The Impact of Budtender Recommendations on Revenue

This article looks at how cannabis brand purchases can increase or cease to exist based on product recommendations from friends, family, and Budtenders. We’ve included a free template to calculate your cannabis brand’s potential revenue based on Budtender recommendations.


The legalization of cannabis has exponentially increased purchase options. The selection process can be daunting even for the most veteran cannabis enthusiasts let alone a first time Patient/ Customer.

To wade through the ocean of cannabis brands Patients and Customers turn to friends and family for recommendations. Research from BDS Analytics reports “Consumers are STRONGLY influenced by familitary and recommendations” and that {60% of purchasers look for recommendations from someone they trust with an estimated 50% of Patient/ Consumers looking to friends and family for recommendations first and 41% Patient/ Consumers asking the Budtender for their recommendation}.

Upon reading BDS Analytics’ research I instantly wanted to put the data into a Patient/ Customer purchase funnel to quantify what the data means for the activation of potential new customers and first-time buyer revenue (it’s slightly sick how much I love quantifying behavior and data…it’s the behavioral psychologist in me). Below is what the funnel looks like for the 50% of Patient’s/ Customer’s that seek product recommendations from friends and family.

Product Recommendation Influence on First-Time Buyers
For the code to embed this image contact EpicHint.

 

Table I: Recommendation Influence on First Time Buyer Revenue below details the steps and values in the diagram above.

 

The purchase funnel shows that cannabis does not just sell itself. There are many steps and variables that influence a purchase (and repeat purchase).

What a Budtender’s Recommendation Means for Your Brand
Let’s make the assumption that we own a new emerging cannabis brand. We know, based on the way the industry currently operates, 100% of the time a purchase will be transacted by the Merch-influencer/ Budtender. We also know, based on third-party research, 50% of Patients/ Customers will ask friends and family for recommendations and 41% will ask the Budtender for their thoughts on the product. We also know that the Budtender is “The Merch-influencer” and is the only person with active point of sale merchandise influence. What does this tell us? That as an emerging brand we need to invest in ensuring the Merch-influencer knows our brand and can authentically speak to its products.

Empowering the Merch-influencer (aka Budtender)
Building a cannabis brand that has longevity and long-term revenue power requires time, strategy, money, metrics, the ability to optimize strategy (as tactics that once worked won’t overtime), and products people want to talk about and buy over and over.

  • Time = Dedicated team members to develop and execute a data-driven Budtender/ Merch-influencer training plan

  • Strategy = Thoughtfully architected plan(s) to train Budtender/ Merch-influencers, provide product experiences, measure outcomes, and quantify the value of each effort (i.e. measure the return-on-investment)

  • Money = An Activity-Based Costing (ABC) Budget with key performance indicators to quantify the relationship between activities, costs, promotions, pop-ups, events, trainings, and product sales (i.e. all the “penny pre-roll and taco truck” brand awareness promotions and “shift change donut and coffee” pop-up trainings need to be quantified and analyzed to determine if they actually produce the results they are thought to produce).
  • Metrics = It’s impossible to know if you’re moving forward in the right direction unless you know what your next “landmark” is, where you’ve been, and where you should be now. Activity and role based key performance indicators (KPIs) are metrics to understand if you’re moving in the right direction. Every member on your team should have KPIs (I have them). Every initiative/ activity should have KPIs. The KPIs help measure impact, track success, and identify areas for improvement before there are major problems. Capturing data without making the data “living” and actionable does no good. In addition, to tracking activity and role-based KPIs a system by which metrics are reported, reviewed, and analyzed for improvement, on a daily, weekly, monthly, quarterly, and cohort basis, is important.

  • Optimize = The analysis of key performance indicators to evaluate and reinforce what is working and dive into the details of what is not working for the purpose of extracting insights to develop tactics/ strategies that produce measurable results.

  • Product = Product Budtenders/ Merch-influencers want to talk about and that Patients/ Customers want to repeatedly buy (a brand can do all of the above right but if the product sucks the brand will go out of business because there is no staying power/ repeat customer/ customer lifetime value).

Having a Party for Budtenders? Measure the impact and ROI.
Market share competition is fierce and only getting more competitive. We see a lot of halfass attempts to influence Budtenders/ Merch-influencers. A low return-on-investment strategy we are seeing more cannabis brands adopt are Budtender Bashes (i.e. product/ tasting parties exclusively for Budtenders/ Merch-influencers). When strategically executed with quantifiable brand and product training Budtender Bashes can be great to empower the Budtender/ Merch-influencer to authentically provide recommendations at the point of sale (because they can share a personal positive experience they had with the brand and its products).

However, we are not seeing strategically executed experiences where brand-to-budtender influence is measured and followed up on. What we are seeing are expensive parties where brands have no strategy or channel to continue the brand-to-Budtender/ Merch-influencer conversation post-party and no idea:

  • Who attended their Budtender Bash
  • What the Budtenders/ Merch-influencers know about the brand or its products
  • What the Budtenders/ Merch-influencers leave thinking about the brand and its products

Brands are using vanity metrics like number of people that attended a party to determine the “success” of a party. The result of these Budtender Bashes are spikes in social media via photos and hashtags but there is no quantifiable ROI on the time invested in planning the event, the costs of the event, the assumed Budtenders/ Merch-influencer relationship, the assumed real positive response (we say real because Budtenders leaving a party may say they liked the product to someone’s face but then never recommend the product because they actually thought it was horrible), or impact on influence at the point of sale. Months of time are invested into planning the parties and the cost of goods (i.e. location, swag, product, entertainment, etc.) are in the tens of thousands but few brands are quantifying if the party has an impact on the bottom line over time (it’s important to measure ROI in cohorts of time) not just brand awareness.

Budtenders/ Merch-influencers are the only persons with active influence at point of sale. It is for this reason that we believe they should be thought of as “on-site” members of a cannabis brand’s team and should be invested in as such operationally (with measurable strategy and training not just swag and the occasional party).

How much revenue is being left on the table?
Table II:Recommendation Influence on First Time Buyer Revenue below expands on the steps in Table I and includes the potential customers in the funnel after each step. If we start with a potential customer pool of 500 people that are considering purchasing a product that costs $65.00 they represent $32,500.00 in potential first-time purchase revenue. When we calculate the steps in the funnel by the time we get to the last step we have 15 first-time buyers who complete the funnel and only $979.00 in revenue. The first-time purchases that are made represent just 3.01% of the total potential revenue that could have been captured!

 

 

If there was ever doubt on why the brand-to-Budtender/ Merch-influencer relationship needs to be strategically planned, invested in, measured, optimized, established and nurtured overtime we hope the table, and information above, provides clarity on the impact a Budtender/ Merch-influencer can have on a cannabis brand’s revenue and success.

Calculate Your Brand’s Potential Revenue from First-time Buyers
Do you know how much money your brand is leaving on the table due to lack luster Budtender recommendations? Calculate your cannabis brand’s potential revenue from first-buyers using this template:

EpicHint Template | Calculate Your Cannabis Brand’s Potential Revenue from First-time Buyers.

 

Calculate Your Cannabis Brand’s Potential Revenue from First-time Buyers »

 

As we noted in our last post, So You Think You Know How a Cannabis Purchase is Made, there are hundreds of Patient/ Customer purchase decision flows. The above cannabis Patient/ Customer purchase decision flow is one example of what captured or lost revenue may look like based on variables such as the percent of Budtenders that provide an authentic positive recommendation (the word authentic is key…inauthentic incentivized recommendations are easy to feel/ spot and will hurt the transaction, perception of the brand, and perception of the dispensary) .

In our next posts we’ll shed light on strategies, tools, and resources needed to establish meaningful Brand-to-Budtender/ Brand-to-Merch/Influencer relationships that result in product recommendations at the point of sale (as well as a few recommendations to capture and utilize the power of family and friend recommendations to lift revenue).

Thoughts? Leave Us a Comment
Has this post sparked any questions or thoughts? Leave us a comment below. We’d love to hear from you.


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Adriana Herrera

Founder at EpicHint
Patient advocate. Data junkie. Technologist. Social entrepreneur. Surfer.

Adriana was inspired to build EpicHint after her friend used cannabis to aide in his recovery from early onset colon cancer and was provided poor product recommendations by Budtenders.

Prior to founding EpicHint she used interdisciplinary principles and agile methodologies to build, and grow, two tech startups; a B2B competitive analytics platform for Internet Retailer 500 e-commerce marketers that protected personal identifying information, and a B2C e-commerce recommendation engine for sustainable and fairly made shopping. She is known for being able to translate a product’s social mission into viable financials.

Her work building tech for social good earned her an invitation to contribute a column to ‘The New York Times’ and features in media such as ‘Entrepreneur Magazine’ as a “Do Good Business Entrepreneur To Watch”, ‘NBC Universal’ as a “Top 10 Latino Innovator”, ‘Forbes’, ‘Fast Company’, ‘TechCrunch’, amongst many other media outlets.

When not working she surfs, loves to cook with fresh locally sourced ingredients, mentors girls in STEAM, advises startups, and hacks on side projects in skills-based learning, artificial intelligence, telemedicine, marketing tech, health and wellness, and cannabis niches.
Adriana Herrera

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2 Comments

  1. Cannabis Brand Ambassador Revenue (Strategy + Calculator)

    […] locations not 460 Budtenders in 23 locations. Impact of Budtender Training on Cannabis Brand RevenueBudtenders have a significant impact on revenue and the success of a cannabis brand. When we look at the numbers they tell us that training […]

  2. So You Think You Know How a Cannabis Purchase is Made? | EpicHint

    […] we have deemed Merch-influencers to be above Micro-influencers and below Macro-influencers. In our next post we’ll get into the concept of the Merch-influencer and what it means in the purchase funnel […]

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