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Insights Premium Add-ons: Cannabis Demographics & Basket Analysis

Jul 6, 2020

You have to understand how consumer trends impact sales in the market in order to build effective strategies that truly resonate with your customer. To do that, we’ve created two new Insights add-ons to help you dial-in your revenue drivers and further develop your understanding of the cannabis consumer. The data in both sets of dashboards serve as add-ons to current Insights Premium subscriptions. Upgrade your account today to start leveraging our new consumer focused tools.

Read through this blog post to learn more about the details of each dashboard and how they’ll help your business better prepare for today’s cannabis consumer. Request a demo.

Introducing the Insights Basket Analysis Add-on

What exactly is it?

Access a collection of four dashboards built to give you insights into the cannabis consumer basket, allowing you to dive into purchasing behavior and start thinking of sales as a bi-product of the transactions that create them. Leveraging these insights enables you to estimate the average basket in the marketplace as well as the average items per basket.

You’ll be able to dig into a few new metrics you haven’t been able to access before.

  • Average Basket: This is the average $ per transaction (or basket).  Just like Insights this is reported before consumer paid taxes and after discounts.
  • Average Items per Basket: This is the average number of items per transaction.
  • Basket Penetration: This is the % of baskets that contain the specified product type. For example, if we have a store with 1000 baskets and 50 of them contain Capsules then the basket penetration for Capsules is 5% (meaning Capsules are in 5% of baskets).
  • Attachment Rate: This examines which categories are often purchased together.  For example, we can look to see how often a person that buys Flower also buys PreRolls
cannabis-basket-performance-overtime-average-basket-size-basket-count
Cannabis basket performance overtime (average basket size & basket count)
current-cannabis-basket-statistics
Current cannabis basket statistics

Why is it valuable?

Drilling into purchasing behavior uncovers gaps and opportunities in your sales strategy, allowing you to increase revenue and improve tactics such as cross-selling and upselling. You’ll build better marketing and promotional plans because you know which products sell best together, with which type of customers.

On top of that, market basket analysis can help with benchmarking and market sizing activities. Set realistic goals and projections for the amount of sales that you can reasonably achieve & use the data to adjust product selection & pricing. You’ll be able to assess how sales are growing in the market and answer if its primarily due to increases in the number of baskets or instead if it’s due to larger basket sizes, informing your approach to the market. 

If you’re starting a new business, you can learn how many transactions occur in the market as well as the average size of each transaction to properly forecast revenue and prepare for demand.

Which questions can you answer with the four new Basket Analysis dashboards?

First, let’s breakdown your total sales into the formula below. We see that there are only two ways to increase sales.

Total Sales = # of baskets + basket size

  • 1) Get More Baskets
  • 2) Make Baskets Bigger

With this new add-on, you’re set up to drill into these vital components of your revenue stream and answer a multitude of questions to further understand consumer purchases.

Overview

  • What is the average size of a transaction for a cannabis purchase?
  • On average, how many items does a person purchase at a time?
  • If average basket is going up (or down) is that driven by an increase in the number of items purchased or the average item price?

Category

  • What is the average transaction size for purchases that contain Edible products?
  • What % of total transactions contain at least one Topical?
  • If someone purchases a Topical what % of their total sales went to Topical products? How much did they spend on other items?

Attachment Rate

  • How often does someone that is buying a Flower product also buy a PreRoll?
  • When the basket contains a Beverage what else is often in that basket and how does that compare to the average basket?

Distribution

  • If the average basket is $50 what % of baskets are >$100?
  • Do discounts increase the size of baskets?

How does the Basket Analysis add-on work & how do you get it?

Let’s get started. We’ll add this to your current Insights Premium subscription, and you can purchase it down to the category & market level. In order to purchase access to the data, you must be subscribed to the specific market and category within your current Insights Premium subscription.

That said, one dashboard will be available to all Insights Premium subscribers – the Overview dashboard. This dashboard gives information on the average basket sizes, illuminating any information by category.

The receipt-level data for these dashboards is populated at the start of the month for the prior month. For example, on August 1st you will see data for all of July.‍

Introducing our Insights Demographics Add-on

What all is in the add-on?

At a high level, the purpose of these four demographic dashboards is to help the Insights user drill further into who is purchasing cannabis and analyze sales by age group & gender.

Built from demographic data from individual retail purchases, this addition to Insights Premium will help Headset users better understand their customers and improve the way they market their products. A critical piece of this data is that it is derived from transactional data from our POS connections. This is not survey data and we’re not relying on customers to remember things and self-report.  You’ll have visibility into what actually happens each day as consumers hand over cash and bring home products.

There’s a lot you can dig into with these new demographics dashboards, and you need to understand a few key metrics in order to get the most out of them.

  • Customer Wallet: We use this metric to understand what else our customers are purchasing. This is the % of the cannabis wallet (or purchasing power) that a consumer spends on a given type of cannabis.  For example, if {over the next 6 months} I spend $100 on Flower, $200 on Edibles, and $200 on Tinctures then my wallet would be 20% Flower, 40% Edibles, and 40% Tinctures.
  • Customer Penetration: This the % of total shoppers that bought the given category in the last six months.  For example, if there are 1,000 shoppers and 100 of them buy an Edible over a 6-month period then the customer penetration of Edibles is 10%. We use this metric to help us understand our potential market and make decisions about growing revenue.
  • Consumer Index: This examines a specific type of purchaser and is how much a particular gender or generations purchases a given category, segment, or package size.  For example, using this metric you can find information like Teas are preferred by (or over-index to) Millennial Women and CBD PreRolls over-index to the Silent Generation.
  • Cross Category Purchasing: We use this information to better understand how a consumer splits their spend across categories so we can do market sizing and market fit analysis for our products. For example, we do analysis to determine what % of their cannabis wallet people that buy Edibles use to buy Beverages.
percentage-cannabis-customers-and-cannabis-sales
Percentage of cannabis customers & cannabis sales
selected-cannabis-category-segment-wallet-spend
Selected cannabis category segment & wallet spend

Why should you use demographic insights?

The industry is still very new, and businesses don’t have decades worth of consumer information to plan and get ahead of consumer trends. The Demographics add-on delivers long-awaited consumer insight into legal cannabis consumption. Finally, you can start understanding who you’re marketing to and what products perform best with which type of consumer segment.

Knowing who your customer is will be critical to deciding how to spend your advertising dollars and which products serve your customer base best. These dashboards provide insight into what types of consumers buy which kinds of products, ultimately helping you determine if your product offering matches your customer profile. Develop products and enter markets with key demographic insights that help inform projections and set realistic growth strategies from the get-go.

Which questions can you answer with the four new Demographics dashboards?

Overall Cannabis Consumer

  • What % of the market do Millennials vs. Gen-Z make up?
  • Do Baby Boomers spend more on cannabis than Gen X’ers?
  • Is the sales share to women increasing over time?
  • Which generation is more likely to respond to discounts?
  • Who buys the premium cannabis products?

Cannabis Consumer Purchases

  • Which generation prefers Flower vs. Concentrates?
  • Are women spending more money on Edibles?
  • What price point do Millennials prefer for Flower?
  • Do people that are discount prone buy Flower or stick with PreRolls?
  • Do women prefer sparkling waters or teas?
  • Do Gen X’ers prefer premium priced PreRolls?

Wallet Share and Customer Penetration

  • Do people that buy Beverages also buy PreRolls?
  • What % of their cannabis wallet to Baby Boomers spend on Flower products?
  • Do people that buy Tinctures also buy Edibles or Beverages?
  • What % of cannabis shoppers will buy a Topical this year? Is that increasing or decreasing?

How do the Demographics dashboards work & how do you access the add-on?

Start leveraging this add-on with the same steps and subscription we reviewed earlier with the Basket Analysis Add-on. You must be subscribed to the category & market for Insights Premium in order to access to the demographics dashboards with the exception of the Overall Cannabis Consumer dashboard.

The data comes from our POS data just like everything else in Insights. Many retailers use a CRM platform to manage their customers.  As part of our POS integrations we have access to this CRM data. We leverage three pieces of this anonymized data from each retailer (yes, that’s right, this is all anonymous):

  • The gender. Records come with a gender which in nearly all CRM/POS is defined as Male or Female.
  • The generation. Records come with a birth year for the consumer which we translate into generations.  If you don’t know much about generations check out this quip: Generation Definitions and Explanations
  • The anonymous customer ID. Every customer gets an anonymous customer ID which continues with them throughout their shopping at a given retailer.  We can use this piece of information to find out things like repeat purchase rate, customer penetration (or the % of customers that purchase a given category or product).

The receipt-level data for these dashboards is populated at the start of the month for the prior month. For example, on August 1st you will see data for all of July.‍ Finally, our data is currently available in four US markets: WA, CA, CO, NV.

Start leveraging basket analysis & demographic insights today.

Click here to learn more about our Insights Premium offering or fill out the form below to request a demo of our new powerful add-ons.