Retail sales incentives aren’t new, but they seem to have hit a chord with some cannabis users.
The fact that medical marijuana was the first industry to be regulated could explain some of the critics. Some who were early entrants in that market have voiced concerns that the incentives offered by the industry could encourage budtenders not to recommend products in patients’ best interest.
A panel at a recent Benzinga event in New Jersey reacted with negativity when Sparkplug – a sales incentive platform – was brought up. The panel groaned as they expressed their dismay at the fact that only well-funded companies could afford to spend money on incentives for sales. Smaller brands were unable to compete.
The panelists agreed that it is not acceptable for medical dispensary clerks to profit from selling the wrong product.
Today, however, most legal cannabis is sold in adult-use shops, which treat cannabis like any other consumer packaged goods.
Sparkplug Cofounder Andrew Duffy revealed Green Market Report The company mainly works with adult stores and not medical. Sparkplug provides information to educate consumers in some markets where promotion restrictions exist.
A better customer experience
Duffy noted that dispensary owners don’t necessarily make big bucks – and labor is usually their biggest expense. Despite that, many budtenders only make the same – or less than – fast food employees. As well, they must be highly knowledgeable about the product.
Duffy says there’s an imbalance between pay and expertise needed for the position. The disconnect between pay grade and the expertise required for the job can result in higher turnover.
He said, “I’d say that the sparkplug concept was born out of a desire to create an ecosystem that allows people to earn money based on their hard work. This is both financially and psychologically rewarding, as it makes them feel like their efforts are contributing to their success, rather than just clocking in, clocking off, and trading the hours they spend working for minimum wage, or a little above, he explained.
Sparkplug is a platform that interfaces with point-of sale platforms for cannabis, like Flowhub or Cova. Brands can pay for inclusion in promotional campaigns or educational materials about their product to be provided to budtenders. When budtenders ring up a sale that happens to have a promotion running, they stand to earn extra money or prizes like concert tickets that come from the brands – not the dispensary owner.
Duffy stated that they were able to save money on rent, and also have more money for groceries.
The motivation to keep the team working and motivated is what keeps them going, he added. The company gave out about $10 million in supplemental income last year to cannabis-industry employees.
And that, he said, contributes to creating an environment where customers – particularly those coming in for the first time – have a better experience, because the budtenders feel more valued.
I take people’s worries about incentives impacting customer decisions or their experience in the store very seriously. Duffy stated that all of our data shows customers are happier with employees who receive incentives. “They are more loyal, repurchasing those products because they have a positive experience, and employees also seem to be happier.”
Sun Theory in Denver has had success using this same strategy.
Blythe H. Huestis is the vice president of Sun Theory’s retail division. She said, “We often offer incentives to our customers on top products. This allows them to discover premium offerings for a discount price, while at the same time motivating and rewarding budtenders. The result is a win/win/win scenario that can improve sales, customer service and team spirit.
Standard retail practices
Sales incentives are commonplace in retail and the service industry, whether its it’s a restaurant asking waitstaff to promote a certain menu item or commissions based on achieving on sales goals. Rewards can include cash or other tangibles like gym or travel memberships.
For example, Spokane, Washington-based Cannabis & Glass provides a program in which all retail employees are eligible for case incentives based on achieving individual and team goals at the dispensary.
“We are committed to recognizing and celebrating the successes of employees. Cristy Anguiz, CEO and co-founder of the company said that sales incentives could be powerful tools if they are used in conjunction with operational and service goals.
Sparkplug stated that half of its incentives were financial, and the other half consisted of products such as concert tickets or merchandise. Sparkplug manages the money disbursements. Other promotions are handled directly by brands.
Duffy noted that not only the employees benefit. There are less people who call out, or miss shifts. “It’s about creating happier, more enthusiastic teams. That reduces turnover costs for them, and also helps create a better store from the customer perspective,” said he.
People who are happy, motivated and well compensated will be better able to help people have a positive experience at a pharmacy.