4 Key Tips To Build A Successful Cannabis Business
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There’s never been a better time to be in the cannabis business.
According to statistics from cannabis market research and data analysis firm New Frontier Data, legal marijuana constituted a USD10.4 billion industry in the U.S. alone in 2018, with investors doubling down on the marijuana industry as a whole in North America with a combined total of $10 billion USD, more than twice the investment of the previous three years combined. According to Statista, the projected market value of the cannabis industry in the U.S. is expected to hit over $24 billion by 2025. With President Trump legalizing hemp across 50 states late last year, the industry is set for even more explosive growth.
The vast amount of money flowing into the cannabis industry means a number of businesses are quickly entering into the market, jostling to establish a presence in this newly-minted landscape. How can a burgeoning cannabis business stand out in this fast-saturating market?
1. Define Your Business And Target Market
According to a study by the Annals of Internal Medicine, roughly 37 million people in the U.S. used cannabis in 2017. But not every person uses cannabis in the same way, or for the same purpose. One business cannot be all things cannabis for every cannabis user.
Deciding exactly what your business will offer, and to whom, is a crucial step towards growing a stable, profit-generating enterprise. Are your products medicinal, or recreational? Will you market to cannabis consumers, or businesses that supply consumers? Will you base your business model on higher volume at lower cost, or higher cost for a lower volume of premium products?
Answering these questions for your particular business may take some time and research, but it is worth it. With the increasing number of options for both cannabis production and consumption, it’s all too easy to get lost in the possibilities and risk spreading your efforts too thinly across too many funnels.
2. Monitor Your Customer Base And Be Prepared For Change
While defining your business and identifying your target market prior to launch is an integral step, do this lightly. Refrain from over-investing in any channel until you gain feedback from your first customers and uncover concrete specifics as to what they want and how they view and use your product.
When StickerYou initially launched we thought our customer base would mainly be comprised of kids and creatives. We were right, but we were also missing a bigger part of the picture. After taking a look at our initial customer base, we found business customers were using our products for branding and marketing purposes, a segment that dwarfed consumer customers in volume by about a 4-to-1 ratio. We were able to evolve and modify our marketing strategies accordingly to more directly engage with this customer base and grow significantly within this sector.
3. Improve Your Customer Experience
After establishing who your target market is, search for ways to improve their experience with you. Make use of the myriad services online to glean customer feedback. If you operate in a brick and mortar retail space, chat with your customers in person, or prep your team to ask questions and make suggestions for improving the customer experience. You may find that investing in a customer service team make sense for your business.
Be curious. Are customers interested in your products because of quality, or convenience? Did they find you by word of mouth, or through your marketing efforts? This information will help in creating and maintaining an accurate profile of your customer base, and will help you hone in on ways to effectively cater to their needs.
4. Experiment, Measure, Repeat
Experimentation is an important part of growing a business, and measuring whether these experiments work and to what scale is an equally important part of the process. Based on customer feedback, play with different strategies and ways of growing your business.
When implementing these new ideas, set specific goals and ways to measure whether or not these goals are achieved. Familiarize yourself with basic research principles, and apply these to your trial runs. Run AB tests of new products and strategies different segments of your customer base. Continually testing and measuring the results of new ideas will give you the necessary knowledge to build and grow your business.
By defining your business, learning about your customer base, working to improve the customer experience and continually testing and measuring new strategies, you’ll build a strong base for your cannabis business that will help it stand out from the competition and grow as the industry expands.
Andrew Witkin is the founder and president of StickerYou. Witkin has also served as VP North American Licensing for Nelvana/Corus Entertainment and Director of Marketing for MegaBrands/Mattel.
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