Understanding data is a complex task. This is particularly true in the broad and quickly evolving cannabis space.
Cannabis faces an array of common and unique challenges concerning data analysis. With legalization unfolding, the nascent market justifiably lags behind federally legal sectors. An example of the current circumstance can be found in business integrations and critical data systems like e-commerce, CRM, advertising and many more.
Playing catch up to the rest of the market is just one of the many hurdles in front of this billion-dollar nascent industry. While an unenviable market position, cannabis is finding market-specific data solutions that will lead to accurate, precise, trustworthy data in the coming years.
Cannabis Data Is Broad
Cannabis data analysis is a relatively wide-open field, with critical metrics varying by sector and company. In marketing, data factors into every aspect of the campaign.
“Successful marketing is a complex set of variables, and it starts with even simple things,” said Jake Litke, CEO of cannabis ad and marketing firm MediaJel, during a recent Panther Group webinar on leveraging cannabis data.
Such variables range from market data to consumer behaviors. Without reliable data, the job becomes a mountain of a task. Fragmentation makes it difficult to obtain accurate information about the market or consumers. Still, progress is underway.
With cannabis being such a robust market, companies have obtained a wide range of data from third-party and in-house solutions. The combination of traditional marketplace solutions and siloed data provides critical aggregated information, such as purchasing data, consumer behaviors, and much more.
Loyalty platforms are one of several critical ways companies obtain key shopper data, including phone numbers and email addresses. More precise data helps segment consumers for targeted marketing. For example, information about when the customer last visited the store helps shape which emails, display ads and notifications they’ll receive in the days, weeks and months ahead. These processes are very much in-line with traditional markets.
While we’ve progressed on shopper data, the market requires further data refinement. Areas of improvement include offline purchases, typically made with cash. For most companies, tracking cash-based foot traffic purchases remains a complex data set to follow accurately.
Such consumer information gaps must be filled with precise data and processes to generate consistently accurate, reliable results. It is now up to third-party and in-house solutions to close the gap sooner rather than later. While cannabis scales its data capabilities, brands already have a series of sector-specific data sets to analyze.
Understanding Consumers with Precise Data
One goal shared across the industry is to reduce noise and create the cleanest, most trustworthy data possible. This achievement would help better shape brand decisions while better aligning with customer wants.
“In the end, what we want to do is understand what’s happening at the ground level,” said Nima Veiseh, head of Panther Group data, during the recent webinar.
The industry is looking at data that overlaps to understand the current consumer climate better. Ideally, cannabis would have Nielsen-type data tracking, but the current situation is different. Today, much of the market looks for overlaying data sets to help understand the customer base, with MAC device addresses serving as a critical data set.
Consumer Evolution and its Impact on SKUs
Customer evolution and its impact on data is a fascinating market analysis component. Cannabis consumer evolution can be a particularly significant evolution. Over time, cannabis consumers tend to evolve as they learn more about various consumption options, production processes and strains.
“As the customer learns and grows and saturates their own understanding, it also affects their behavior,” said Veiseh.
The evolving behavior of consumers affects the rest of the supply chain. Brands have several fundamental data sets and metrics to assess, including their SKU velocity per retailer order. For example, companies can better understand SKU popularity and strength in specific markets using precise shipment data, said Jason Siegel, VP of information systems at Kiva Brands.
Siegel calls SKU velocity per door “a great metric.” He offered an example of why:
“We might see that we’re selling a certain SKU gangbusters in some market. If we realize that it’s in every single store, and the velocity’s pretty low, that’s not a great sign,” he said during the recent webinar.
Siegel highlighted additional key focus areas, including shipment and wholesaler data, state-by-state performance analysis and overall state market growth.
“We might have 10% higher sales in some month, but if the market grew by 20%, we’re not doing so good,” Siegel said, as a use case.
Lack of Market Maturity Driving Concerns
It would be fair to argue that much of the industry’s problems boil down to a lack of maturity. That isn’t the fault of the space but rather the nature of the beast as legalization incrementally creeps along in America. One of the consequences of the current situation is noisy, messy data. As the previous section explained, efforts are underway to improve the situation. But in the meantime, the lack of maturity does create significant challenges.
Catching up to traditional industries is critical to improving data collection. Simultaneously, cannabis still needs to work on market alignment. Sales data is a glaring example. Data aggregation becomes problematic when dispensaries under the same parent company sell products under different names. Choices like those can create product fragments that cloud buyer data.
As Litke and Siegel delved into during the webinar, brands are now blending data after a decade of bespoke options, creating more insightful market-specific solutions.
Still, we have to remember that cannabis data is different from the rest of the legal market. The disjointed nature of US law created fragmented laws on the state level. Each state’s unique regulations must be factored in when assessing the data. The circumstance creates challenges not seen in traditional CPG spaces. In marketing, branding materials may need further clearance before going out.
“There’s a handful of states…where creative advertising needs to be approved by the government,” said Litke.
Compliantly operating within state laws will remain challenging. Thankfully, assessing data could become more manageable as consolidation comes to the market. Regarding marketing, consolidation applies to implementing cohesive systems across major brands, namely multi-state operators.
Today, we are seeing MSOs integrate systems rather than having various state brands select which POS, e-com, loyalty programs and other techniques they would like to implement. Creating this alignment around processes and product naming will help silo market data.
Consolidation efforts will lead companies into an era of cleaner, reliable data. Over time, more and more companies will have more precise data and a clearer understanding of consumer behaviors. Product and partner information should also become more evident as we better understand inventory, saturation and other critical sales data sets.
With clean data sets, the cannabis industry could make its booming market burst with that much more potential. Simultaneously, the data should help companies better understand their consumers’ needs, wants and behaviors.
“I think that the cannabis industry represents a unique opportunity for brands to have a more meaningful, direct relationship with consumers,” said Litke.
Are you a cannabis company curious about how you can better leverage your cannabis data to meet your goals?
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