5 Ways Cannabis Brands Can Digitally Transform Their Business and Engage Customers Directly
Article written by Evan Eneman
Brands covet one-to-one relationships with their customers, or at least they should. For years in the cannabis industry, a brand’s only real channel to interact with and sell to consumers has been in brick-and-mortar retail, better known as Dispensaries. For many, that was the only channel they focused on to drive awareness and trial, and then COVID-19 hit.
Prior to COVID-19, there were few legal alternatives to purchase cannabis products with THC (as opposed to hemp). In addition to Dispensaries, customers were able to purchase products through local delivery companies that serviced their geographic area. Many brands were leveraging point-of-sale advertising and “budtender” training sessions to educate consumers prior to purchase of cannabis products. Brands would also have “demo” days and other in store educational events that could provide consumers direct interaction with product brand specialists.
During COVID-19, with “stay at home” orders around the country, many cannabis retail outlets have either closed their doors or have had to adjust their distribution to be through curbside pickup or delivery, as many consumers have become more reluctant to enter retail stores.
Due to the impact of COVID-19 and the restrictions on business operations, fewer consumers are “browsing” before purchase in a retail locations. Increased options for delivery and “direct-to-consumer” purchasing have also caused brands to quickly transition their business strategy to a digital first model.
McKinsey’s latest consumer sentiment study supports the digital first model, stating that “consumers are shifting to online and digital solutions as well as reduced-contact channels to get goods and services. Intent to shop more online across categories is positive in several countries, including the US, India, South Korea, and Japan. As we look more granularly in the US, this digital trend is magnified for Gen Z and millennials and for higher-income consumers.”
Regardless of whether or not physical retail options are available, there’s a good reason to adopt the digital first approach – supporting a direct to consumer model allows a brand to develop a real relationship with their customer. Brands can tell their story, create an emotional bond and increase brand loyalty and customer lifetime value through value-added engagement. Another important reason for brands to transition to a digital first direct to consumer model is the robust data it provides. By building direct relationships with their customers, brands are able to understand and evaluate buying behaviors and trends, demographic information, as well as overall engagement with various branded content. Having this direct connection, allows brands to provide a more unified experience. Depending on the intended audience, younger consumers are demanding a more holistic and engaging digital experience with seamless integration into their daily lives.
Brands are rapidly shifting the way they interact with consumers due to these changes in the market, as well as new viable infrastructure to support direct to consumer models. As brands make the shift towards digital and direct to consumer channels, here are 5 areas to consider:
- Brand Purpose
1. Brand Purpose
Another important “P” in marketing, a brand’s purpose, is the reason for a brand to exist beyond making a profit. It is the “Why?” of the company. Not only does it make sense morally to focus on a greater purpose, but it is also making sense financially, as consumers are now demanding it. The 2018 Edelman Earned Brand study shows that the market is being transformed by the rise of the Belief-Driven Buyer. Nearly two-thirds (64%) of consumers choose, switch to or boycott a brand based on its stand on societal issues, up from 51% in 2017.
Patagonia has long since been driven by purpose, which is ingrained in their corporate culture and every aspect of how they operate as a company. They are a leader in activism, speaking out for what they believe is right. For example, since 1985, Patagonia has pledged 1% of sales to the preservation and restoration of the natural environment.
There are very few brands in cannabis that are well known to the broad general public. A digital first and direct to consumer model provides a critical opportunity for companies to build from the ground up, making purpose their north star, and fully embracing and telling their story. With the transition to digital, brands can no longer hope that retail sales people will best position their product, they can do this all themselves and increase their interactions with and understanding of their consumers.
Consumers have become much more sophisticated in their ability to identify the authenticity of brands. To build trust with consumers, brands must embrace as many touchpoints with current and potential consumers as possible while still aligning with their overall purpose. Staying true to what a brand is saying to its customers, how they say it and how they prioritize the needs of customers is crucial.
Many brands will need to build trust through narrative storytelling, led by thoughtful and engaging content. Given the limited IRL activation opportunities, brands must turn to their digital channels, including their website and social media channels, to meet consumers where they are. This creates a virtuous cycle of creating and distributing content that helps to engage consumers throughout the purchase funnel while educating them on the brand, its purpose, mission and ultimately, its products and services.
Companies like Lucid Green provide a unique QR code, LucID, on product packaging that can be easily scanned by a mobile phone camera to instantly pull up product details. Not only does this allow the brands to provide more details about their company, but it also provides easy access to product information, such as supply chain information and analytical lab testing results. With the number of counterfeit cannabis products on the rise, having this safeguard makes it more difficult for the illicit market to survive.
3. Search Engine Optimization (SEO)
SEO has long since been a critical component of a brand’s marketing strategy, ensuring that the brand receives proper exposure in organic search engine queries. In a highly regulated market like cannabis, SEO is even more important as paid media opportunities can be very limited, especially on more traditional channels like social media and traditional ad networks.
For cannabis brands, having a strong presence online has increased in importance since many consumers are now staying at home and researching products prior to purchasing through digital channels. According to Moz, the first page of Google captures 71% of search traffic clicks, so if a brand does not have strong SEO and does not appear for their targeted audience, potential customers may view their competitors’ options and offerings first, or worse yet, view other companies’ thoughts of their product or brand.
Brands need to control their own messaging as best they can, leveraging SEO to amplify their reach. The key driver of a strong SEO presence is sustainable, informative and engaging content, which helps to build trust, a direct brand relationship and an overall strong organic audience that will carry their brand’s message. Search engines are continually updating their algorithms to prioritize quality, engaging content. Optimizing quality content across owned channels and having a consistent backlink strategy, will support the brand’s overall visibility to their targeted online audience.
As more consumers transition to online purchasing, having a strong eCommerce strategy will increase the likelihood of purchase and lower the cost of acquisition. The equation to optimize in this process is a lower cost of acquisition (“CAC”) and a higher customer lifetime value (CLV). The ability to order directly from a brand’s website and have your products in online marketplaces are two of the most common ways to increase brand exposure online. Your direct to consumer channel, or “indirect to consumer” model, as some actually are, helps to control the customer’s journey and experience with the brand.
Once a brand develops a strong story and online presence, it will be important to convert this new traffic to their site into customers by integrating an eCommerce strategy as seamlessly as possible. Platforms like IHeartJane.com allow brands to integrate their shopping cart solution directly into their websites. This solution provides real-time inventory and specials at local retail outlets, enhancing the consumers’ experience with the brand they are researching and leading to increased sales.
One of the quickest ways to gain credibility as a brand is to have the right influencers spreading your message. We see this everyday with consumer goods like shoes, headphones and alcohol. Whether it is celebrities or micro-influencers, these groups can have influence over their audience to provide a positive impression of your brand.
With the widespread and volatile public health, economic and political landscape, we are seeing a new group of influencers being viewed as the modern day “celebrities.” Medical professionals, scientists, historians and activists have increasingly been in the spotlight and are being followed much more closely for their insight, expertise and ability to help consumers parse through all the noise.
These influencers also can be found in the cannabis industry, where researchers and medical professionals, like Professor Raphael Mechoulam, the founder of the THC molecule in cannabis, are garnering a larger voice in the community about the potential benefits of cannabis. More brands are having doctors and scientists on staff and are leveraging their data driven insights to make decisions on everything from product development to marketing. Cannabis activists are also gaining visibility with mainstream audiences by raising awareness of social justice issues and other long standing concerns that have plagued the industry for decades.
Time to Act
Given the broad and tangible changes we’ve all experienced over the past few months, brands have an opportunity to engage with consumers and build strong relationships that will ultimately result in increased sales and higher CLV. The channels that provide the most measurable results, as well as those that are most viable today given the limitation of in-store options, are digital first and direct to consumer. Brands should reconsider their strategy and long term planning if they have not already embraced these channels, as there is still much to be figured out as to when consumers will have a “normal” in-person retail experience.
The Fiorello team has worked with 100s of brands in cannabis and emerging industries, providing strategic advisory services around brand architectures, go-to-market strategies and creative campaigns that align with digital first and direct to consumer opportunities. Contact us via firstname.lastname@example.org, sign up for our newsletter or follow us on social media to learn more.