Winning in cannabis retail and clinics using behavioral economics

Optimizing their Customer Experience (CE) is a powerful way cannabis retailers & clinics can improve consumer loyalty, increase sales and optimize service levels. Getting the CE right is important for any cannabis business looking to be differentiated and profitable in a hyper-competitive industry.

The CE is an amalgam of on & offline customer interactions, ranging from initial greetings and communicating product knowledge to closing the sale and post purchase support. 

Every clinic and retailer have a default CE.  They likely have defined their service model (e.g., structure, people, practices) based on their needs and resources, before considering how customers actually think and make decisions. As a result, too little thought is paid to how customers want to be treated or how their behaviours and impressions are influenced and driven by cultural & psychological factors. Of course, getting your operational model right is a key ingredient to improving service performance. However, it is not the only lever you can pull. 

Cannabis companies can improve their performance by incorporating the precepts of Behavioral Economics (BE), in areas like process design, merchandising, pricing and messaging.  BE is an academic discipline that combines elements of social & behavioral psychology, anthropology, decision theory and technology. In a cannabis retail context, BE is the study of how an individual’s sub-conscious influences how they think and behave in response to a firm’s in-store design & aesthetics, selection, and service execution.

BE insights can be applied right across the CE, whether that be an in-store visit, web site interaction, or contact centre query.  Below are 6 of the most powerful BE lessons I have witnessed in the cannabis industry:

1. Get any bad news out of the way early;
 
2. Portion out the pleasure over time but combine the pain in one instance;
 
3. Build customer commitment by enabling their control and choice;

4. Let people have their in-store rituals;

5. Present you desired SKU option as the middle of three choices;
 
6. Finish the CE on a positive note.

To leverage BE in your operating model, I recommend this analytical and implementation approach:
 
> Understand the business context i.e. what problem are you trying to address?

> Analyze key customer decision points and experiences within this context, looking for hidden bias, social/incentive pressures or opportunities to catalyze the desired actions;

> Identify suitable ‘nudges; or an optimized choice design that positively impacts the various decisions or actions;

> Prioritize BE opportunities according to financial, operational and brand impact;

> Experiment, measure and scale.

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