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Welcome to the CAMP newsletter where we share the many ways data and analytics are being used today to run more efficient and profitable cannabis businesses. Thank you for being here! If you enjoy our newsletter, please forward it to a lucky friend or colleague. If this email was forwarded to you by someone else, ​subscribe here​ to get your own copy next time.

If you’re like most operators we know, you need answers to urgent business questions but don’t have time or budget for a complex data warehousing project. A growing trend we see with operators of all sizes is using Ad Hoc Analytics to break down complex questions and get insights about their business they can take action on now.

We are huge fans of Ad Hoc Analytics because they are designed to deliver value in days or weeks and don’t have to be overly complex or time consuming. These are usually one-shot, data-intensive studies that use data you already have to dig into high priority, strategic topics and answer discrete questions. If “Ad Hoc” sounds off-the-cuff or informal to you, don’t be fooled. These are typically structured in their approach and robust from a data and analytics perspective. They usually require a combination of data and analytics skills which, unfortunately, tend to be scarce in cannabis. Or people with the skills are in-house but are too busy running mission critical data and systems.
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Below are some concrete examples to help illustrate the concept.

Promotions Effectiveness : Promotions have proliferated in the battle for new and repeat customers, and to deal with price compression. An ad hoc analysis of promotions history provides an operator with clear view and perspective into how deals performed : ROI, Net Sales, Lift, Customer retention, etc. What type of promo worked the best and which deals am I running now that should not be repeated? Am I giving discounts to customers who would gladly pay full price, and are my daily deals losing their effectiveness over time?

In a matter of weeks an ad hoc promotions study based on the last 12 months of promo and sales history will answer these questions (and more), ultimately generating recommendations to materially improve performance of the category and margins on the promotions that you keep.

Assortment Analysis - Did you ever wonder how many SKUs you should carry or where your assortment gaps and private label development opportunities are? When combined with deep product and customer knowledge, SKU performance analysis can be a powerful tool to improve product selection for your stores. When the performance of each SKU is analyzed based on POS transaction and inventory data the 5-6 most important performance measures can be captured across key dimensions - sales, inventory productivity, profitability, customer and basket. Each SKU is scored and ranked relative to its performance in its category.

The chart above is an example where products in quadrants I (Keep) and II (Delete) over-perform and under-perform their category over the long-term. SKUs in quadrant III should be reviewed carefully for delisting if performance does not improve and SKUs in quadrant IV are rising stars that deserve space in the assortment as long as they continue to outperform the rest of the category.

This is just one example and one visualization - the key point is that a systematic SKU-level assortment review that goes beyond basic sales and profitability measures can help identify opportunities to cut underperforming SKUs and allocate precious inventory dollars to your best performers or to new SKUs.
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Without much additional effort, the same data and analytics can be extended to look at gaps in the assortment’s range by quality, weight, dosage, flavor or price tiers (more in a future newsletter about 9-box grids). Or to understand where your biggest private label development opportunities are for the category.

Loyalty and Customer Analytics - It’s not unusual now for overall customer counts to be level or down, and for more and more of your new customers to be “one-and-done” bargain hunters. So a deep understanding of customer dynamics has become mission-critical for any operator. Ad hoc customer studies can deliver a snapshot of the member base and quick “health check” on customer numbers and trends. Another more complex analysis is looking at customer dynamics : churn and Customer Lifetime Value. RFM models and customer segmentation based on purchase history take more time but deliver even more value as they can be used to execute customer-centric direct marketing, merchandising, loyalty and promotions strategies to improve sales, margin and campaign ROI.

Other Ad Hoc - Site selection, customer visit analysis, site specific geo-demographic profiles and competitive assortment and pricing are other areas that operators are scrutinizing with the use of ad hoc analytics. These and the other examples we’ve shared here can be one-time studies, performed opportunistically (eg. buying a store?) or refreshed on a more regular annual, quarterly or monthly cadence depending on your use case.

In summary, ad hoc analytics provide answers to urgent and specific business questions quickly and are a great place to start your analytics journey. They tend to leverage data you already have and tend to be super efficient in terms of delivering business value over a short period of time. And they have the added benefits of 1) expanding trust in your data 2) building data and analytics into the fabric of your organization, and 3) creating a solid data and insights foundation to build on for the future.

Until next time take care - and don’t forget that we’ll be at MJBizCon this week. Grab some time on our calendar here.

Let’s work together to grow profits!

Thanks and best regards,

Nick Afonsky

CEO & Founder

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