Preparing for 2024: How to Create A Strategic Cannabis Promotional Plan that Delivers

Are you ready to increase customer numbers, spending, and frequency for your cannabis business? While many retailers excel in one of these areas, it's rare to find one that excels in all three. Sure, you can attract new customers, but will they come back? This blog aims to help you create a well-planned and organized promotions calendar that aligns your team's tactics and budget, all with the ultimate goal of seeing growth in all three areas.

At Vetrina, we already know that marketing and promotional planning presents both challenges and opportunities that require the attention of retailers. 

From securing budgets and optimizing your channel strategy to creating achievable goals, a strategic plan becomes even more crucial for those who not only aim for growth but also want to safeguard their market share.

Should you invest in marketing your cannabis business?

The short answer is yes. The assertion that "Marketing is an investment, not an expense" is the rallying cry for businesses navigating late Q4 and turbulent economic markets. Backed by compelling data from Ehrenberg-Bass's 2018 study, the consequences of halting advertising are stark: a 16% decline in sales after one year, escalating to 25% after two years. Notably, the rate of decline is most rapid for brands already experiencing a downturn before cutting marketing spending, disproportionately affecting smaller brands.

So if you are seeing a slip in profits, it will be tempting to slash marketing budgets, but long term this is going to lead to a steeper drop in your profits.

How much should you invest in your cannabis marketing?

Now, the question of how much to spend becomes central to this discourse. The recommendation of allocating 7% of total revenue to marketing, divided between maintaining current income and fueling growth, emerges as a strategic guideline. Additional insights from a recent Forbes article advocate for allocating between 5-10% to maintain market share and up to 20% for businesses in growth mode. Small businesses, the lifeblood of many industries, are advised to consider a minimum monthly advertising spend of $1,000.

It's important to note that 70% of revenue comes from loyal customers. During economic downturns, customers become more cautious with their spending. Therefore, establishing trust through strong branding and clear communication of offerings is essential. Over time, trust transforms into loyalty.

Let’s talk about channels, one in particular that remains a spicy topic in our industry…

What about Weedmaps?

Retailers and brands that allocate substantial budgets, exceeding $100K monthly on Weedmaps, are advised to reassess their expectations for Return on Ad Spend (ROAS). The harsh reality is that many of them, despite aiming for a 5X-10X ROAS to break even, fall short and often achieve no more than a 2X ROAS. This decline can be attributed to the increasing cost of diminishing returns as the audience expands and changes.

Consider a scenario: promoting a vape product to consumers who value convenience and flavor. While the initial impact may be substantial, scaling presents challenges. As the audience grows, it attracts cost-conscious consumers, which can potentially lead to losses when factoring in customer acquisition expenses. The cost of advertising to attract new, uninformed customers becomes excessive, as it involves competing for attention without ensuring loyalty.

In this competitive landscape, where some spend only $10K per month on advertisements and others hire agencies to achieve a 5X return on ad spend (ROAS) on Weedmaps, the important factor that sets apart those who are truly growing is their emphasis on providing a great customer experience. The recommendation is to redirect the focus from spending on ads to cultivating customer loyalty by delivering exceptional experiences.

It is important to also consider the decline and difficulties of the platform. Once an unparalleled success in the cannabis industry, Weedmaps owes part of its triumph to serving a lucrative niche often shunned by tech giants like Google, Yelp, and Facebook due to federal laws. However, its financial success was also based on a controversial willingness to run ads for unlicensed cannabis businesses, even after California passed Prop 64.

The decline of Weedmaps demonstrates a cautionary story. In 2022, the company encountered major obstacles, resulting in staff reductions and a stock decline of over 80%. The market value of the company plummeted from over $1.5 billion in 2020 to just $200 million. This decline was triggered by Weedmaps succumbing to federal pressure and discontinuing the listing of unlicensed operators. This decision severed a substantial source of revenue.

While still a formidable player in the cannabis advertising space, the company's dependence on unlicensed revenue and challenges from licensed listings pose significant hurdles. Its future remains uncertain.

The reality is that achieving a high ROAS on Weedmaps could be a thing of the past. It would be more beneficial to focus on increasing the lifetime value of customers. The real profits are made after the initial (and possibly subsequent) purchases.

Wherever your strategic plan lands, ensuring you’re entering 2024 with the right channel strategy is incredibly important. If you’re pulling back from Weedmaps we’d recommend that you would invest in your SEO with an expert. Reviewing performance by channel at year-end, and seeing what worked and what didn’t will help optimize your marketing efforts for Q1 and beyond. 

Marketing and promotions planning are ever-evolving, as are the customers that we’re communicating to. Speaking of…

Don't forget the importance of marketing to Gen Z

We cannot overlook the importance of Gen Z, why? The rise of Gen Z, which makes up 26% of the world's population and accounts for a quarter of the workforce in 2023, brings a new dimension to marketing strategies. This digitally native generation is socially conscious, diverse, and heavily influenced by social media.

When planning your calendar and tactics, stop to consider some of the newest customers entering into legal age to be able to purchase cannabis. Like big tech companies, winning Gen Z’s loyalty at this early stage could have major benefits. Even if this generation may not be interested in your ads but is interested in the human element of your brand. Gen Z values connection and authenticity. They appreciate user-generated content and like to see others using or interacting with products. In fact, a recent survey by Prosper Insights & Analytics revealed that 58% of Gen Z respondents stated that familiar labels are important to them.

Gen Z is the generation that engages the most with social media, providing marketers with a wealth of information about their preferences and interests.

However, cannabis marketers should be cautious. Gen Z can detect if you are trying to cater to what you think they want. If your campaign comes across as purely profit-driven, it can backfire. For instance, in response to the increasing number of brands participating in Pride month initiatives, 13.7% of Gen Z no longer wish to see LGBTQ+ issues presented in advertising campaigns. This doesn't necessarily mean they don’t care about equality issues, they simply see through superficial corporate campaigns.

Learnings from your efforts in 2023, accounting for the preferences of your loyal and possibly some new customers, will bring to the surface a few insights that can be woven into your overall promotions calendar.

How to start planning your New Year promotions calendar

Strategic Planning with Four Peaks: Elevating Your Marketing Calendar

At Vetrina, we help our clients in utilizing a Four Peaks promotional plan. In simple terms, this means strategically identifying four peak periods throughout the year. This strategy aims to not only maximize consumer spending opportunities but also encourage repeated interactions, ultimately bringing customers back to your store at least twice per quarter. This approach is aligned with the average frequency of visits for cannabis customers, which is 8 visits every 45 days.

The cornerstone of this approach lies in orchestrating one major promotion every three months. This frequency ensures that your dispensary remains top of mind during key consumer spending occasions, creating sustained momentum and driving additional business with each carefully timed peak.

A well-executed promotion at the right time can yield exceptional results or, at the wrong time, have the opposite intended effect. While the rise of online retail has made it easier to create promotions on any day of the week or year, it's important to consider customer shopping habits and analyze what the market and competitors are doing with their promotional offerings.

So, what kind of buying occasions should you be looking to support?

1. Seasonal Consumer Spending like Holidays:
• Embrace the spirit of holidays, tapping into heightened consumer spending during festive seasons.
• Craft promotions and experiences that align with the celebratory atmosphere, enticing new and returning customers.
2. Gifting Moments like Valentine's Day/Mother's Day:
• Seize opportunities presented by gifting occasions, appealing to customers seeking thoughtful and meaningful presents.
• Tailor promotions that resonate with the sentiment of love and appreciation, expanding your customer base through gifting.
3. Remain Topical with Industry Days like 420/710:
• Align with the cannabis community by celebrating industry-specific days like 420 and 710.
• Craft promotions that resonate with cannabis enthusiasts, fostering a sense of community engagement while attracting new clientele.
4. Category-Specific/Seasonal Shopping Occasions like Summer:
• Leverage category-specific or seasonal shopping occasions, capitalizing on trends and consumer preferences.
• Tailor promotions to cater to the unique needs and desires of your customers during specific seasons, ensuring relevancy and engagement.

The goal of planning for these four peaks is not just to drive immediate business but to lay a sturdy foundation for sustained growth. Each peak is an opportunity to attract new customers who, in turn, become the bedrock for subsequent peaks. This cyclical approach creates a ripple effect, continually expanding your customer base and driving business growth.

Educating clients on the value of streamlining initiatives, the strategy encourages leaning into one major initiative per quarter. This focused approach allows for impactful promotions within the context of bi-weekly product promotions, ensuring that efforts are concentrated and results-driven.

Acknowledging the dynamic nature of the industry and your cannabis business, the strategy emphasizes regular fine-tuning of the marketing calendar. Plan to check in to refine your marketing calendar every 6-8 weeks ahead of deployment dates. Additionally, quarterly meetings between departments are deemed essential to foster collaboration, ensuring everyone feels supported in the pursuit of marketing excellence. 

With the 4-peaks mapped out, you can jump into creating a calendar that maps out the 12 months of 2024 into manageable ‘sprint initiatives’ that align to your retail bi-weekly promotions. Having these plans in one document ensures your retail, procurement, cultivation and marketing teams are not only aligned but planful with their efforts.

How do you build a cannabis promotions calendar?

In our 100 Cannabis Retail Course, we provide a downloadable template that you can fill out. If this blog has sparked your interest in getting started and learning more about building a profitable promotions plan, including understanding when and why to use discounts, markdowns, and promotions, then using this template could be the quickest way to prepare your marketing plan for the upcoming year.

If you have time, using a tool like Excel to track promotions and ROI is a reliable option.

Remember to include:

• Key Dates and Peaks:
• Identify and mark key consumer spending occasions, industry-specific days (e.g., 420, 710), holidays, and other relevant dates.
• Plan promotions around these peaks to capitalize on heightened consumer engagement.
• Seasonal Relevance:
• Align promotions with the changing seasons and consumer behaviors.
• Tailor offerings to meet the needs and preferences of customers during different times of the year.
• Target Audience Segmentation:
• Define and understand different customer segments.
• Tailor promotions to specific demographics or preferences within the cannabis consumer base.
• Promotion Types:
• Determine the types of promotions to be featured, such as discounts, bundle deals, limited-time offers, or loyalty programs.
• Mix and match promotion types to keep the calendar diverse and engaging.
• Product Focus:
• Highlight specific product categories or individual products in each promotion.
• Showcase new arrivals or popular items to keep customers excited and curious.
• Educational Initiatives:
• Integrate educational content into promotions.
• Share information

If you made it this far into the blog you get some insider knowledge. The team at Vetrina is currently hard at work putting the finishing touches on our master class on promotional planning. If you feel like you’d like to brush up on your skills or learn some new ones we’re be launching this class in late March next year. Details to follow. If you want to check out our 101 course, check it out here.

Tips for Cannabis Brand and Retailers

• Diversify Marketing Efforts: Explore and invest in marketing channels beyond Weedmaps to reach a broader audience and mitigate the risks associated with platform-specific challenges. This can also mean shifting focus from heavy ad spending to delivering a fantastic customer experience, recognizing it as a key driver of sustainable growth.
• Realistic ROAS Expectations: Reassess and set realistic expectations for Return on Ad Spend (ROAS) on Weedmaps, acknowledging the cost of diminishing returns.
• Strategic Four Peaks Calendar: Implement a marketing calendar with four strategic peaks, aligning promotions with consumer spending occasions to drive business and build a foundation for growth. Strategically plan promotions for holidays, gifting moments, industry days (420/710), and seasonal shopping occasions, considering the diverse preferences of the cannabis consumer base.
• Frequency of Promotions: Aim for one major promotion every three months to maintain a consistent presence, driving customers back to the store at least twice per quarter.
• Streamlined Initiatives: Dial back the total number of initiatives, leaning into one major initiative per quarter within bi-weekly product promotions for focused and impactful campaigns.
• Calendar Fine-Tuning: Regularly review and fine-tune the marketing calendar every 6-8 weeks, ensuring adaptability to industry trends and consumer behaviour.
• Budget Allocation: Allocate marketing budgets wisely, considering recommendations such as 7% of total revenue divided between maintaining and growing income streams.
• Data-Driven Decision-Making: Utilize data analytics to evaluate the success of past promotions, informing future strategies and ensuring a data-driven approach.

If this blog has you thinking about the coming year, subscribe to our newsletter as we continue to share expert insights you can action.