Cannabis Retail 2.0: Measuring Your Return on Experience
In today’s experience economy, every cannabis brand and dispensary should be thinking about all of the ways their customers interact with their business.
Cannabis Retail 2.0: Measuring Your Return on Experience
Today I learned some new marketing lingo that I’m excited about—not only because it validates the importance and relevance of our mission with Best in Grow, but because it helps to quantify and make tangible something that I’ve often struggled to articulate. Whether you run a retail dispensary or you’re growing a cannabis brand, Return on Experience (ROX) is the metric you should be obsessed with.
In today’s experience economy, every cannabis brand and dispensary should be thinking about all of the ways their customers interact with their business. And while customer experience is an important thing to prioritize, as one of our advisors frequently notes, in reality it’s a lot like kissing in middle school: everyone is talking about it, but no one is really doing it.
Return on Investment vs Return on Experience
In the fiercely competitive world of cannabis, all business operators are familiar with calculating their Return on Investment (ROI). Whether it’s software, hardware, people or products, the arithmetic is straight forward: how much will this cost me today (x), and how much will I save or make tomorrow (y)?
Of course, there are things to consider like rate of return, net present value, potential risks and the formidable unknowns, but the core principle holds: when the return is greater than the cost (usually by a meaningful margin) the ROI makes sense; you’ve uncovered value, and if all goes well your business will be more efficient and profitable as a result of your brilliance.
The concept of Return on Experience takes the cut-and-dry calculation of ROI and applies it to the ethereal, conceptual, and difficult-to-quantify domain of subjective human perception and emotional decision making. It is the beautiful and messy marriage of objective analysis and potent intuition; the duality of spreadsheets and gut-instincts.
How Cannabis Companies Can Provide Superior Customer Experiences
Customer experience has long been recognized as an important consideration for businesses big and small. Offering a superior customer experience is foundational to building brand loyalty, boosting customer retention, and ensuring customers tell everyone they know how wonderful your company is.
However, very few organizations approach their customer experience with the same analytical rigor used when evaluating how discounting a product resulted in a boost in sales. A well-planned and thoughtfully-executed customer experience strategy will contain three elements, and here is where we begin to see where the art and science of crafting a revenue-generating “experience” must be carefully balanced. The three things you to consider are The Goal, The Experience, and The Metrics.
Setting Goals for your Cannabis Business
Every experience you seek to create should be mapped to a business outcome you want it to inspire. This depends on your goals. High-level priorities for your business, like greater brand loyalty, stronger brand engagement, and greater likelihood to recommend are examples of lofty, but worthwhile objectives for you to strive towards.
Experiences are inherently emotional. Stronger emotion translates to a deeper engagement with your brand. When setting goals, think about the types of relationship you want customers to have with your brand or dispensary. The business value of the emotion and connection that results from a positive and unique experience cannot be overstated.
Defining the Experience in Cannabis
You should clearly define the touch-points you have with your customers and what that experience should look like in your ideal world. This is different depending on your business and goals, and it can take countless forms. It can happen online or in-person. It can be subtle or in your face. Defining your customer experience, why it’s unique, and what makes it so great takes time and careful research.
For a brand that makes chocolate edibles, perhaps it is the brief anecdote on the foil wrapper that prompts a fleeting moment of introspection or laughter prior to enjoying the product. It could be the elegance with which your packaging unfolds, or maybe the feeling of attention or belonging when your seasons greetings note lands in your customer’s email inbox.
On the retail side of cannabis, dispensaries have countless opportunities to delight their customers and provide experiences that keep them coming back. Whether it’s the manner in which they are greeted when they enter the store, the lighting in the display cases, or the questions they are asked once they reach the counter, the in-store experience is critical. Clearly defining what your customers see, smell, touch and hear will give you greater control on how they feel and what they think. This is your customer experience.
It’s difficult to define, let alone put into action, an experience that will resonate with your customers and serve your end goals. In doing so, you have to make assumptions about your customers, what they like and don’t like, and what they will even notice. To help with this, we’ve created a customer experience checklist to help you make sense of all the ways your business can stand out. Feel free to download it here.
Calculating Your Return on Experience
The final part of implementing an ROX-minded customer experience relates to measuring success and quantifying your results. This is the Return piece of ROX. Of course, traditional metrics like revenue, average ticket prices, and customer lifetime value can serve as signposts when measuring the success of a customer experience initiative, but it is difficult, if not impossible, to determine which aspect of the holistic “experience" was best received and resulted in the highest return. Improving your customers’ experience all around is great, but a strategic approach to measuring ROX will empower you to appropriate resources where and when it matters most for your bottom line.
Digital content and experiences, like your website, social media feeds, and email campaigns are much easier to A/B test. With the right tools you can easily track how these online experiences translate to traffic, conversions, and engagement. But for cannabis brands and dispensaries, the impact of the in-store and product experience are higher stakes and more subjective, and as a result, more difficult to measure.
Making the leap from measuring online experiences to real-life experiences is where ROX can feel messy. Where possible, anchoring your high-level goals to demonstrable and related metrics will give you insight into what’s working and what’s not, so you can course-correct as necessary.
Sometimes this is easy: improved customer satisfaction could be proven by fewer returns or complaints. Sometimes it’s much harder: what metrics would indicate that your dispensary is known for its professionalism and sophistication? More challenging even is identifying which part of your customers’ experience lends itself to that emotional connection, and does that reputation translate to a meaningful financial return.
It’s great to have high aspirations for your company. Often the most ambitious goals are the most difficult to measure against. For the goals and customer experience initiatives that seem impossible to pin to one key business metric, there’s one thing you can do to measure its efficacy: ask.
To make sense of the intangibles, many companies use customer satisfaction surveys and the Net Promoter Score (NPS), a metric used to determine how positively customers view your business and how likely they are to recommend you to others. Asking customers about their experience in itself can help to provide a positive experience, as the invitation for feedback helps to solidify the mutual relationship.
Asking your customers what they love most about your product or dispensary, how likely they are to tell a friend about your business, and what you could do to improve is sure to uncover invaluable insights that will help you to demonstrate which of your efforts provided the strongest Return on Experience.
Our team has put together a step-by-step guide on designing surveys and collecting data in the cannabis industry; I encourage you to check it out here.
The Experience Economy Meets The Cannabis Industry
Some organizations claim that each dollar invested in improving their customer experience delivered a return of 100x. This, of course, depends on your industry and which part of your customer experience your investing in. One thing is clear: in the burgeoning cannabis industry,consumers are incredibly discerning. Everyday people walk into dispensaries for the very first time, curious about cannabis and eager to learn more. Every single touch point you have with that customer represents more than just your brand or your dispensary, it represents cannabis as a whole.
A clear vision for how customers should perceive and build a relationship with your brand along with adequate investment in positive, unique touch points with those customers will put you miles ahead of your competition and will set you unto succeed as the cannabis industry continues to flourish and grow.
As an aside, customer experience is something that I myself focus on a lot with Best in Grow. So much so that my co-founder, Andrew, thinks I should change my official title from COO to CXO (Chief Experience Officer). To be determined. However, our new website is a terrific example of the thought that went into defining how we want our customers to experience Best in Grow. The website often serves as a person’s first interaction with a business or brand. The imagery, language, colors, movement, and even font all amalgamate to an experience, one that we hope inspires confidence in the power and value of our product. I’m curious to hear what you think of it. And of course, I’m always interested in hearing about how companies in the cannabis space are thinking about and investing in the perfect customer experience. You can reach me at firstname.lastname@example.org, if you’re so inclined.
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