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420 Holiday Retail Guide: How to Crush Store Revenue Records and Win New Customers on Marijuana’s Big Holiday

26 March 2019  |  22 min read

420 weed day

For cannabis dispensaries, April 20th is the day.

It’s the “Black Friday” of the cannabis world, with hundreds of thousands of customers pouring into cannabis shops in search of deals and enticing offerings that they can use to celebrate the holiday.

In recreational states around the United States, the holiday is celebrated with big gatherings. During 420 2018, more than 70,000 people packed into Denver’s Civic Center Park to participate at the world's largest cannabis festival.

For some dispensaries, the outcome of 420 directly affects their sales figures for the entire quarter (or even the entire year). It’s critical that retailers are not only able to attract customers into their shop and pull attention away from their competition on 420, but it’s also important that they are able to provide a positive buying experience.

In recreational cannabis states like California and Oregon, the market environment is becoming increasingly crowded with each passing day. Retailers are forced to do more in order to attract customers and stand out from the competition.

The effect of that increasingly competitive environment is compounded on 420. Every retailer is offering their own discounts, innovative product bundles, and other attractions to bring customers into their store. Your ability to not only match their offerings but outpace them in marketing coverage, preparation, and in-store experience may play the biggest role in your overall success on that day.

Let’s start by diving into just how important 420 is to cannabis businesses to show why it’s critical for you execute during the weeks leading up to the 420 holiday retail explosion.

If you already know the importance of preparing for 420, jump ahead to a section below for best practice recommendations and tips for your biggest 420 yet:

  1. A big opportunity for dispensaries
  2. The “420 season” starts weeks early
  3. Creating targeted specials
  4. Launching an omnichannel campaign
  5. Upselling opportunities
  6. Stocking up on inventory
  7. Security, compliance, and logistical considerations
  8. Collecting data to learn and improve your business

    1. A big opportunity for dispensaries

    420 is the biggest sales day of the year for most marijuana retailers, both recreational and medical. During the 2017 420 holiday retail workday, total Colorado sales topped $9 million, representing a 40.5% jump from the 2016 holiday.

    April 20th isn’t just the most important holiday of the year for marijuana retailers — it’s increasingly becoming even more important with each passing year. Our data at Flowhub showed significant growth. April 20th, 2018 cannabis sales were 51% higher compared to an average Friday, with more than 30% growth over April 20th, 2017.

    420 2018 statistics compared to 410 2017

    Cannabis sales on 420 2018 were 51% higher compared to an average Friday, with more than 30% growth over 420 2017.

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    This number was bolstered by the fact that 420 happened to fall on a Friday last year, which is traditionally the highest sales day of the week for dispensaries. Retailers can expect to see a similar growth trajectory during the 2019 holiday which lands on a Saturday for the first time for most markets that have legalized adult-use or medical marijuana. With 420 happening on the weekend, even more participation is expected—making it even more imperative to capitalize on the opportunity.

    In order to design and execute a strong marketing strategy, you need to get your 420 offerings in front of your customers as reliably as possible through high-engagement channels such as in-store advertising, online menus, word-of-mouth promotion, email, SMS, and social media. A true omnichannel experience will not only endear you to your customers but will help grow your revenue throughout the month of April.

    However, it’s important to understand that 420 isn’t just about the holiday itself. It’s about the weeks leading up to the holiday as well, just like Christmas.

    2. The “420 season” starts weeks early

    Having a big sales day on April 20th is important, but it’s not everything. Retailers that truly take advantage of the holiday know that sales for 420 actually start weeks in advance.

    Regulars, medical patients, and others (myself included) may want to avoid the crowds and hoopla associated with the holiday itself and opt to pick up their products a week or two in advance. They know to stock up early, but will still be expecting to benefit from 420 specials and discounts—don't disappoint!

    420-cannabis

    According to a study from BDS Analytics, the average retail sale was actually higher between April 1st and 15th in 2017 than it was on April 20th, with an average sale size of $7.30 during that time period. That number was almost a dollar higher than the average 420 sale, which came in at $6.32.

    The reasoning for this is speculative, at best. Perhaps more seasoned marijuana consumers and medical patients typically fall into the crowd of people that want to avoid the holiday masses in their local shops. Perhaps they opt for stocking up early, bringing in larger orders than normal.

    Additionally, the 420 holiday attracts a lot of occasional users, who may only buy marijuana products once or twice per year, as well as brand new consumers looking to participate for the first time, leading to lower quantity purchases.

    You may see smaller sale amounts on 420 since the holiday attracts many occasional users, who may only buy marijuana products once or twice per year, as well as brand new consumers looking to participate for the first time.

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    In the following sections, you'll learn some key strategies to prepare for 420 holiday retail challenges and maximize your business impact.

    3. Creating targeted specials

    Segmentation is a powerful tool for any retail business. Being able to custom tailor the offers and messages that your customers receive in the weeks leading up to a holiday can help you to maximize interest, keep your customers engaged with your brand, and improve word-of-mouth marketing. Your customers are more likely to be interested in your products when the offers you present are personalized based on information you already know and data that you have previously collected.

    Segmentation goes beyond the standard grouping of medical vs. recreational customers. Consider creating targeted 420 specials and pricing specifically for:

    • Locals
    • Veterans
    • Employees
    • Friends & family
    • Military
    • Senior citizens
    • VIP (e.g. customers who have reached a spend threshold)
    • First-time customers
    • Category of products purchased (e.g. flower, edibles, concentrates, pre-rolls)

    Segmentation offers many benefits, and allows you to be more efficient with your time, money, and resources by grouping similar audiences together rather than targeting individuals one by one. It also gives you the ability to:

    • Match your offerings to the specific needs of a customer group. If a customer traditionally purchases edibles, informing them about discounts on edibles during the 420 holiday period will make them more likely to buy from you.
    • Improve the reach of your word-of-mouth marketing. A customer that belongs to a segment is likely to have friends that also belong to the segment. If they typically buy concentrates, there is a good chance that they hang out with people that also buy concentrates.
    • Improve your understanding of your customer base as a whole. Offer products that appeal to your customer segments at your store specifically, not just what products are selling the best in the competitive marketplace.
    • Identify opportunities for upselling. A customer that traditionally buys flower can be upsold a greater quantity, higher quality strains, or other related offerings that can increase your average order value.
    • Understand what your customers can afford. By tracking average spend data you can discern how much disposable income certain segments might have available and use that information to offer higher priced products and improve your average order value during the 420 holiday retail period.

    It’s not just about getting your products and offers in front of your audience, segmentation allows you to make sure that you are putting the right offer in front of the right audience. As an example, you could offer a “first-timers pack” or “420 virgin kit” that includes flower, a pipe, and a lighter to give new consumers a straightforward option. Get creative and have fun with your specials! It's 420, so why not play up the party?

    Dispensary best practice: When launching new 420 specials, always complete a few successful test transactions before the big day.

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    Once you’ve identified your target audience and compelling offers, be sure to build and test your specials on your point-of-sale software before you begin advertising. You don’t want to end up in a situation where the customer presents a coupon sent to them via SMS but it doesn’t work when they try to check out! It is our best practice recommendation to always complete successful test transactions when launching new specials to ensure a seamless customer shopping experience.

    4. Launching an omnichannel campaign

    "Omnichannel" sounds like a scary, all-encompassing superhuman concept but it's simply a cross-channel communication strategy where all messages are cohesive and integrated.

    Today’s retail customers are less channel-specific than customers in years past. They don’t mind, and in many ways expect that retailers will connect with them through multiple channels. They want to learn what 420 special discounts and events are happening through channels they already use like social media, text, and email weeks beforehand.

    Consumers average nearly six touchpoints with a company before buying a product.

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    Fifteen years ago only 7% of customers used more than four touchpoints with a company before buying a product. Today, consumers average nearly six touchpoints with a brand. More than 50% of customers use more than four.

    Businesses that adopt omnichannel strategies achieve 91% higher customer retention rates year-over-year. Retail cannabis stores should explore and test a range of different ways to get in touch with and inform their customers in the weeks leading up to the 420 holiday, including:

    • Email. It's the most common way for a retail store to reach out to customers leading up to a big sale. Building demand through an email drip campaign with several touches weeks before, leading up to, the day of, and even after helps to keep you top-of-mind without overstaying your welcome.
    • Text message. Did you know that SMS message open rates beat email by more than 4x? Additionally, response rates are nearly 7.5x higher than email. For that reason alone, text message marketing should be a part of your 420 strategy. At the minimum, a day-of text to promote your offers on 420 would be appropriate. However, it is important to remember that text messages are seen as more of an interruption than emails and should be used more sparingly. Need a way to send email or SMS? Check out Flowhub’s CRM & Marketing software partners.
    • Signage and TV menus. The biggest deals and discounts should be readily apparent to any visitor that enters your store. Every section should have a headline deal that you push to get customers through the door, along with a range of other offerings that you can use to upsell customers. Leverage strategically-placed printed menus or tablets as well as digital signage to help display 420 specials as prominently as possible.
    • In-store promotions. In-store promotion and events hosted at your store (things like free food, live music, onsite massages, giveaways, free swag, or community and charity components) give your customers an additional reason to choose your dispensary on the big holiday. Even extended store hours on 420 can help boost your sales. Flowhub data shows 2 PM - 6 PM as the busiest time of day on April 20, 2018 by number of transactions. But if you stay open later than the dispensary across the street, consumers in a pinch will default to you.
    420 statistic busy time of day

    The busiest time of day on 420 2018 was 2 PM - 6 PM by number of transactions.

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    • Cross-promote with vendors. Vendors offering a shiny deal for the holiday? Work together to promote the offering in your own store. Set up a table for demos and give out free, non-medicated samples. Collaborating to spread the word about great prices and holiday-specific offerings works to your mutual benefit.
    • Leverage your loyalty program (if allowed). Loyalty programs are not allowed in every legal state. For those that can utilize them and provide enticing incentives, loyalty programs can be a great way to increase your average order value, customer return rates, and overall customer satisfaction with your brand. Flowhub’s point-of-sale solution offers a built-in loyalty program with a rewards system, purchase history, and redeemable points for discounts and perks. A loyalty program is an excellent way to give customers a reason to come back to your dispensary.
    • Encourage word-of-mouth promotion. Excellent word-of-mouth promotion can make or break your 420 holiday retail outcomes. Training your staff in advance to encourage your customers to tell their friends about holiday deals and generating real social interest is a cost-free way to maximize your holiday revenue. Friends don’t let friends miss out on dank deals, after all! Use creative tactics to increase word of mouth promotion. For example, "The password DankDealz = 20% off when mentioned on 420, tell your friends!"
    • Social media. Today seven in ten U.S. adults use social media. Younger audiences have an even larger presence on social media. For dispensaries, Instagram provides a simple and accessible way to get your most attention-grabbing products in front of your target audience. Make sure that you are sharing and teasing 420 deals in the weeks leading up to the holiday. Improve visibility by using popular hashtags like #420, #cannabis, #stoner, #weed, #cannabiscommunity, #marijuana, #hightimes plus your location to target people in your area.
    • Website and online menus. There is no better tool for informing your customers about the deals that you have to offer than your website and popular online live menus like Leafly, Leafbuyer, Wikileaf, iheartjane, or Dutchie. As you approach the day, launching a 420 deals page (just like Green Dragon did here) can help your customers separate your typical offerings from the deals that you are offering specifically for the holiday.
    420 special green dragon colorado

    A well-rounded, cross-channel approach can help you make 420 a defining success in your company’s history and set a new standard for future April’s as well.

    5. Upselling opportunities

    The day of 420 itself saw lower average order values than in the weeks leading up to the holiday in 2017, according to BDS Analytics. 420 brings a lot of occasional and first-time users into stores. Many just want to dabble and that often leads to smaller quantity and lower-priced purchases.

    Your ability to upsell customers that come in will be critical to the overall revenue that you can produce day-of. The deal that brings your customer into the store isn’t necessarily the offer that gets them to the cash register once they’re in-store.

    First, make sure that all of your advertised deals are flanked by equally-enticing deals of a higher-priced product, located nearby or in the same display case as your headlining deal. Then, your floor staff can inform customers about the higher quality product. Occasional users may be willing to spend a few extra bucks for a better experience — but you need your staff give them a nudge in that direction, otherwise most will stick with the original deal that caught their attention.

    420 dispensary shopping

    Additionally, you can help to increase your average order value by upselling accessories that can help them to enjoy the product. Selling pipes, bongs, rolling papers, lighters or other smoking devices to a person that buys flower can help to increase average order value and ensure your customers have the best possible experience. A roach clip could help improve the experience for pre-roll buyers.

    Since many will be shopping large groups on 420, retailers should pay attention to increasing their conversion rate, meaning the percentage of check ins that end up making a purchase. According to Flowhub data, 420 2018 saw a 5% decline in conversion rate compared to an average Friday, from 88% to 83%.

    420 2018 statistics compared to average friday

    Not only can you maximize the number of people who check in and make it to the checkout counter with strategic product placement (a specific table with all lower-priced items, for example), you can also incentivize a higher volume of purchases by:

    • Offering an enticing freebie with purchase: Promote a doorbuster deal for free food, a t-shirt, or some other product to anyone who makes a purchase. Dispensaries should tread carefully since many state laws prohibit giving away cannabis for free. Typically, you can get around this by bundling products together at discounted prices. Erring on the safe side works equally as well. Buy something, get a slice of pizza for free? Yes, please.
    • Properly training staff. Encourage sales associates to interact with every customer, especially those who are visiting with friends or spectators with no intention of making a purchase. There’s a good chance these folks will be in good spirits for the holiday and are prime conversion opportunities, particularly if you are running relevant specials for first-time customers! Add some friendly competition into the mix by rewarding your top-selling 420 budtender with a special bonus or prize. (However, be aware of which incentives for budtenders are legal and which are not in your state.)
    • Providing flexible payment options: Make sure your ATM machine is stocked and working. The more convenient ways you allow customers to pay, the easier it is to complete transactions. Consider offering cashless payment alternatives and start accepting cards at your dispensary to increase conversions and spend.

    6. Stocking up on inventory

    Ensure that you have enough product on hand for the big day and weeks preceding it as well. You don’t want to run out of a product that you have spent money advertising and you can’t have customers coming into your store to buy a specific deal only to find that it isn’t available.

    Review your internal data to evaluate what inventory you need to stock up on. Flowhub’s Executive Dashboard and sales reports allow you to easily learn what products are most and least popular, purchasing trends at each of your dispensary locations, which specials tend to be used most frequently, and more.

    420 top selling products

    Pro tip: Add top selling products and items on sale as “Featured Items” in Flowhub to make them easily searchable and more sellable.

    According to a study from BDS Analytics, the 420 product category market share still leans heavily toward flower products, but concentrate and edibles remain highly sought after.

    • Flower: 54%
    • Concentrate: 24%
    • Edibles: 12%
    • Pre-rolls: 5%

    Similarly, Flowhub data from 420 2018 shows:

    420 statistics product categories

      Every dispensary has a unique customer base with their own unique preferences, however, understanding overall market trends can help you to know what deals to prioritize in your marketing and inventory leading up to the 420 holiday. We predict top selling items on 420 will be easily shareable, instant-use products that are more friendly to new consumers—think flower, edibles, pre-rolls, and cartridges. Make sure these are well-stocked and highly visible.

      420 Prediction: Top selling items will be easily shareable, instant-use products friendly to new consumers such as flower, edibles, pre-rolls, and cartridges.

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      While you’re at it, be sure to take advantage of Flowhub’s Par Level Report to confidently set product pars, know the minimum quantity of inventory you should always have on hand, and never experience stock-outs in your store again.

      7. Security, compliance, and logistical considerations

      The 420 holiday means a lot of hustle and bustle in most recreational marijuana markets. Retailers must be prepared for long lines, handling customer wait times, and providing more assistance to less experienced consumers who need help selecting the right products. Increased store traffic will present new challenges for your staff and security teams, but the potential upside for sales can be compounded by having a game plan and creating a streamlined check in to check out experience. Working to prepare for these hurdles in the weeks leading up to the holiday will help to ensure that your 420 is successful.

      Make sure that you have backup plans in the event that things go wrong.

      • What will you do if the WiFi goes down? (If you need backup internet connectivity, Flowhub's mobile NUG device doubles as a Wifi hotspot so you can keep your lines moving.)
      • How will your security team handle the larger crowds in the store?
      • Will you need to bring on additional staff on the holiday to ensure a safe and positive experience for your customers?
      • How do you ensure you don’t oversell cannabis? Or that you verify the age of every person who shops at your store? What other compliance and marijuana laws should you be wary of?
      • What will you do if the line gets long or the store gets too crowded? (Hint: try our mobile NUG check in app with ID scanner and queue management. Cookies Melrose loves it, plus NUGs are on sale through April 2019!)

      Preparing for these eventualities will put your team in a position to deal with problems as they arise. Above all, make sure that you have a reliable point-of-sale solution. You can’t have dozens of customers in your store and no way to check them out!

      Flowhub goes to great lengths to protect our customers against technical failures and keep their dispensaries and retail stores running smoothly. Not only that, our knowledgeable product support team has a 95% call answer rate and is available to help every day of the week, 365 days per year.

      8. Collecting data to learn and improve your business

      The data that you collect on 420 has the potential to be more valuable than the actual revenue that you generate. On 420 (and in the weeks leading up to it), you’ll have many customers enter your store for the first time. You’ll have the opportunity to expand your customer databases, collect new data on returning customers, and use this data to bolster future campaigns.

      Make sure that you have data collection architecture is firmly in place before you get anywhere close to April 20th. Set a goal for Key Performance Indicators like:

      • Customer conversion rate
      • Average wait times
      • Percentage of new vs existing customers
      • Total sales
      • Total transactions
      • Average order value

      420 recommendation: Track KPIs such as customer conversion rates, average wait times, percentage of new vs existing customers, total sales, total transactions, and average order value.

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      You can collect and analyze all this data and more with Flowhub, including Customer Source upon check in. If you aren’t tracking customer sources, this is a great opportunity to start measuring how specific marketing channels (like Instagram, word of mouth, or Leafly) are impacting sales.

      Some of the data that you collect on 420 may come in handy sooner than you’d think. After the holiday, most stores will inevitably have sold more of some products and less of other products than they estimated. This means overages and shortages — which means that you’ll need to quickly move certain products to make room for others, which means more discounts and opportunities to increase revenue even after the big day.

      Leveraging data that you collected on 420 can help you to quickly move excess inventory and find balance. The days following the 420 holiday present a lot of potential for growing relationships with first-time customers through post-holiday discounts, giving you a great reason to make a quick second connection and attract repeat customers.

      Light up your 420 strategy

      As the biggest holiday in the cannabis industry, April 20th and the weeks surrounding it present a huge opportunity for dispensaries, but it also presents some risks. You must have a solid marketing strategy in place, deploying weeks in advance of the holiday or else you lose getting lost in the noise and losing business to the increasingly crowded competition.

      Retailers must also make sure that they have the right systems in place to provide peace of mind and reliability during the most important business day of the year. Flowhub's point-of-sale and inventory management solutions can help cannabis retailers to prepare for and execute a successful 420 holiday.

      “Love this POS. It hasn’t crashed on us once yet, even on 420.”

      Vincent Lidie - Starbuds, CO

      Anne Fleshman

      Anne Fleshman

      VP of Marketing at Flowhub

      Anne Fleshman is the VP of Marketing at Flowhub, the point of sale software making compliance easy for cannabis dispensaries. Anne joined Flowhub to support the legalization movement and help cannabis businesses grow. Prior to Flowhub, Anne grew Autopilot 21% month over month as Director of Marketing and received her BA in Peace and Conflict Studies from UC Berkeley. Connect with Anne on LinkedIn.

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