This summer, SPARC employed a virtual MBA summer intern. His name is Dale Henriques, and he’s between his first and second year of at Stern business school at New York University, and because of the pandemic he was able to apply for this internship across the country and fulfill his duties remotely.
Dale has spent much of the last two months designing SPARC’s first customer experience survey, conducting interviews with SPARC customers, poring over data, and helping with the company’s growth and marketing strategy.
“I’m now probably one of the most knowledgeable people in New York about California cannabis, after doing this internship,” Dale says, half-jokingly.
But he may be right. This being a nascent legal industry with only two full years of recreational sales data in one of only a couple of states where recreational cannabis is now legal, the business of cannabis marketing is a whole new ball of wax — or resin.
“I’ve been doing a lot of customer research. That’s been the focus of my internship,” Dale says. “The cannabis space is fascinating because it has got to be the most diverse customer base in the world. It cuts across socio-economic criteria, it’s got different races, ages, religions, genders — everyone is interested in cannabis in some way. And to my knowledge, no one has really done this research yet. There’s multi-billion-dollar demand in this industry and no one really knows why — why do you choose SPARC over someone else? Why do you choose the products that you choose? And everyone uses cannabis for different reasons, so all of that is fascinating to me.”
He adds, “Also, as a business student, where can you be on the ground floor of a new industry with obvious multi-billion-dollar demand? It just doesn’t exist anymore, that kind of opportunity.”
Among the big takeaways Dale found in talking to SPARC customers is that there is a strong desire to start having the kinds of onsite, walk-up-and-smell-the-flowers experience on a cannabis farm the way one would at a vineyard — with a tasting experience akin the wine tastings that happen within throwing distance of SPARC’s Sonoma County farm.
“People are into a couple of specific things on the farm,” Dale says. “We were thinking they were probably into some subset of activities we might be able to offer on the farm — but it’s great because they told us specifically what they want.”
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Customers really want the opportunity to purchase products on the farm, which at the moment isn’t legally possible but it may be at some point soon. These people also said they’re hoping for educational farm tours, much the way you’d have at a vineyard.
“This is instructive for us, because we now have to work hard to change some of the laws around these kinds of experiences,” he says.
Interestingly, Dale’s research found that the era of the “Apple Store of cannabis” — which was what SPARC’s first dispensary was often called when it opened in San Francisco in 2010 — may be on the wane.
“It certainly was true at some point that customers were looking for that kind of high design — which SPARC certainly had at the beginning,” Dale says. “But what we found is that that’s not really enough anymore. You can’t just have the fancy space to go purchase cannabis in. Customers want reliability. They want a consistent consumer experience. They want trust — the ease and convenience of a grocery store and the trust of a pharmacy. Really they want an amalgamation of all these different industries, and there are more priorities now beyond the design of a store.”
Dale says that Apple still comes up when customers discuss brands they know and trust, but it’s not just about looks.
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“The way Apple, we believe, resonates with our customers is the nuts and bolts of how they do their retail. One thing they’re very good at is being transparent in their pricing model, with different tiers to serve different economic levels, or different willingness to spend money — but there is always value attached to higher prices.
“Another thing they’re really good at is funneling customers to fulfill different needs within the store — you have customers there to go to the Genius Bar to solve a problem, and you have the regular employees there to help with a purchase. We think these are the things that resonate most with our customers.”
The research has led the SPARC team to start thinking about cannabis sales differently, because prior to this they really didn’t know what customers’ main motivations were, or the reasons for their brand loyalty.
As you would imagine, Dale’s research this summer also came at a time when the delivery side of the business is booming — most shopping has shifted online, and customer behavior isn’t likely to return to what it was anytime soon.
“As a company, we have to be thinking about the pre-COVID era and the post-COVID era for retail, and things likely aren’t ever going to return completely to the pre-COVID era in terms of how retail works,” Dale says. “It extends to things like what activities can we have in-store, and were should we be focusing after the pandemic — like will there be a need to have a really tactile experience with products in the store, or will people even want that anymore? Probably not. People aren’t going to want to touch jars and stick their faces in them anymore.”
Dale heads back to school — at least virtually — next week. And he’s doing so as the incoming president of the NYU Stern Cannabis Club.
“It’s really cool, having done this work this summer, because in New York it’s still really a black and gray market, so there really are not a lot of opportunities for studying this industry.”
He adds, “It’s kind of a silver lining, if you will — because of COVID, I got to do this and work with SPARC from home. And like I said, nobody in New York has this perspective on California cannabis yet.”