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Why cannabis needs powerful consumer data


January 3, 2020
By Asif Khan, CEO of GroundLevel Insights

Topics
Customer buying marijuana. (Credit: Getty Images)Customer buying marijuana. (Credit: Getty Images)

Cannabis companies have easy access to several data platforms at their fingertips. A quick look at point-of-sale data shows stakeholders what products they sell, how much money they make, the size of their market share and the average transaction size.

But I believe the key that will help cannabis companies in making demand-side projections for the future lies in consumer behaviour data.

There is little data on the behavioural attributes of the cannabis consumer. This missing information is crucial in understanding key questions facing our industry today: Where are my consumers coming from? Where do they go after they visit a dispensary, clinic or CBD/hemp retailer? What else are they interested in, beyond cannabis?

I believe the answer lies in the physical movements of the consumer. These insights can help inform a cannabis company’s strategy in areas like product development, cross-promotional marketing and competitive situational analysis. By knowing where the consumer has been before a cannabis purchase and their location post-purchase, companies can employ more targeted strategies and curate better customer experiences to help grow their company.

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About a year ago, GroundLevel Insights established the idea of a new artificial intelligence (AI) platform that will help cannabis industry stakeholders in a way no other data company has done before. We recruited top professionals who brought a wealth of experience in product development and brand marketing from working with brands such as Groupon, Starbucks, Netscape, Pernod Ricard, Here Maps and Yelp.

We gained some interesting insights from our experience with these companies and discovered that they could be applied to the cannabis industry. Here’s what we learned:

 

Adjusting Product Mix to Improve Sales

Data like the kind GroundLevel Insights provides, is achieved by aggregating the location data of consumers collected from various reliable sources, filtering it through a proprietary AI platform and converting it into unique insights on the behaviours of those consumers.

All our “connected” devices are being tracked and the bulk data is stored on the servers of data companies, mobile operators and Internet suppliers the world over. We acquire anonymous bulk data from hundreds of suppliers and turn it into insights that consist of audience groups represented by industry averages and percentages. This simply means that the outcome of the AI platform is never any information on specific individuals but rather the behavioural patterns of anonymous groups.

For example, rather than saying, “your consumer Rachel visited a jewellery store today,” results can identify “25 per cent of your customers visited a jewellery store directly after visiting your dispensary today.”

Starbucks uses data from a consumer’s mobile device, coming in proximity of their Wi-Fi routers and compares that to the same mobile IDs visiting other nearby competing businesses to capture more market share.

The company found that 18 per cent of those customers visiting a certain Starbucks, also visit a nearby Einstein Bagels shop within a few minutes. If this activity persists over a period of time, Starbucks has now identified a pattern and might consider selling a greater variety of bagels.

For the cannabis industry, this may mean understanding the availability of a specific product at competing locations and adjusting their own product mix to improve sales.

GroundLevel Insights uses artificial intelligence to analyze anonymous location and consumer data. (Credit: GroundLevel Insights)

GroundLevel Insights uses artificial intelligence to analyze anonymous location and consumer data. (Credit: GroundLevel Insights)

Determining Ideal Real Estate for Your Business

In the restaurant and retail world, companies like Taco Bell or Dunkin’ Donuts spend a great deal of time studying location intelligence data to determine the optimal site to acquire real estate for their new stores. Typically, this factors in demographic and other city-based data.

For example, Dunkin’ might see through these data areas of new real estate development with a correlation of social media conversation about their brand. In such cases, it may indicate a positive response to opening a new store.

In cannabis, we can see where the existing stores are, relative to consumers’ homes and their travel patterns. This, in turn, can determine gaps in maps that represent the best locations for the next dispensary or clinic.

 

CPGs Want More Data to Invest in Cannabis

For traditional consumer packaged goods (CPG) companies like Coca-Cola or Procter & Gamble, years of effort are often spent on new product development. One of the key components of that is the investment in data science to measure the anticipated product demand and consumer acceptance.

Coca-Cola, who owns Costa Coffee and Fuze Teas, might use location-based demographic data to determine if a certain geographic market holds a consumer population that buys a lot of spices. This can indicate a potential demand for flavoured coffee. A great deal of fresh fruit can indicate a demand for lemon-flavoured iced tea.

These companies are used to buying data from companies, like Nielsen and others. In the cannabis industry, no such data exists. Companies like Ferrero Rocher are already working on infused chocolates, but where is the data to show the demand?

Licensed producers and extraction companies are struggling to figure out what categories of product to infuse, and the traditional retail CPGs and beverage companies who are trying to find their way into the cannabis market are reluctant to invest when the data they are used to having is simply not available in this new market.

In most other consumer-facing brand categories, like consumer packaged goods, hospitality and tourism, beverages, alcohol, and more, a great deal of data is used to inform everything from product development to market sizing and targeting. In cannabis, however, it’s like the wild west. It’s an emerging market without a great deal of this market guidance. 

 

Innovation is the Future of Cannabis

We are now live with our public beta version, which is available to everyone who is interested in learning more about GroundLevel Insights’ technology and exploring how it can be leveraged for their businesses.

We are inviting major stakeholders in the cannabis industry to participate in this trial, which includes retail and medical clinics, licensed producers and service providers, government and regulatory bodies, market research companies and advertising agencies.

In a hugely competitive industry like cannabis, only those who embrace innovation will be able to make more enlightened cannabis decisions and will likely survive and thrive. Tracking consumer behaviour gives companies deep-level analytics that are crucial for cannabis companies to make a mark and become world-class companies.

2020 is around the corner, and the cannabis industry will only benefit from the leverage effect data technology will provide to the new decade.


Asif Khan is the CEO of GroundLevel Insights, a start-up employing an industry-leading AI and movement science data platform, turning anonymous location and consumer data into real-time insights and analysis for the cannabis industry.