Beating Black Market: How To Win Back Lost Customers & Retain Loyal Shoppers
It's no secret that the black market continues to be a major issue for legal businesses, particularly in the marijuana industry. Not only does this illegal activity undercut prices and limit potential profits, but it also drives away customers who would otherwise purchase from legal retailers. Fortunately, there are ways to combat this problem and regain customers from the black market.
To start, it is important for retailers to understand why people buy from the black market in the first place. This can include factors such as cost, convenience, and access to specific products that may not be available on the legal market. Once these reasons are identified, legal businesses can begin to craft strategies that address these issues head-on.
Why Consumers are Buying From The Black Market
From sketchy sidewalks to secret back alleys, illicit shops offer a tantalizing array of products at unbelievable prices. But how do they do it? With no taxes or licenses to sell, these black market suppliers are able to find creative ways to source goods from lower-cost states and keep their merchandise inexpensive for customers looking for a deal.
Another factor contributing to the black market’s success is enhanced accessibility. In the state of New York, for example, Trivette Knowles of the State Office of Cannabis Management has revealed that unlicensed operators have been trading with impunity. Weed can be bought through unlicensed brick-and-mortar shops, trucks and even door delivery services. Despite efforts from authorities to curb illegal activities by sending out cease and desist letters, a trade group estimates that tens of thousands remain active; making it next to impossible for law enforcement alone to rid them all completely.
Having said that, cost and accessibility are the main motivations that drive customers to buy from illegal businesses. But despite all these savings and convenience, buyers rarely think about the harmful risks of patronizing illicit supplies. And this is becoming a real problem for the industry as a whole and for public health.
Because beyond taxes and regulation-related costs, one of the biggest price discrepancies between legal and illegal marijuana products is that of quality control. For legit businesses, for products to be legally sold in the country, they must adhere to certain safety standards set forth by the government. This means that every batch must go through rigorous screenings prior to distribution, adding an extra layer of expense for legit enterprises.
Sadly, this is something the black market doesn’t typically worry about as it’s all about the money. And despite all the dangers of transacting under the radar, legal businesses continue to lose customers over it.
So what can legal marijuana businesses do to recover customer losses brought about by this thriving market?
Before developing a recovery plan for your business, it’s important to understand that these two markets, offer drastically different experiences for consumers.
The black market, despite the serious risks associated with it, appears very attractive due to its lower prices. While legal dispensaries attract consumers that value product quality, safety and loyalty towards their favorite brands & producers.
Dispensary owners can leverage these consumer priorities to continuously make changes in the way they market and operate their businesses. After all, we’re dealing with a fast-changing industry that needs a lot of pivots to achieve success.
Here are three strategies you can try to incorporate to increase the odds of attracting black market consumers back into the legal system and keeping your loyal shoppers from going to the other side:
Shift Your Marketing Messages
Campaign for Safety
When it comes to product education, complement current product education efforts with safety & health-focused campaigns. Expose your market to the hard truths of using products sourced from the black market and actively push for it for better awareness. Possible angles can include:
- The presence of harmful chemicals and bacteria in products from unregulated markets. This can include recent findings on products laced with lead, salmonella and E.coli, which can be very dangerous for their health.
- Getting hospitalized can get far more expensive than buying safe and regulated products from legal marijuana businesses.
- Educate consumers about the rigorous quality control processes your products go through prior to distribution.
To make this approach more powerful, see if you can connect with your fellow retailers within your county or state to launch a collective campaign for a better impact on the public. Collaborate with powerful voices such as social influencers to strengthen these messages.
Use The Power of Empathy
Enticing consumers with new strains and products is standard practice. There’s nothing new about that. So give your marketing a twist by using the power of empathy and emotional selling to your advantage.
Promote special offers while expressing genuine concern over consumer predicaments
For example, if you're targeting consumers in corporate America, keep in mind their potential life challenges such as the rising cost of living and wages not keeping up with inflation. Letting them know that you understand these issues and appreciate their hard work will make them feel more valued by your company.
Showing your empathy through targeted messaging and a special offer they can benefit from can help strengthen loyalty to your brand. Show consumers that you genuinely care about their happiness and well-being, which can go a long way in building trust between your brand and its customers.
Appeal to the heart of consumers
Incorporating marketing messages that can pull one’s heartstrings can add a new level of dimension to your dispensary marketing. Explore topics like:
- Humanizing content such as supplier & budtender highlights - Recognize the hard-working people behind your brand. Introduce them and recognize their contributions to keeping customers happy and safe through regulated marijuana products.
- Real, honest customer reviews - Customer feedback can often be the deciding factor when making a purchase. People are more likely to buy something if they believe it will meet or exceed their expectations, and one way to get reassurance is by hearing about other customers’ experiences. Customer reviews have the potential to make a huge difference to a cannabis business; by showcasing satisfied customers, businesses can quell any doubts potential buyers may have about the safety and effectiveness of their products, thus increasing trust in both their brand and the industry at large.
Why this may work: The recent study by researchers at the University of New Mexico has uncovered some interesting revelations about marijuana users. They discovered that individuals who had recently used the drug exhibited substantially higher levels of empathy compared to non-users, often making decisions in regard to fairness and avoidance of harm. These findings suggest that marijuana may have a positive effect in shifting people's motivation away from self-centeredness towards a more responsible attitude with regard to other people.
Shifting your marketing messages from product-based to humanizing ones may convince your existing customers to stay put and keep patronizing legal pot businesses, and even convince black market buyers to buy legal when targeted consistently.
Get Creative With Pricing
Realistically speaking, it’s hard to compete with black market prices. However, by making tweaks in sourcing and product design, you can give a whole lot of value to your customers and your dispensary through a potential increase in profits. Here are a few ways you can get creative with your pricing:
- Expand & Bundle
You already probably have the best price possible from your suppliers. If you can’t negotiate costs further, try to venture out and start investing in complementary accessories that you can get at very low costs. Bundle them with your regular products and offer them at a really attractive price that’s enough to reel people in. Offering bundles this way can give people more value than what they can get in the black market.
Not sure how to bundle them together? There are two ways you can go about it.
First, is by pairing complementary products or bundling them as a collection that your budtender can recommend to varying levels of users. You can even make these bundles a limited-time offer to activate demand. Manually observe what bundles get the most traction and take note of what works and what doesn’t.
Second, is by leveraging technology. If you have an e-commerce website or an app for your dispensary, data analytics are there to help you make informed decisions about your promotions. You’ll see what products are a crowd-favorite and what products still need a bit of push. This way, you can make data-driven decisions that are tailored to what your existing market resonates with.
With technology such as a custom mobile app, you can even program it to push smart recommendations based on a shopper’s purchase and browsing history so you’re not left with abandoned carts.
- Mix & Match
If you’ve been operating for a while, you know how some flowers can lose their potency after a certain period of time. Start moving these products by pairing them with fast-selling products. This way you’re liquidating older inventory at a profit and keeping your inventory updated. If anything, shoppers love a good deal even if we all know that we’re getting stocks that have been in store for quite some time.
In connection with leveraging technology such as mobile apps to create attractive promotions, this tool can also make your products more accessible to everyone. Everyone with a smartphone and internet that is. Consumers don’t need to open their laptops and make their purchases on cannabis websites. All they have to do is open the app for your dispensary and make their purchase from the comfort of their own home. It’s discreet, secure and safer than walking in cannabis shops, or worse, black market locations.
Moreover, improving access can also come in the form of
- Expanding your business to places with high demand but currently with low competition.
- Affiliate marketing and referral programs
- Offering on-demand delivery services
The black market has taken a slice of the cannabis business' profits, but with willpower and original ideas, reclaiming that share is entirely possible. We hope our tips will help your dispensary team devise clever strategies to appeal to new customers while keeping existing ones happy.