The cannabis industry is one of the fastest growing industries in America, but just like all industries, not every business will make it. Even though there was a 44% workforce gain in 2018 due to the emerging markets of cannabis, not all markets are created equal and some businesses will be back to square one by the end of their first year. While the innovative opportunities are thrilling and entrepreneurs are having a shot at making some great money, there are important things that will help smart business people survive the masses.
When looking at the dispensary marketplace reports that almost 50% of dispensaries fail within the first 1-2 years. Why is this so? According to Michael Roberts from Westword, “30 percent of all new businesses in any industry fail within the first two years.” So, what is different about dispensaries that the number would be higher?
Just like any new market, people approach new opportunities like the Gold Rush back 1848. Many people sprint to set up shop without any strategy, system, or plan. They just pitch their tent and put out an “Open” sign. And often, they make good money, for a little while…
Here are three reasons why we at GOCo. believe many dispensaries will fail within the first year:
Failure to Invest in Marketing
As a marketing firm for the green industry, we have had many dispensaries tell us that they didn’t need our marketing services because they were already very successful and bringing in thousands of dollars. However, from our standpoint, their marketing, branding, and online aesthetic needed a lot of work.
Studies say that in order for successful businesses to stay successful, companies need to be investing 8-15% of their revenue back into marketing services. The ocean is wide, and the need is much, but how will people know you exist if you stay on the shore? At GOCo., we believe investing into marketing carves out space for you in the ocean of opportunity and can anchor you in a position to achieve success.
While the demand may be heavy for the cannabis industry, and dispensaries may be getting traffic like a New York City subway, how can one compete with a market that is opening a new store on every street? We believe the businesses who will win out over time are the ones who invest their money back into their business in a wise and thoughtful way.
The people in the gold rush who had a plan and strategy often became the mayors, the bankers, and the anchors of the new city establishments. Here at GOCo., we want to help your dispensary or business become an anchor for the city – or perhaps the mayor of your industry. Are you ready to start investing wisely?
Failure to Put Intention into Branding
Branding is everything and will either make or break your business. Today, millennials are the main buyers of the market, and they live by the saying "judge a book by its cover." You may have a good product, but if your product does not look sexy or professional, many buyers will not be interested.
Millennials are a generation of personal aesthetics, being selectively pretentious, and being completely loyal to the brand of their choosing. Speaking as a millennial, we want to take pride in the products we support. We want the products we support to reflect our style and our fashion, in the same way we view our coffee - high quality, but also stylish. We want the products we buy to stand out amongst the crowd, not be average, and not be what everyone else is doing.
At GOCo., we believe putting intention, patience, money, and thought into your brand can help make you distinct in the ocean full of boats offering a similar party that you are throwing. You may have wine and cheese, but that other boat with the beautiful paint job, vibey music, and a cool logo probably has better wine and cheese.
Do you see what I am trying to say? Branding is everything and if you are a dispensary, it is important that you do not just slap on a bright green leaf as your logo and make some obvious reference to cannabis. This is how you will slowly, but surely, sink in the ocean.
Failure to Create Customer Loyalty
Customer loyalty is how you keep your business moving and bringing in consistent income when the hype has calmed down and the press releases are forgotten. When a customer is loyal, it means they are a recurring customer over and over again. The commitment can be anywhere from low to high, but what is critical is that they view you as someone they can rely on.
So, you may be asking, “What makes a customer loyal?”
Trust is everything, and each customer must be viewed as a person you can have some level of relationship with. Everyone loves when their first name is remembered. Everyone loves being remembered. It makes them feel valued and it creates a familiar and safe environment for them to visit.
This is one of the major keys to trust, but how do you get them in the door to start that relationship?
This is when branding comes into play. Having a strong, professional, and creative logo, as well as a website, gives people their first reason to trust you. Having a poor logo and a faulty website, or no website at all, does not give a potential customer a reason that they can trust the product or service you are trying to sell.
If you can get these potential customers in the door with your professional branding, then you can start to build that personal relationship to take their trust even a step further.
After you have gotten a customer in the door, sold a few products, built some form of relationship with them, a question you must ask yourselves is, “Can they expect this same experience the next time they return?”
One of the biggest mistakes that businesses make is failing to stay consistent with their brand, their product, and their customer engagement. People return to their favorite coffee shops, restaurants, or experiences because there is something they are expecting to happen that always comes through.
Another way of proving your consistency is staying engaged online and on social media. A business that stays active online and engages with their customers daily is a business that people can trust. Doing social media posts, writing blogs, sharing articles, and responding to comments is a way that ensures you are reliable, and someone engaged with the community. This is another way many businesses utilize the help from marketing services, because no business owner has the time to do this all – but this is what marketing firms are paid to do.
Once a customer becomes loyal to you, they take pride in being a representative of your business. It’s free marketing!
If you have all of the elements of proper branding, consistent experiences, quality products, and customer relationships, you have the potential of utilizing the free marketing tool called “word of mouth.” This is proven to be the most critical form of marketing for any business, and it’s free! Although, getting to this point is not free. It’s takes money, time, patience, thought, strategy, and of course, consistency.
We believe these are the reasons why many businesses fail and why almost 50% of dispensaries will fail within the first year.
If you need help or are ready to take your business to the next level – this is where we come in. Here at GOCo., we desire to build trust with all of our clients.
We believe branding is the most important thing a business can put their resources into, outside of the product itself. We desire to help all businesses grow, build trust with customers, create consistency for a customer’s experience, and turn prospects into loyal customers who take pride in what you have to offer.
Are you ready to get started? Contact us today.