are some stats around customer service — when a customer has a really great experience, they tell, on average, seven people, and when they have a really bad experience, they tell, on average, ten. So, cannabis, because of the regulations and our limited availability to advertise, depending on the specific geography, it becomes so important to go out and create micro-influencers, the people who have the best shopping experience, and figure out how to get them to tell seven people — if every customer tells seven people, and we convert one or two of them, we're going to be in a really great place building a customer base, that's how a customer base kind of organically grows. So thinking about that when planning loyalty programs or promotional efforts, how do we build that in as a strategy too, to reach more people, that's going to become one of the aspects that drives a more profitable business later on — your touchpoints aren't only the ones we've physically created, or created digitally online, your customers become a touchpoint as well. Anytime your customer is wearing your merchandise around the community, that's a touchpoint, anytime they're telling friends or family about the product or their experience at the store, that's a really good touchpoint — thinking about that, and integrating it into your touchpoint strategy, is really helpful too.

Host: I know some loyalty programs have a "refer a friend" program, where the person referring gets a kickback, maybe 10 to 20 percent off their next order, if that's available in your location — there are a lot of ways to expand and amplify that, especially when you're getting positive feedback. Do you have an example of a marketing principle that also translates into physical retail?

Floor Plan as a Sales Tool

Krista: I think most marketing principles play true in physical retail, though there are certain things, because we're in a regulated space, we're handcuffed in our ability to openly communicate without some restriction. The rule of seven, and those seven touchpoints, is really important in what happens physically in-store too — this is actually how you translate a marketing strategy into a merchandising strategy — if we're looking to build our basket size, add products to the basket, we need to think about what we're doing from a touchpoint perspective in-store to help drive that message home. If our goal is to add pre-rolls to the basket, because it gives an opportunity for the customer to test something, or it's seasonal, or great for margin development, we need to think about where this pre-roll story shows up seven times in the environment, making sure customers are catching this information, subtly pushing them toward it — this is something they want. Humans, as we talked about, are habitual, and like things that feel familiar, and they like to feel like it was their idea — whatever we can do to support them feeling like it was their idea, you're going to have a win every time. That's why I love the strategy around using seven, it gives us rigor around how we're defining our story, what we're trying to communicate directly to our customers, and pushing them in a direction that supports our margin development.

Host: That's key, making sure the consumer feels like they made the decision, and that they're winning from this whole experience — remember that marketing rule of seven, by Dr. Jeffrey Lant. Now that we've covered your pre-opening marketing plan, let's focus on setting up and optimizing your in-store customer experience — how we move customers through the space and highlight products is key. How important is a retail floor plan, Krista?

Krista: The retail floor plan gives you the opportunity to create these touchpoints and define the way the customer travels through the store — at the end of the day, profitability and transaction sizes are usually directly linked to what's happening in the floor plan. Different floor plans are great for different businesses, depending on what we're trying to achieve — if we're trying to create repeat behavior, someone coming in and out multiple times a week, that might look different than trying to capture a tourist customer. What we forget a lot in cannabis retail is that the store is a sales tool — the in-store experience is important for the customer, but the secondary piece is that the store is a sales tool for your bud tenders to get product moving, so we need to analyze how easily accessible the floor plan is for our bud tenders, and how they can use it to help guide the customer.

Host: And how often should you shift your floor plan?

Krista: Total changes depend on if there've been big market shifts — for example, when beverages started to grow in popularity in Canada, we saw shifts in floor plans to accommodate the change in product format and how much space beverages took up. One thing we miss is that we should be reassessing where product is in the layout at least monthly and quarterly, relative to our inventory levels — the store is the tool to help us move the inventory, so what's happening in our inventory should relate back to decisions on the physical floor.

Host: Awesome, awesome — I had a lot of conversations at MJ Unpacked about different floor plan layouts, based on the strategies for how stores want to manage the in-store experience versus online — some of our partners are getting 80 percent of their orders through e-commerce, so they're setting up their store to minimize the time to fulfill an order, when someone shows up they want to make sure they can get out within seven minutes, that's a priority they've taken on. How can retailers ensure they're moving product that may be tying up cash flow or nearing expiration dates?

The First Things to Analyze Walking Into a Store

Krista Ramer: I think thinking about how many touchpoints it has in-store is valuable — also, if we're running a promotion, does it have the physical presence that goes with it? So many times I walk into an environment where a bud tender is telling me all about a promotion, but it has no visibility anywhere — we want to match it up, whether on a digital menu board or physical signage, giving it a reference point somewhere else, because people learn and consume information differently, some audibly, some visually, so if we can match touchpoints for both, it helps our customer better understand what's happening.

Host: A hundred percent, and let's discuss the in-store experience — your store is open, customers are walking through the door, there's so much more to a retail store than just putting products on the shelves. When you walk into a retail store, what are the first things you analyze, or the top three questions you ask, Krista?

Krista: One of the first things I look at is where the cash desk is, that kind of jumps to the front, mainly because it's a bit of a trend and pattern to position the cash desk in a place that doesn't allow the customer to experience the whole store — we tend to put cash desks against the back wall, creating almost like a highway of customers coming in and walking back out, meanwhile we've invested a lot in our physical space and fixtures. So we want to understand how to get the customer all the way through the store — I'll first look at where the cash desk is, and, funnily enough, your customer is too. Then I'll try to assess how many options are being presented to the customer at any given time — we often create environments that result in decision paralysis, so many options we don't know which to pick, so we go with something that feels familiar. We can do a lot in our physical environments if we dial back our options and present less information — that creates more confidence in decision-making, while we can still enable assortment variety by seasonally changing product, but presenting it in smaller, more digestible pieces, specific to your customer and environment — we probably don't want to present flower as a category in a section of five, but might break it into subcategories and present it in groupings of three to five, so customers can make a decision within that, helping guide them through the decision tree to a purchasing decision.

Impulse Shopping and Basket Size

Host: Where do most retailers fall short on the in-store customer experience?

Krista: Usually around impulse shopping — impulse can be incredibly impactful for your bottom line, in gross margin and units sold per customer. In traditional retail, and fashion apparel specifically, it's known that if you can get a customer to purchase three products, they're 70 percent more likely to shop with you again — we don't have enough data in cannabis to fully tell if this is true, but we know the larger amount a customer has spent, the more likely they are to stay loyal, so building basket sizes and thinking about units per transaction can help retain that customer, and often that additional one or two products from impulse make the difference. So, with impulse shopping, we're presenting product at the cash desk that's easily understood, doesn't take explanation, and fits within a certain price band — understanding your customers' price sensitivity, in some locations that might be up to $15, others up to $25, and presenting things that are easily understood, that don't take long to decide on — edibles, pre-rolls are great, beverages are great for impulse, as well as accessories like papers and lighters.

Host: Yeah, we see a lot of top retail stores do this, like CVS, Walgreens, they have a huge assortment of products available at checkout for impulse shoppers — as you said, if we can get people to buy three products, they're more likely to shop with us again, so really prioritize that, it's something I see a lot of stores dropping the ball on.

Krista: Even retailers that are non-CPG do a really great job of this — Lululemon is a great example, in terms of the in-store experience, usually when checking out at Apple, they'll position you so you can see the accessories in the background of the view, a very subtle customer behavior, positioning you facing them, and behind them is the accessory wall — there's a reason for that, accessories in an Apple store are the impulse products compared to the price point of the products in store, so it's really about thinking about where we can add those additional products, which are usually high-gross-margin products too.

Post-Purchase: Reviews, Loyalty, and Retargeting

Host: And we did talk about really getting that customer feedback — in-store there are different ways to maximize that, creating QR codes at checkout to encourage Google reviews is an easy, free way to improve your feedback on Google, which helps with your SEO and discoverability on that search engine too.

Krista: Yeah, and the ask from the bud tender too — if we've created a relationship with the customer, it's a great time, it's up to the bud tender to understand and embody that moment, but if there's something positive happening, an ask from them will get you a long way — being able to create multiple touchpoints around QR codes and requesting reviews translates to both bud tenders talking about it, and physical presence of it.

Host: And it doesn't stop once the customer has purchased and left the store — stats show that businesses focused on customer experience create loyal shoppers, and loyal shoppers have a high customer lifetime value, which increases revenue in the long run. So, once the customer has made that purchase and left, the goal is to create as many loyal customers as possible — now you want to evaluate your point-of-sale data, everything we covered, what SKUs are selling well, what product assortment is selling, was there customer feedback from bud tenders, think about revisiting training for those bud tenders. And, as far as marketing tactics, we don't want to forget about the customers after they've left the store — loyalty programs are key, email programs with specials, or SMS campaigns, to maximize spend for loyalty subscribers, offering deals, promotional events — there's automation with some CRMs where someone visits the store, and 10 minutes after their visit gets a text asking how their experience was, can they give feedback on Google — an easy way to get Google reviews. And, on the paid search and display advertising side, you can do retargeting for people who know your store, making sure that, even after customers come in, you continue to push that rule of seven, so people know you're top of mind when they think about purchasing a new product.

Calculating Customer Lifetime Value

Host: Krista, on the data side, what data should retailers be collecting and analyzing to calculate customer lifetime value?

Krista: The first step is definitely understanding what the lifetime value is — the value of our customer over, I like to use a year, how much are they spending, what does their business look like. To even do that, we need to start by creating accounts — whether you're opening today and have a loyalty program in your future, what are we doing today to track individual customer behavior, can we link everything back to an email or phone number. Then we track the spend and the way the customer is purchasing, frequency, and what they're purchasing, do they usually purchase flower first, pre-rolls first, what's the entry product and how does that expand. Then we can start to forecast — that's the cool part about building a customer base, we can say, are we on track, for example we just opened and are growing our customer base 20 percent month over month, and based off of that, and the scale of eight visits a year and what they're usually spending, we can anticipate revenue, and know if we're on track. If we've added a bunch of customers and aren't seeing them repurchase in a two-month period, we've probably got something to address, it tells us about our customer experience faster, whether we need promotions, or something from a bud-tender or customer service perspective to address. Similar to this revenue piece with inventory, usually 30 percent of your customers generate 70 percent of your overall revenue, so it's making sure we take care of that group — I don't want to downplay the other group, but these top customers are your promoters, they're going to help build a customer base in your community, understanding who's on the cusp becomes where some of your biggest opportunities are. In analyzing customer lifetime value, we want to look at how frequently people purchase, how much they're spending, and what types of products they're buying — this helps us in loyalty programs, what cadence we should reach out at, what products to promote, when to identify somebody who's dropped off, or when to amplify communication.

Heat Mapping

Host: If anyone has questions, feel free to ask them now, we'll answer them before we log off — what is heat mapping, and how can dispensaries use this to improve customer engagement?

Krista: Heat mapping is maybe one of the best-kept secrets nobody's using — we have security systems in stores that often use heat as a sensor, as opposed to vibration, the old way of doing security systems, and we actually have data around where the heat is in the store, as long as your cameras are on. We can heat-map a floor plan and utilize your security footage to understand where customers are going — this tells us a lot about where our touchpoints need to be, and where there are probably really valuable places in the store, or where we're missing big opportunities and want to push customers in a certain direction.

Host: Awesome, and before we sign off, I want to hear your story about how a dispensary used its proximity to a dog park to shift its retail strategy.

Krista: It's so funny, understanding and being super niche about who your customer is is often a long-term winning strategy — there's this group whose entire strategy is to be close to dog parks, because they really understood the customer purchasing behavior. They opened their first location right near a dog park, and noticed it influenced what types of products were selling, when their customer was shopping, and their mood set even coming into the store — they thought, we can replicate this, and scale our business easier, because we'll see similar patterns in inventory, assortment, and what we need to think about with customers coming before, during, and after a store visit, making it easier to create brand consistency. So they opened a second one, it panned out true, then a third, also true — they really understood who their customer is, picked a location specific to them, and nuanced the environment, the inventory, and the people working there, to support the needs of the customer coming in-store.

Closing Remarks

Host: I love that, it's a unique strategy, and there are different ways people can apply that same strategy depending on where they are in the city, or based on who their customers are — this has all been very insightful, Krista, thank you for joining us today and sharing all your knowledge on how to manage the customer experience before, during, and after the visit. Where can people find you and learn more about the Vetrina Group and what you do?

Krista: You can find us online on our website, I'm also pretty active on LinkedIn, we like to share a lot of quick tips and tricks, and we're happy to work through any questions around data and how to leverage your data in a retail environment to push that profitability. But thank you so much for having me, this has been great, I love the ability to think about a retail environment as well as online, and how they tie together.

Host: Likewise, likewise, and thank you again for sharing all your insights, and thank you to our audience for joining as well, whether you're logging in through Zoom, LinkedIn, Facebook, or Instagram — thank you again for joining us, and we'll catch you next week.

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