“Hey, so these THCA gummies are $40? I saw them at a gas station for, like, $19.”
Are your customers maybe coming at you with statements like this? If so, it must be annoying. Scary, even. You think, if this keeps up, we’ll be out of business real soon. Well, you’re not necessarily wrong. But you’re not screwed either.
Yes, your rent is going up, and price wars are heating up. So how do you keep your businesses thriving in a world of tightening margins?
There are plenty of ways. Here’s how you can protect your bottom line while staying on top of customers’ needs, keeping the bottom line in line with your clientele.
Get Smart With Your Numbers
Keep a tab on your “fixed” costs like rent, salaries, and insurance while trying to maximize your “variable” costs, which are connected to the products you sell. For example, you can’t change the price of electricity, but you can get more buck for your bong. Make sure to take a close look at what products can help you boost your margin. The ones that can push you beyond parity and turn a significant profit. These products are distinct from margin-killers that you have for sale, which play a role in engaging customers but earn you little cash.
Once you know where you’re making money vs. just moving units, you can devise a sales strategy that puts you over the top.
Lose the Race to the Bottom
In the 1978 film The Wiz, a teenage Michael Jackson, playing the brainless scarecrow, crooned, “You can’t win…you can’t get even, and you can’t get out of the game.” Competing with crappy products from the dregs of Amazon or the convenience mart at Exxon can feel dispiriting, especially when you’ve put so much thought into your establishment. You care. You love these products and what they mean to you and the people who buy them.
But there’s hope. You can win. The price of your products are flexible. In both directions. So avoid the temptation to drop your prices because it’ll get hard to get them back up again. Instead, you can add value to them by being valuable yourself. Focus on the experience you provide for your customers. How much something is worth is a perception, and you can create that incredible sales experience.
A microwaved steak is different from the one you order at a fancy restaurant. Even if it’s from the same cow. Become a premier establishment.
Avoid dropping your price when a customer says they can find it somewhere cheaper. That’s a dangerous knee-jerk reaction. Of course, if you believe that your product is unfairly inflated, then maybe you’ll give in to the urge out of guilt. “Ok, ya’ got me! Name your price.” But that’s a failure of imagination. There’s a lot you can do to make it worth keeping your margins alive, and even expanding them.
Make it obviously worth it
There are many tried and true ways to add value without slashing prices.
One is to create bundles. Got a gummy that’s $8? Sell a bundle instead, like three for $20. This gives customers a thrill of both savings and abundance. Another successful tactic is to award loyalty points, which may be digitally recorded, or, even better, counted in punch cards. This gives customers a special connection to your store, something they can feel excited to use next time they need to pick up some flower, edibles, accessories, or whatever you’ve got in stock.
And, no matter what ways you implement to boost sales while holding firm on your margins, make sure your staff can sell the “why.” Your employees are the first line of defense against shrinking margins, and training them to handle customers’ complaints and turn them around will do more than anything to make sure you keep your profits. Do lots of role playing so they’re prepared for the wide variety of situations that might arise.
Then, your secret weapon will be customer service. When a human being explains to your customers that they’ll enjoy benefits like better quality, real terpenes, and third-party testing, it is more likely they’ll feel convinced and pull out their wallets. People pay more for trust.
Tiny Changes. Huge Impact.
Let’s face it, people love a good deal. So give them one–without changing anything. One trick is to show customers a range of prices so your mid-tier products feel reasonable. This anchors them at the price points you want them to feel comfortable with.
Also, explore .99 pricing vs. round-numbers. Like $19.99 vs. $20. Depending on the clientele and the product, some might work better than others. Round numbers feel more artisanal, classier. Whereas .99 prices can feel like a better deal, even if it’s one cent cheaper.
Embrace objections and turn them around
“Ours is better,” is a poor response to “why should I pay more for your THC-A drink?” People aren’t stupid and they may just walk out.
Instead, give them, as marketers call them, reasons to believe (RTBs). Try rolling with their skeptical energy, going with the flow of it, and redirecting it back to your preferred message.
Instead of “because our is better,” you could try “I totally get that, yet it’s important to know what’s actually in your products. We can work with you on that.” If they bring up the fact that a product is everywhere now, you can respond by saying “Sure, but this one’s tested and we’ve gotten great feedback!” And include highly motivational language, like social proof. “Yes, we carry that brand on purpose. Folks keep coming back for it.” People love to do what other people are doing.
When customers feel like they’re part of a smart group of consumers, they’re more likely to want to join your club. When they feel heard, they’ll feel less defensive and more likely to relax with you. And knowing that you’re in the business of making sure they get better products with better service and better safety, they will feel like they’re getting a better overall experience.
And that’s worth a lot.
Hold the line, you’ll be happy you did
Gas stations sell gas. Maybe they fix your car, give you somewhere to go to the bathroom, or sell you a can of soda or window cleaner.
Online shops feel anonymous. They have little personality and see you purely in terms of numbers. Consumers are just a digit on their spreadsheet.
You’re better than that. You can have real, in-the-flesh relationships with your customers. People crave that, just like they’re willing to pay more to go to a restaurant when they could eat at home. So don’t be ashamed to charge what your products are worth. You’re including the price of your expertise and connections you’re forging.
When you know your value, and your staff can communicate it, you can hold margins–even expand them–while keeping your customers. The Mobil station at the corner can’t do that. Nor can the algorithm at Amazon.
But you can.
