Cannabis Marketing Best Practices: Audience Segmentation

Build better cannabis marketing campaigns for your dispensary by breaking down your audience into segments and personalizing outreach.

In retail cannabis, same as just about every other industry, effective audience segmentation is a cornerstone of successful marketing strategy.

If you aren’t familiar with the concept, audience segmentation in marketing is the process of dividing a broad audience into smaller, more defined groups. 

This strategy allows retail dispensaries and cannabis marketers to tailor their messaging to very specific customer segments and deliver personalized text or email campaigns. This way, communications and promotions align with the preferences of those particular segments.

When your marketing aligns with what your customers want, when they want it, the experience improves for everyone. You get more revenue and your customers get marketing that actually matters to them.

Here's how to get started with best practices for cannabis marketing audience segmentation.

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Understanding Audience Segmentation

In short, the more specific you are in what you say and who you say it to in your marketing, the better.

Audience segmentation involves categorizing consumers based on various factors like demographics, behaviors, and interests.

In the context of cannabis marketing, segmentation becomes crucial due to the diverse nature of cannabis consumers.

For example, medical versus recreational use, brand loyalists, product affinity, and the litany of other data that you can use to identify subsets of buyers for highly-targeted marketing campaigns.

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Importance of Audience Segmentation in Cannabis Marketing

The cannabis market is not homogeneous. 

If you ever set foot in a dispensary for any amount of time, chances are you’ll see some colorful characters walk through the door. 

Each individual has their own wants, preferences, and patterns but here are common characteristics many of us share, if you’re paying attention. 

By understanding these differences and learning how to group similar customers together, you can begin building audience segments of all those individuals and groups who buy from you.

By segmenting audiences effectively, cannabis businesses can:

1. Personalize Messages: Craft personalized messages that directly address the “job” customers need to do with the right products, at the right time.
2. Optimize Resources: Spend marketing dollars more efficiently by targeting the segments that are most likely to engage and convert, improving ROI.
3. Increase Engagement: create stronger connections and engagement by delivering the relevant content and offerings that specific segments will respond to.
4. Improve Experience: When you pay attention to what your customers are telling you with their behavior, use those insights to make sure their interactions with your brand are on-point when it comes to what they care about. Do it right and they’ll keep coming back. 
5. Gain a competitive advantage: Having your finger on the pulse of consumer trends is invaluable. Marketing that leverages highly-segmented data allows you to hit the mark with greater accuracy and capitalize on trends quickly while your competitors are left scrambling.

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Types of Audience Segmentation in Cannabis Marketing

While there are more than a dozen ways to segment your cannabis marketing audiences, they all fall into four main groups: Demographic, Geographic, Behavioral, and Psychograhpic.

Here, we break down each of those pillars of marketing audience segmentation and provide examples of how you might use them in your own dispensary marketing campaigns.

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1. Demographic Segmentation

Demographics are population or group-based characteristics that can include age, gender, income level, location, and occupation. These aspects of a customer profile play a huge role in informing cannabis consumption patterns. 

Having access to and being able to make sense of this type of data allows businesses to create highly targeted cannabis marketing campaigns that speak directly to consumers and increase conversion rates as well as ticket values. 

For example: tailoring messages differently for medical users versus recreational users based on age or gender can yield more effective results than if you hit both groups with the same messaging and offers regardless of where they are located or their age bracket.

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2. Geographic Segmentation

Geographic or location data is particularly useful in that it can tell you where your hottest local markets are and how far your most loyal customers travel to get to your dispensary. 

For example: you can use this info to determine if delivery is worth investing in or is showing you it’s not worth the hassle. You could also consider this support for market research. Maybe you should consider opening a new location if a lot of your buyers come from a certain ZIP code where you don’t currently have a location or there is little competition.

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3. Behavioral Segmentation

Understanding consumer behaviors, like purchase history, consumption preferences, and engagement patterns tell you a lot about each person who frequents your dispensary. Even though we are all unique individuals, we share a lot of common traits and behaviors.

Segmenting audiences for promotions, product announcements, and the like based on behaviors can improve sales significantly. You can outline marketing strategies based on what time of the month, week, or day certain buyers come into the store most often, whether they prefer to engage with you via text or email, and whether they respond to plain text or rich graphics in your communications. 

For example: segmenting based on consumption preferences (edibles, concentrates, or topicals) allows for targeted product recommendations and promotions.

Think about it, you don’t want to send customers who historically buy only pre-rolls a promotion on dabs. It’s not what they’re into based on past behavior, they probably wouldn’t buy the product, and they might even be turned off by how far you are from the target audience with your marketing. i.e. you’re not listening to me.

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4. Psychographic Segmentation

Psychographic segmentation involves consumers' lifestyle, values, attitudes, and perceptions. 

In the cannabis industry, this could mean segmenting based on wellness seekers, lifestyle enthusiasts, or those seeking medical benefits over recreational ones. 

Crafting messages that resonate with these psychographic segments can further improve engagement and communicate that you are listening to what these customers are telling you.

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5. Unique Ways to Segment Audiences in Happy Marketers

You may want to segment audiences based on historical data, like spend, order value, and duration between activities at your dispensary.

In this case, a few additional ways to segment (esp. through Happy Marketers) include:

• Lifetime Spend - Rewarding your biggest spenders is always a good idea. It shows them you are taking notice of and appreciate their continued loyalty.

• Average Ticket Size - Keep big buyers coming back with unique offers geared especially towards them, such as XX% off when you spend more than $XXX. 

• Number of Orders - Quantity of orders is another interesting way you can segment audiences that frequent your retail or online dispensary. Keep up the momentum of customers who come in with rewards that continue to build loyalty.

• Time Since Last Visit - If you have customers who haven’t shopped in a while, this is the perfect segment to use when you want to get them back in the dispensary. Everyone loves a “We miss you” deal in their inbox.

• Average Time Between Orders - Whether frequent or infrequent, time between orders indicates purchasing frequency among customers. Don’t let your segment go stale, show them a good time with a deal that coincides with their next order.

For a more comprehensive look at dispensary text marketing best practices and how they will improve marketing campaign performance, check our or all-in-one guide.

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Best Practices for Cannabis Audience Segmentation

When it comes to your dispensary marketing campaigns, a “the more the merrier” approach is not going to do you any favors. In fact, the more contacts in your sends, the worse off you are for a number of reasons.

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1. Sizing of Audience Segments 

Carriers are super vigilant about people who abuse communications channels. 

This includes robocallers, email spammers, and generally people who don’t bring value to the conversation. Offenders they’re on the lookout for tend to mass blast communications and try to play a numbers game of hitting as many people as they can with their message in a single message.

This approach is one that violates good marketing practices and burns your text message deliverability score in the eyes of carriers, limiting your ability to send messages. Too many violations effectively means that the carriers (AT&T, Verizon, T-Mobile, etc.) will flag your message as SPAM and actively block your messages from being delivered.

Not only that, it effectively KILLS your contact list, prohibiting you from reaching them in the future regardless of what platform you use to send dispensary marketing campaigns.

Breaking down your marketing campaigns to smaller audience segments improves your delivery rates because they are seen less as SPAM and more as valuable communications. We recommend keeping those audience segments to 1,000 contacts or less per unique text message.

Not only this, but when you segment audiences into small groups of like-minded individuals, you're generally going to speak more closely to their preferences. It's easier to connect with smaller audiences on a personal level and show them you have taken the time to listen and respond to their individual preferences. 

When you truly get to know your audience, what they need, and how you can best serve them, your dispensary marketing becomes much more effective, engaging, and ultimately more beneficial for everyone involved. 

With this approach, conversions are generally higher, you have fewer people unsubscribing from your dispensary marketing communications, and your rate of SPAM reports/carrier violations will drop significantly.

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2. Build Marketing Audience Personas

It's too much to personalize marketing on a one-to-one scale, at least for now. so, marketers fall back on building personas.

A persona is a semi-fictional representation of an entire audience segment. basically a generalized group of people who share similar traits.

for example, Jeeter JD can be a persona for your younger audience that comes in regularly and buys mostly pre-rolls, while Grammy Grace could be your older demo that comes through less frequently and steers more towards edibles, tablets, and topicals.

By segmenting your audience and associating them with a persona, you can begin to paint a picture of their behavior and interests that will reflect directly in your marketing. 

The result is a relevant message that’s on brand, of interest, and further supports the relationship between you and your customers.

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3. Ethical Considerations

Ethics can easily be overlooked or taken for granted in cannabis text and email marketing. However, it never hurts to reiterate that ethics are essential when you’re marketing, particularly if you are promoting mind-altering products or those that could impact the health of your customers.

Failing to comply with these elements of dispensary marketing could quickly land your business in hot water with regulators and even earn you a visit from law enforcement.

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All this to say: 

• make your marketing meaningful and relevant
• avoid targeting minors and people who have not opted-in to your marketing communications
• don’t make unsubstantiated health claims
• ensure compliance with regional regulations (if you’re unsure, ask your state)

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4. Telecommunications Compliance

When it comes to messaging, there are a whole lot of words and phrases related to cannabis and its consumption that simply can’t be used in marketing communications. Particularly, in cannabis text and email marketing campaigns. 

Fortunately, Happy Cabbage is constantly evaluating dispensary marketing performance and how telecom carriers are censoring content. We bake-in as much of this knowledge as possible directly into our Happy Marketers platform, and further support customers one-on-one through best practices to ensure they achieve the highest deliverability and success possible. 

Volume and frequency also factor into how effective your marketing will be. Sending tens of thousands of texts every day will get you flagged. Repeated offenses may get you banned from sending altogether.

CAN/SPAM is a particular legal framework to remain mindful of in cannabis marketing, in that it's important to always be honest about your promotions and provide your customers an opportunity to opt-out of your cannabis text marketing and dispensary email campaigns. Additionally, it includes provisions about using misleading subject matter and message content, providing details about your operational location(s), and more. 

You can read all about that from the federal government, here.

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5. Adopting a Data-Driven Approach

Utilizing data analytics tools to gather and organize consumer data is crucial for effective segmentation. If you aren’t keeping track of who gets what messaging, who engages with those communications and ultimately ends up making a purchase, you really aren’t making any headway in improving your dispensary text and email marketing campaigns. Everything is ad-hoc and you aren’t striving for continual process improvement.

Using insights from analytics helps refine segmentation strategies, optimize campaigns, and identify high-value segments. We know how crucial this is because it's a major component of how we elevate our own customers' dispensary marketing and show them how they can improve their performance.

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Conclusion

Audience segmentation in cannabis marketing isn’t just about dividing consumers into groups; it's about understanding their nuances, preferences, and behaviors. 

By approaching segmentation on as many levels as you can,your dispensary can create highly targeted and personalized marketing campaigns that audiences come to appreciate because you are saying exactly what they want to hear and when they want to hear it. 

This, in turn, builds stronger long-term relationships, improves engagement, and ensures better business outcomes despite the upsets this industry is so well known for.

If you’d like to see how we achieve the highest deliverability and ROI for cannabis businesses, schedule a demo today!