Cannabis Sales Psychology 101: The Ultimate Guide to Driving Revenue

One on everyone, back at it again with another video. This is the Cannabis Psychology Sales Guide, the ultimate Guide for Driving Revenue for your dispensary. And as usual, no super long intro. We’ll get right into it. Now, below are the strategies that the top companies in the world use to generate more sales.

And you’re, you’ll probably be familiar with many of these tips. We’re not trying to reinvent the wheel, but unless you’re consciously aware of them, you won’t be able to intentionally use them yourself. And these strategies are incredibly powerful and you need to use them ethically. You’ll definitely wanna stay to the end of the video so that you can use these strategies for yourself.

But like I said, you need to use them ethically. Now, one of the first psychological tactics that companies use is scarcity. Meaning that they create a sense of exclusivity or rarity to increase the received value of a product. It’s also heavily related to urgency, which we’ll, uh, discuss later. So very good example are collectibles, right? The less of something there, there are the higher value that people put on them, right? So, uh, an example is in 2010, Groupon.

Uh, Groupon is a company that runs daily deals for websites and they ran a promotion for a restaurant that offered a discount of 50% off of the regular meal. And this is just unlimited redemptions per person. And the promotion was pretty successful. A large num a number of customers purchasing the deal ended up, um, using the coupon and actually visiting the restaurant, right? But then Groupon decided to do a slight, uh, twist to this.

They decided to run a similar promotion for the same restaurant, but a few months later. But what they ended up doing was that instead of offering a 50% discount, the promotion offered a limited number of vouchers for 75%. Now, the results of the second promotion were actually better than the first one, even though the first one provided more value because it wasn’t limited, right? But the perceived value was different.

The restaurant actually sold all of its discounted vouchers within hours of the promotion going live, and actually saw 30% increase in overall sales. And as a result, increase, uh, drove more traffic, more loyalty, and more money, uh, to the restaurant. Now, let’s look at how we can use that for yourself.

Now, how, how can you use scarcity, right? The biggest thing is providing limited availability, right? So what you want to do is you want to have a certain product that is already valuable to the customer and limit it only to a certain day or a certain week, or a certain season. Because what this does, it creates a sense of exclusivity, encourages customers to make the purchase or visit the store specifically for that one product.

Now, Rolex does this all the time for their watches. And there was another store that I went to. It was a churro store. And the Churro store actually has different types of churros based on the different seasons. And in February is Valentine’s Day. So they had a red velvet churro that was only available in February.

So what this does, it automatically creates scarcity within the product and it makes your customers want to buy it more because it is inherently more rare. So, like I said, even though that the 50% discount of the coupon was an unlimited discount, as in as many customers could redeem it as possible, right? When they offered a limited number of vouchers, that actually sold out faster.

So by having a limit on the product or a service or a thing that you offer will inherently provide, will inherently provide more perceived value that your customers will see. Now, what you need to do is you need to make sure that the thing that you’re making exclusive is also valuable. You can’t just like, you know, say you’re giving away cones only on Tuesdays when everybody else sells cones, like at a convenience store, you need to make sure that it’s a specific product that is only available at a specific point in time.

Now, the second one is social proof. So social proof is a psychological principle that suggests that people are influenced by actions and beliefs and others. In marketing, social proof is often used to influence buying decisions and to increase sales. So in this example here we have PSOs Cannabis and they have 27,000 or 27,600 Google reviews, right? .

So this is more reviews than dispensaries have customers in total, which is absolutely insane. So just like when you go online, you type in a restaurant near me, you go decide to eat at a restaurant based on the reviews, the customers will end up doing the same for your dispensary. So how can you use social proof to for yourself? There are a few ways you can do it.

So user reviews is a big one, just like on Google. So featuring reviews and ratings from past customers can help potential buyers feel more confident in their purchase decision. So a big thing on user reviews is like on Amazon, right? On Amazon, there was a study and I think they saw four to 5%, uh, increase when there were 50 reviews or more on each of the products, right? So you want to generate as many reviews as possible cuz it’s not just good for increasing rankings and seo, it’s actually good for increasing conversion of whoever sees your Google Maps listening has a higher chance of them ending up purchasing from your store, which is fantastic, right? The second one is social media proof, right? So I know in the, uh, dispensary space, this is a little bit tricky because accounts get banned all the time, but this is a very good way to increase credibility and trustworthiness because whether it’s real or not, the perceived value of what people see as real showcasing the number of followers, likes, and shares can help increase credibility and trustworthiness.

So an account online that has a million followers, uh, has a better perceived credibility and trustworthiness than an account that has 200 followers, right? Another one is testimonial. So featuring quotes, success stories, and satisfied customers can help build trust and also increase conversion rates.

So the way that typically that people typically go on Google as they go, they look at the reviews. If the review number is high, so 4.95, 4.5, whatever it is, and the volume of reviews is high, customers will then click the review to see what the customers are saying, right? So if the customers what the, when, whenever the customer says something, it has a much greater pull on how you can get people to, you know, purchase from you.

So for example, if you say that your products are the best and your customer service is the best and everything is amazing, it is 10 times more powerful. If a customer says that, then you just shouted at the top of your lungs, right? So not only do you want to get a high review, a high volume of review, you also want to get reviews that paint the picture of solving pain points for your customer, right? So if a customer is always like, ah, you know, bud tenders never know what they’re doing and a pain point that you’re, you’ve been finding, you want to make sure that you Google reviews, say that the dispensary has the top notch bud tenders, they’ve hired the best of the best, and they can answer any question that you have, right? Because that actually solves a specific pain point.

So we get more and more granular on each of these strategies, which will then help you get more sales, right? Infl endorse endorsements. Again, this is based on where you are and what policies are available for the types of influences that you can have. But cookies use this very, very well. They just partner up with a bunch of influencers.

Snoop Dogg is everywhere. Um, but again, because, uh, the people that you partner with already have credibility, right? They already have the, the clout, if you will. Um, and by partnering with influencers in your industry, you can help increase brand awareness and sales, right? Um, a very good way, uh, very good way that, uh, a very good company that uses influencer endorsements is actually Nike.

They sponsor the top of the line, um, athletes. They have LeBron James, they have Ronaldo, they have everyone else, they have Serena Williams. And what they do is they associate these celebrities with their brand by paying them, of course. But because these celebrities have so much pull and so much credibility in the things that they do by being associated with these athletes, it makes it even better, right? So you can do this on a micro level and partner up your, with your, uh, with, uh, businesses in your local community.

So if you know that there is a hair salon that is the top hair salon in the entire city, you can go partner with the hair salon and say, Hey, you know, let’s, uh, figure out a way that we can partner up with and then you can share the credibility of that hair salon and then use some of that credibility for your own business as well.

So now, uh, I’m gonna touch on urgency. So urgency is a, is another psychological tactic that creates a sense of time pressure and it motivates customers to take action and it plays on the fear of missing out and the desire for immediate gratification. So I’m gonna go back quickly to scarcity. So scarcity is creating a sense of exclusivity while urgency creates more of a time, uh, a time urgency, right? So, uh, Shopify actually did a, uh, a case study and they found that adding a sensor urgency to a product listing resulted in a 10% increase in sales compared to products without urgency.

So how can you use urgency for your dispensary? So the main ways doing limited time offers, right? So these are deals from motions that are only available for a short period of time, such as a one day sale or a weekend special by, and by creating a sense of urgency around the offers availability, customers are more likely to take advantage of it.

And a good company that does well with this tactic is like McDonald’s, right? So McDonald’s, they have different products that they release at different times of the year. So whether it is a BTS meal, um, that they used, or it is a habanero chicken burger, or it is a, the M McRib, right? Everybody goes crazy when the mcri mc McRib is back.

They say this is only available for a limited time, but they use both scarcity and urgency because the mc McRib is only available for a limited time. It is also scarce, right? But the limited time offers are typically things that make that your customers want to purchase more quickly. So for example, you know, you can have, we’ll use the, the papers and cones for example, right? Maybe you do a 75% discount on the cones, but you know, it’s a limited time offer, you automatically create some urgency so people can come purchase right away, right? But again, it is also scarce because the limited time offer in itself doesn’t happen all the time.

But like I said, urgency is more so something that creates a time pressure while scarcity is the thing itself is actually rare, right? Um, another way you can use scarcity is by having countdown timers. So countdown timers are a visual representation of time running out. So if you say that, Hey, in order for you to get this deal, you have five hours and the time is literally ticking, it creates that sense of urgency because just like when you have, uh, you know, those old hourglasses, right? And the sand is trickling down and you kind of get anxious at like, oh, the sand is gonna run out.

It’s the exact same thing, right? So by having countdown timers on your website, it will allow you to create this urgency, um, that will make people want to buy more. Because if they were thinking about buying it and the offer is gonna run out and they’re gonna go ahead and buy it, right? And if they weren’t gonna buy it anyways, it doesn’t matter.

And the example picture here is Amazon. Amazon does this all the time. Today’s deals, right? They have today’s deals all the time or lightning deals. These are the things that promote urgency. So if you have a quick 20 bucks in your bank account and you wanna buy in this situation, a phone case, you’ll go ahead and buy it because it’s on a deal, right? Um, another good way of using um, this urgency is low stock notifications.

So if you know that, you know, uh, you have products that you either want to move very quickly, um, or products that are literally low on stock, you can also put low stock notifications. So this tactic is most often used in retail where customers are notified when a product is running low in stock. This creates a sense of urgency and motivates your customers to make a product before it sells up.

Make a purchase of the product before it sells up. And again, a very good example of a company using this are airlines and hotels. You know, when they say, ah, you only have three seats left to get this spot, or you only have, um, there’s only taking five more, uh, booking reservations for this, right? You know that they’re probably lying, you know, , there’s gonna be more than three seats left.

But the sense of urgency just makes you want to take action quicker, right? So by having low stock, uh, notifications, you can create a sense of urgency, right? But like I said, it’s important to use this ethically, right? So like use low stock notifications when your products are actually low stock, right? Don’t create a false sense of urgency or pressure, because what’s gonna end up happening is that if you keep on doing this, customers slowly start to get desensitized to these low stock notifications.

If everything is low stock, if everything is on sale, then what’s the point, right? If they know that it’s gonna come back again and again and again. So this is a very, uh, interesting or cool, right? However, the way you wanna look at it, way of driving sales on a psychological basis, right? Um, another one is using reciprocity.

So reciprocity is a psychological principle that dis that describes how people tend to feel when you give them something and how they feel about giving you something back, right? So in the context of sales and marketing business can use reciprocity to their vantage by offering something of value, right? Um, and when you offer something of value, it creates a sense of like, inde, I’m like indebtedness, right? So it’s like I did something good for you, you kind of have to do something good for me, right? But it’s not saying it, it’s psychologically saying it, which is completely different.

So there was a study done by the University of Pennsylvania in Delaware, and they found that waiters who provided diners with a piece of candy alongside their bill saw significant increase in tips. The researchers found that the waiters provided one piece of candy to each diner. The average ship increased by 3.3%.

However, when the waiter, uh, provided two pieces of candy, the average tip increased by 14.1%. So that is what almost, that’s more than a four x increase in the average tip. So this is just an, uh, example of how reciprocity can be used, um, by providing customers with a small gift, right? Um, and how you can use reciprocity in your dispensary is one, you can give people a free sample.

So by giving potential customers opportunity to try a product before they buy it, businesses can create a sense of goodwill. A company that does this very well is Costco. You go to Costco and obviously there’s like trials and samples, but like when you take a sample, you kind of feel obligated to buy the product, or at least you give it a little bit more of a thought, right? Um, loyalty programs is also another good one.

So this is where customers can earn points or rewards for making purchases, and by offering customers something of value for the loyalty businesses then create that sense of obligation to use that purchase, right? Um, and a good company that does this is Starbucks. Starbucks does this really well, um, and credit card companies, right? So you generate tons and tons of points for credit card companies and you’re gonna continue using that credit card because they give you something of value.

Now, this is a very important piece. It’s important to note that reciprocity works best when the offer gift is perceived as valuable and genuine. If the customer feels that a business is fake or insincere or just using this as a sales tactic, this won’t have, this won’t work at all, right? And, um, in the situation for dispensaries, uh, you probably won’t get any benefit of just giving away a pen, right? Who cares about a pen? But if you give away maybe papers or cones or maybe a pokey or something like that, um, with an order, uh, customers may feel more, uh, obligated to come back and purchase from you again, right? So maybe, maybe you tie in scarcity and urgency and reciprocity.

So you give something away for free, but you only have a limit, a limited amount of things that you can give away for free and you give it away, um, uh, once a month, right? So the way that, uh, stadiums use this or, uh, you know, when people come in and they partner up with like, uh, you know, those bobblehead companies, right? And they, they say, Hey, get these bobbleheads, um, and, you know, uh, the first people to come in, uh, get the first thousand people to come and get a bobblehead of this, this athlete or whatever, it’s right.

So they use scarcity, they use reciprocity, um, and these urgency so that people can come in and make a purchase, right? So like I said, what we need to do in the dispensary space is we need to see what the big guys are doing. What industries have been doing things well for a very long time and how can we then just use the strategies for ourselves? Because in this space, there’s not a lot of things, uh, there’s not a lot of, uh, uh, guides that we can use other than the guide that I’m showing you right now, um, to help, uh, benefit how you can make your dispensary the best, right? So these are the things that we can take from different industries to see, okay, let’s see what works.

Let’s see what doesn’t, let’s see what we can put to the test and let’s see what we, what we can be the best at. Cuz we wanna make sure that our key differentiator, what we do for our dispensary, far surpasses what the other guys are doing because as you know, competition is getting even greater, right? So, uh, long gone are the days where you can just have a store and then people come in.

Now we have to use these strategies and these tactics to, to be better than everyone else anchoring. Now this is the last one, and this is another cognitive bias. So that, uh, when this happens, it’s when people rely too heavily on the first piece of information they receive and then they use that information as a reference point or an anchor to then make subsequent decisions, right? So this bias can be used to influence people’s decision making in retail settings by strateg strategically providing them with an initial price point that sets their, that sets their expectations for a cost of a product or a service.

So an example is that a study conducted by Columbia Business School found that diners were more likely to order expensive menu items. When the menu included a high priced dish in the study, researchers gave two groups of diners a menu with no prices or a menu with a high priced item listed at the top. The group with a high priced item listed at the top spent way more money on their meals even though the high priced item wasn’t ordered by anyone in the group.

How crazy is that? So this is really interesting because a lot of times, at least in my perspective is that if I thought that I put something super, super expensive and I was selling super, some something super expensive, people would just walk away. They’d be like, ah, this is way outta my price range. Like, I don’t even want to deal with this, right? But the way people actually make purchases is that they go into the store or they look at the menu and they look at the most expensive thing, or they look at something the first thing, and then they make their buying decisions on the thing after that.

So a very good example of what you can do is that when customers walk in your store and you have the digital signage menu, or you have pricing summer, right? In the biggest way possible, show your most expensive thing. So, uh, if you have a retail store and you sell accessories, right? And you have this like crazy piece of glassware and you put like $14,000, uh, for the price, and you have a big sign that says it’s $14,000, right? Everything in comparison will seem so much smaller than that $14,000, right? Um, and you know, companies do this all the time and that, you know, if you go into a lamp store, do you really know what the price of a lamp is? Like, you know, are you like boom, you have an expectations of what you want to pay, but you really don’t know what the price of a lamp is, right? So what companies do is they would put the most expensive lamp boom right in front, right? And then once the lamp is there, they will then have cheaper lamps or more affordable lamps on the back end, right? And then what happens is that, uh, people by association would be like, ah, this is a lot cheaper, I really don’t need to worry about this, right? And then you’re good to go.

So same thing with you. You can use this price anchoring technique to say, let me put the most expensive thing upfront and then buy comparison, put things cheaper, right? Uh, and this is another way that you can help generate a bunch of sales. So now to quickly summarize, we’re gonna go through the four, uh, psychological, um, strategies and tactics that the top companies use.

So the first one, scarcity, right? Having something that is super, super rare. The second one is then social proof. Trying to, uh, align yourself with credible businesses or showing that you yourself are a credible business by having a bunch of reviews and testimonials, right? Third one is urgency.

That creates the sense of time pressure or the foal in that, like a customer might miss out, you have to do this right now, act now. This is a limited time offer. And then the fourth one, uh, is reciprocity. So you’re giving something to a customer and then your customer just psychologically feels like they want to give something back, right? So this is a lot better than me saying, Hey, I gave you this, gimme something back.

It’s like, no, I’m giving you this out of the kindness of my own heart. Do with that, uh, as you will and then maybe you can give something back to me, right? And then again, in all transparency, I’m providing as much value as possible in these videos with the hopes that you would come in and let’s schedule a chat and then maybe we can work together, right? But I’m not ex like, this isn’t the expectation.

I’m just giving these videos away for free. But uh, in the long term, I’m gonna build up enough goodwill so that the reciprocity will work back in my favor right after I’ve developed the reciprocity and after I’ve developed the credibility so that you, knowing that I’m not just talking nonsense and all the things that I talk about, right? Um, and then the last one, price anchor, right? Putting something super, super expensive in comparison to the other things that you’re selling so that when you sell the other thing, the customer doesn’t think it is as expensive because this, this, uh, um, case study with the restaurant menu is super, super important.

So, um, that’s it for me for now. Um, if you’re looking for marketing, more marketing strategies, feel free to subscribe. Hit the notification bell and if you wanna speak with me one-on-one and you want to discuss any of these psychological strategies or anything else about your business, you want me to do a deep dive on your website or any of the other marketing, feel free to go to Canna bud marketing back slash schedule and then I will talk to you there.

But that’s it for now. Have an awesome day. Thanks. Bye.