The age old saying is true, data is king
One of the biggest challenges that businesses operating in the cannabis industry face today is collecting accurate market data and analytics because the industry is so young. Especially in states that are just beginning to implement new cannabis laws and regulations, up-to-date, reliable information on the brand-new market can oftentimes be hard to find or worse, virtually nonexistent. That being said, data plays a huge part in the initial and ongoing success of your cannabusiness. Finding reliable data and then effectively analyzing it is critical. As a licensed owner or operator in the cannabis industry, oftentimes the answers to your biggest, most crucial questions can be found in analytics.
Why Focus on Analytics?
Simply put, analytics can help increase profit margins, and the importance of it should not be underestimated. In such a competitive industry, the cannabusinesses that cut through the noise and become nationally recognized brands will partly do so by harnessing the power of data. Analytics offer extremely important insights to simplify and augment involved decision-making processes such as pricing analysis, business strategies and planning, and marketing. The scale and scope of data as well as how effectively you utilize it will affect how much your company’s profit margins increase. If using data to its fullest potential, your business could expect to increase its operating margin by around 60%, if not more. Focusing on key analytics will allow you to tweak and improve your business model as time goes on. It can also help you develop your next service or product based on consumer demand trends. Analytics help drive constant enhancement and innovation.
One type of data that companies in the cannabis industry are tracking is retail analytics based on digital transaction data. Leveraging retail data will allow you to improve your business’ sales performance, better manage your inventory, and gain a more accurate picture of financials. Point-of-sale software is your first key to gathering data. You can then analyze data from your store’s sales system and make sense out of it by using analytics. Your point-of-sales system may allow you to determine your top selling products, best-selling strains, highest performing budtenders, busiest times of day for your store, and even information on customers, depending on which software you choose. In-store analytics in retail cannabis stores is becoming more common as the industry matures in more established states such as Colorado and Washington. Some analytics platforms are built into point-of-sale systems and allow you to combine compliance measures as well. This type of information makes it much easier to account for local, state, and even federal tax requirements when tax time comes each spring. Choosing the right software depends on your store’s needs. Think about what type of data you want to collect, such as demographic information on your customers. As the market grows, retail analytics will play a greater role in the success of cannabusinesses that are working to reach their fullest potential.
Marketing analytics are just as critical to your cannabusiness’ success as retail analytics are because of the competitive nature of the industry. Right now, the market is crowded and full of different companies all vying for the number one spot. Due to increasing competition, evaluating market spending trends among cannabis consumers and determining your return on investment from your marketing strategies and campaigns is more important than ever before. Especially crucial to monitoring social media, marketing analytics can also help you track your company’s various promotions and content marketing occurring both online and in-store. Many digital marketing strategies today use Facebook, Twitter, YouTube, and advanced search engine optimization to successfully target and run advertising and marketing campaigns. Some companies are also able to track the search engine performance of their own website straight through their marketing analytics software. Some software on the market currently caters exclusively to recreational and medical cannabis dispensaries. Choosing the right marketing analytics software can help streamline your digital information retention processes, for example, more easily managing your patient/cardholder database. This information can even be used during the patient’s check-in process to help verify identity, or track buying habits to allow budtenders to better recommend products.
The Growing Importance of Analytics within the Cannabis Industry
In recent years, becoming a software vendor has become an attractive option to many because of the ancillary nature of the business. It doesn’t require a license- yet- to operate a software company in the cannabis industry. There is a growing market for vendors who can best present data in a logical, thoughtful, easily-accessible, and useful way. Providing context for data and information to give it meaning can be a difficult task, but there is money waiting to be made for those software company’s able to do it. Proper and effective data analysis gives dispensary operators the ability to develop and implement procedures and action plans to help make their business more successful. The breakout companies of the future will no doubt all heavily focus on analytics to leverage their data and information to the best of their ability.