In today’s hyper-competitive cannabis landscape, a data-driven culture can make all the difference. Those who leverage data can confidently estimate the total addressable market, evaluate risk and opportunity, track performance, and execute against opportunities. From day one, cannabis businesses should strive to incorporate data into operations to make more informed decisions, problem-solve effectively, and understand the cannabis consumer and what drives their purchase decisions.
Leveraging Experience vs. Data
Some may look to experience and boots-on-the ground exposure as justification to not invest in data, which brings up an important question: what’s more important – experience or data? We say both. Having either without the other puts your business at a great disadvantage.
Data provides a concrete base to view and understand a situation without the bias of anecdotes or squeaky wheels. However, data can also be interpreted in several ways for any given context and can take you off course if you aren’t looking at the “right thing”. Experience and instinct overlayed with that data is the key to success.
Let’s unpack some key questions that data can support and where to find data.
Use Cases for Data in the Cannabis Industry
We would be hard-pressed to find many examples of business applications for which you can’t find value in leveraging data. The following are some of the common business questions that data can and should support:
- Fundraising – What is the size of my total addressable market (TAM) and opportunity to capture market share?
- Pricing Optimization – How should I price given the existing competitive and economic landscape?
- Assortment & Purchasing Planning – What products should I make or carry?
- Revenue Forecasting & KPI Tracking – What are my revenue goals and how can I track milestones and growth?
- Consumer Insights – Who is my target consumer and how do they make their product decisions?
- Sales Operations – How can my sales team be more effective?
- Marketing Metrics – How can I maximize the return on investment (ROI) of my marketing spend?
- Budtender performance – How can I track and incentivize my top performing budtenders?
- Increase grow yields – How can I increase efficiency and effectiveness of my grow operation?
If you’re asking yourself a question about how to optimize an area of your business, there is almost certainly data available to guide confident decision-making.
Types of Cannabis Data
So you may be asking, how do I get my hands on data? The good news is that data is available for every budget (including no budget) and at every stage of business development. The challenge is identifying and extracting the right data to support your goals and pulling out the insights in a way that makes sense to your target audience – whether that be your customers, partners, investors, or your own team. In other words, the value is not just in the data itself, but what you can do with it.
- State Provided Data
- Informal Observational Data
- Market Retail Sales Data
- Point of Sale Data
- Consumer Insights Data
- Wholesale Data
- Market Forecast Data
- Availability and Pricing Data
- Marketing Data
Context is everything – framing up the data
When citing a data point, would you consider 50% a lot or a little? It depends on the context. A data point generally represents an unanalyzed figure, it only means so much as an independent number. However, once you add context, you may unpack a compelling story.
For example, if evaluating a cannabis product category market share, consider some of the following: What size is the total market? What other categories have more or less market share? Is the category growing or shrinking? What time frame is being referenced?
Then, diving deeper into more granular data affords you visibility into WHY. For example, why something might be shrinking so you can address the root cause issue, or why an opportunity is worth investing in. This insight that is derived from the data is where you are likely to find the greatest ROI from data.
By leveraging data and insights, businesses can optimize their operations, identify growth opportunities, and improve customer satisfaction. In the fast-paced and constantly-challenged cannabis industry, companies that rely on data to drive decision-making are better equipped to succeed, adapt to changing market conditions, and remain ahead of the competition.
Headquartered in Louisville, Colorado, BDSA helps businesses improve revenues, reduce innovation risk and prioritize market expansion with accurate and actionable cannabis market data, consumer research and advisory services. The company provides a holistic understanding of the cannabis market by generating insights from point-of-sale data, market data, consumer research and market forecasts. To learn more, please visit bdsa.com.