6 Convincing Reasons You Should Consider Subscription Boxes
With the pandemic and slotting fees limiting indie brands' access to dispensaries, sub boxes are an effective way to get your brand directly to the consumer.
Increasing your brand's exposure in the crowded cannabis industry is difficult and expensive, especially for smaller mom-and-pop companies. With limited budgets and strict cannabis marketing restrictions, marketing departments at indie weed brands have fewer promotion channels. In the past, in-dispensary product demo day events were often effective marketing, but COVID-19 has caused many dispensaries to shut their doors closed indefinitely. As a result, small cannabis brands must find new ways to market their products without increasing their expenses.
One solution is to leverage a subscription box service as a distribution channel. The subscription service model, a market that grew 890 percent between April 2014 and 2018, presents a multitude of benefits for the subscription provider and small brands seeking an alternative marketing strategy.
For example, Nugg Club, a cannabis subscription service, offers small brands the chance to do exclusive launches through their boxes, getting the debut product right in front of canna-curious consumers looking to discover something new. This approach is cheaper and more effective than in-store demos, grants the brand immediate access to verified customer feedback, and delivers relevant insights that were otherwise inaccessible. In a standard market, subscription service models were already one of the more effective promotion strategies for mom-and-pop businesses. Amid a pandemic, subscriptions can be a marketer’s lifeline.
Cutting out the middle man
Indie cannabis brands tend to focus on dispensaries as their main marketing channel, but this approach comes at a price. Due to the increasingly competitive cannabis market, many retailers are now charging brands for shelf space. Known as slotting fees, these “pay-to-play” dispensaries—most in Northern California—bill anywhere from $500 to $15,000 a month, depending on how much shelf space is requested and in how many stores. This growing trend threatens to crowd out smaller companies who cannot afford such exorbitant prices for premium real estate.
In addition to slotting fees, companies allocate a significant portion of their marketing budgets and resources to in-store demos. During these promotions and product launches, brands typically offer free or heavily discounted products to capture the customers' attention as soon as they walk through the door. They also typically give away additional products to the dispensary budtenders and owners as an incentive for them to adopt the product onto their shelves.
Brands must repeat this practice at countless other dispensaries to reach different consumers, requiring hiring multiple sales associates and is exceedingly time-consuming for brand ambassadors who have to teach numerous teams of budtenders. Even after all of these expenses, there is still no guarantee that customers will try the product or favor it over others in the category, plus the brand never receives customer feedback.
When dispensaries are either closed or experiencing abnormally light foot traffic, in-store product launches are a non-option for cannabis companies. Here are six compelling reasons you should consider a subscription box.
1. You target your actual consumer.
Cannabis subscription services offer an affordable and effective marketing alternative that provides brands with benefits unavailable through retailer partnerships. These monthly deliveries give smaller brands the chance to execute exclusive launches through the boxes and include their debut product with the other full-sized, highly-curated, and personalized cannabis products placed directly on the consumer's doorstep. The service consists of targeted marketing in email blasts and text messages, which introduce the brand to subscribers in a more personalized way. The boxes also allow brands to control their brand story through print inserts that provide consumers with information. This approach offers smaller brands a value proposition they could never previously afford.
One of the biggest advantages of subscription boxes is the ability to reach the target consumer. Each box is highly personalized to the subscriber based on their preferences. The product will only be sent to those who opted-in for similar products and are thus more likely to become repeat purchasers. This way, the brand avoids wasting funds on consumers outside their target market, who are unlikely to enjoy the product and raises brand awareness among those who the company wants.
2. You get instant feedback.
Brands also receive verified customer feedback in real-time, insight impossible to obtain from in-store events or dispensaries. Nugg Club incentivizes customers to review every product in the box and directly passes the brand's feedback. Brands can customize the questions asked to find the answers they're looking for, which is incredibly useful for smaller companies who lack the resources to go through countless product iterations and thus need to know what the customer thinks.
3. You reach customers organically.
Subscription boxes also offer a social element in the form of organic marketing on social media channels, which 40% of consumers actively use to decide what to buy. The boxes are Instagram-friendly, so many customers share photos or stories on social media, even tagging the brands included in that month’s shipment. Many indie cannabis brands do not have a social media strategy, so organic reach through a third party is a massive benefit. Products included in these boxes have quickly become associated with a certified cannabis curator’s stamp of approval, making these free promotions all the more valuable to small brands.
5. You gain a more comprehensive understanding.
Subscription services compile data on both customer demographics and brand performance, information that helps brands better understand their target market, and where they stand among competitors. Demographic data tells brands who is buying their product, how often they’re purchasing it, and how much they are willing to spend, which allows brands to more effectively market to the right audience. Through Nugg Club, for example, partners learn which of the competing brands are performing well and why their own brand may be underperforming, crucial information to help brands get ahead, and create a competitive advantage. The subscription business model helps brands better position themselves for their target consumer at the right price point and in the right geolocations. Such insight would otherwise take an excruciating amount of time to compile from dispensary data and would be too limited in scope.
6 It's another avenue of e-commerce.
Some brands offer customers brand add-ons that allow them to separately order a particular product they like, thereby supplying brands with an additional sales channel equal to that of several dispensaries. Customers are allowed to purchase any product that has ever been included in a box to be shipped alongside their upcoming box, giving them more control over which products they receive. As the subscriber base grows, it will become an even more vital revenue source for brands, without any additional distribution costs or slotting fees.
Most marketing strategies in today's cannabis markets far exceed what many mom-and-pop cannabis operations are prepared and capitalized to undertake. Those they can afford to undertake are unpredictable and don't lead to short-term returns. Cannabis subscription boxes offer these brands a value proposition unmatched by other marketing techniques available to cannabis companies. When indie cannabis brands are stripped of their most popular promotion method due to COVID-19, cannabis delivery boxes may be their saving grace.