Cannabis POS Analytics and the KPIs Dispensaries Should Measure
Whether you run a cannabis dispensary or a retail business, if you’re on the path of scaling your functions and market reach, you need concrete data on your side.
Measuring the performance of your cannabis dispensary can give you helpful insights into your strengths, weaknesses, and market opportunities - but only when you’re looking at the right data.
In this blog, we’re going to share the key performance indicators you can track for business growth using cannabis POS analytics on solutions like SellTreez.
Cannabis business KPIs to track for dispensaries and retailers
While the cannabis business KPIs should be based on the type of products you sell and who you sell to, here are some metrics we do recommend keeping a close eye on.
1. Time per transaction
This is an important KPI that shows how much time it takes to complete one transaction. Longer time per transaction means a customer has to wait for a long time in the queue or has to go through a long checkout process to complete the purchase. Remember, a longer wait time can directly impact your customer satisfaction and sales.
If you run multiple stores or have both online and brick-and-mortar storefronts, you may want to compare the time per transaction of each to measure performance.
Some of the reasons why time per transaction may be too high are:
- Clunky cannabis POS software
- Untrained or undertrained staff
- Faulty workflow
- Not enough staff in your store
- Not enough inventory on the floor
- Lack of checkout optimization
2. Discount use and type
Knowing the discount use and type is crucial to keeping a healthy revenue flow. To know what percentage of transactions you should be offering as a discount, set an acceptable gross margin range so you don't run into a loss. Few discount types to consider:
- In-line discount by budtender
- Coupon codes
- Auto-applied discounts by store managers
- Bundle purchases
- Discount based on cart value
A cannabis dispensary POS can easily track this metric for both your online store and dispensary. Apart from knowing the discount use and type, this KPI is also insightful in determining which discounts are redeemed most so that you can create effective deals that push more sales.
3. New vs. returning customers
This is another important, insightful metric to help you determine your business strategy. For example, if you have more new customers, you need to focus on customer retention. Deep dive to understand why you’re not able to retain customers. Some reasons could be product pricing, unsatisfactory customer experience, longer average wait time, etc.
Similarly, if all your customers are returning customers, you must devise a strategy to attract new customers. Some initiatives that may work include optimizing your marketing efforts, offering first-time customer discounts, rewards for customer referrals, etc.
4. Average cart size and value
These are two important metrics that tell you how many items are on average in each cart and the average dollar value of the products in each cart. This metric is critical because it helps you to evaluate various parameters of your cannabis business, like:
- Performance of your sales team
- Ideal price point
- Buying habits of the customers
- Upselling and cross opportunities
- Store layout
Improving the cart size and cart value can help you increase profits. Many cannabis dispensary owners prefer to offer BOGO discounts to improve these metrics.
5. Sales by category
It’s an important KPI that gives you an insight into the most preferred product among the customers. This gives you a direct insight into how you should be stocking up your inventory. You can track this KPI under various categories like product type, THC content, and cannabis strain.
Sales by category is particularly a key metric for cannabis businesses with a large catalog.
6. Number of transactions per customer
This metric will help you determine how many transactions your customers make. This will give you the lifetime value of the customer. Knowing the customer's lifetime value can help you determine how much you spend to acquire a new customer. As you increase the number of transactions per customer keeping the acquisition cost fixed), you can increase your revenue.
For example, if your customers are making two transactions per month, look at ways to increase it to five transactions per month. You can achieve this by providing different promotional offers and targeted marketing campaigns.
7. Customer demographics
Knowing your customer demographics can give you a lot of insights. For example, customer age and gender can help you decide how you want to design the dispensary layout, organize products, and how you want to promote your distribution. Knowing which channels attract your customers can also help you decide channels where you want to invest more.
For example, if the maximum of your customers is coming from Instagram and the least through billboards, you know where to focus.
8. Traffic flow metrics
Do you see a peak in customer flow at certain times of the day, month, or year? Such cannabis data intelligence from your POS system can help you make important decisions.
For example, if the POS system reports that your sales peak in October and 8 PM is the peak hour at your store, you know when to have more staff in the store to process the orders quickly.
9. Total sales
Your total sales are the direct indicator of your profit. If your total sales are skyrocketing, you know your cannabis dispensary is doing well and is profitable. It also indicates your stock level and if your inventory needs to be refilled.
Here’s what to look for in a cannabis POS:
1. Sales trends analytics
Sales trends analytics can help you maximize your revenue and profit. It lets you discover products that are most preferred among the customers and at what times of the year. Knowing this information can help you manage your inventory, create targeted marketing campaigns, and target the right audience. An intelligent cannabis POS system can also help identify patterns and predict trends.
2. Customer behavior
A good cannabis POS system helps provide insight into your customer database. It helps identify customer demographics, the different audience segments and their purchasing behavior - including insights into preferred products, eCommerce search history, spending habits, spend power, shopping patterns, product preference and more. The granular level data can help you to get to know your customers better and uncover insights how to improve their experiences with your business.
3. Predictive analytics
Consumer preferences can vary over time based on trends, requirements and their knowledge around cannabis products. A cannabis POS can help predict such market changes by collating your past and current data to find common patterns, unusual spikes or dips, and help you prepare to meet consumer demand and preferences better.
4. Inventory and supply chain data
Cannabis is a perishable product and hence inventory management is crucial. No dispensary or retailer wants to overstock or understock at any point in time. To maintain healthy inventory and supply chain efficiency, the cannabis POS system should be able to not just update your data, but also alerts you when the stocks are running low.
Does your cannabis POS system equip you with analytics?
A number of cannabis dispensaries and retailers choose a POS system based on the payment gateways they are integrated with. But a cannabis POS software has a much bigger role to play in your business growth.
In times when the competition for consumer attention is increasing by the day, it is becoming important for businesses to take a data-driven approach. That’s why we built SellTreez to be more than just a cannabis POS system - it is the one place where you can find all the insights that can help understand your business performance, customer preferences and growth opportunities.
Want to learn more about cannabis POS and the role of analytics in business growth?