By Richard Krueger
What’s one of the most overlooked keys to success in the cannabis industry? Data.
And more specifically, the analysis of data to understand your business and shed light on where you can improve.
Whether applied to equities trading, sports management or retail sales, organizations are increasingly turning to analytics for answers to their most mission-critical questions – and the same is true in the marijuana space.
The amount of data companies are analyzing is more than doubling every two years, and the amount of metadata (e.g., data describing the data) is now the fastest-growing subcategory of the digital universe.
There’s a big reason behind the focus on data: It can put more cash in your pocket. It’s estimated that retailers could increase their profit margins by more than 60% through the full exploitation of big data analytics, while it’s projected that the healthcare industry could save $300 billion a year, according to a study by the Centre for Economics and Business Research (CEBR).
With U.S. sales of marijuana projected to grow by billions of dollars in the coming years, canna-entrepreneurs need to get their data acts together, literally, and adopt an overall analytics strategy to support the anticipated rapid growth.
Just as you wouldn’t drive without a speedometer (or jog without a FitBand), growers, processors, and retailers all need a gauge on their inventory, sales, marketing spend and other key performance indicators.
Here’s a peek at the different types of data companies in the cannabis industry are tracking, how they’re collecting it and what types of insights they’re gleaning from it.
Long before the flower is ripe for the picking, analytics are at play.
Actually, from the moment a plant is cloned, growers in an increasing number of states must build analytics into their processes and operations, per their state regulations.
Colorado, Washington, and (soon) Uruguay go as far as requiring all plants to employ an RFID tag and connect to a government-run inventory tracking system. This allows local authorities to track marijuana plants from seed to sale.
Digital tracking via RFID reduces the amount of manual paperwork, as the data is automatically transmitted into a government system for monitoring and controlling the production. Aside from the detection of unauthorized marijuana, the system also allows authorities to track cases of contamination or illness back to the source.
A number of third-party tracking platforms are now available that integrate with these systems and offer advanced analytics and reporting.
These state-wide mandated tracking systems benefit everyone.
Growers benefit from knowing exactly what stages their varietals are at, as well as average cost to grow each crop. Dispensaries benefit from knowing where their product was grown and its genetic origins.
But it’s the consumers and the state who benefit the most. Consumers are ensured that the name on the jar matches the flower inside, while the state is ensured every penny it’s due in taxes.
As long as there have been digital transactions, retailers have been at the forefront of leveraging analytics to improve sales performance, manage inventory and report on financials.
With point-of-purchase (POP) systems providing a wide range of data points, analytics allows dispensaries and recreational marijuana shops to pull all the data together and make sense out of it.
Store owners can determine their top-selling products and strains, top-performing budtenders, peak traffic times each day, ratio of new to repeat customers, and a whole lot more.
Some companies that develop analytics platforms for retailers/dispensaries mesh (combine) the data with reports and compliance, even taking into account local and state tax requirements. They also offer software for grow house management, inventory management, and patient management, delivering a complete seed-to-sale solution.
The use of in-store analytics for recreational dispensaries is still in its infancy, especially considering the retail marijuana market has only existed for a little over a year.
But it will certainly play a growing role going forward for businesses that want to thrive.
As competition heats up with the dizzying onslaught of branded products and retail options all vying for their share of the consumer, analytics is used to evaluate marketing spend and determine return on investment, monitor social media and track content marketing and promotions.
Marijuana businesses are getting much more adept in employing advanced SEO strategies, retargeting online ad campaigns, YouTube videos, Facebook and Twitter communities, and other digital marketing tactics.
Some software even cater to dispensaries and collectives specifically, allowing them to do everything from manage their patient databases and provide patient verification to tracking SEO performance of their website.
There’s a lot of money to be made for software vendors that are able to provide data in a logically organized and easily accessible way.
Without context, there’s no meaning, and nowhere is this truer than in data analysis. All the data in the world without the proper analysis and corresponding action plan won’t make a business successful. It’s one of the reason’s that the data scientist/analyst is quickly becoming the most important rock star within today’s marijuana companies.
Those companies that effectively leverage their data will be tomorrow’s standouts.
Richard Krueger is executive vice president of mCig, a provider of technologies and solutions for the marijuana industry, and previously held senior-level positions at top business software and social media analytics companies. He can be reached at email@example.com.