Krista Raymer: Pricing, Promotion & Strategy Tips for Profitable Cannabis Retail

Krista Raymer: Pricing, Promotion & Strategy Tips for Profitable Cannabis Retail

Krista Raymer: The very best promotions will increase velocity and create limited margin erosion, and the worst promotions will create no velocity improvement and create massive margin erosion. Bryan Fields: What's up, guys? Welcome back to another episode of The Dime. I'm Bryan Fields, and with me as always is Kellan Finney. This week we've got a very special guest, Krista Raymer, founder of Vetrina Group. Krista, thanks for taking the time — how are you doing today? Krista Raymer: I am doing amazing, thank you for having me. Excited to be here. Kellan, how are you doing? Kellan Finney: I'm doing really well, really excited to talk to Krista and dive into cannabis retail. And I'm excited to talk to you too, Bryan — how are you doing today? Bryan Fields: Oh man, that was really sweet of you, Kellan. I think we've got a lot to talk about, and I think data is going to be a key focal point today, because what we talked about pre-show is that there are a lot of people out there who could probably use data as a good reference point going forward. So Krista, before we dive in, give a little background about yourself and how you found your way into the cannabis space. Krista Raymer: I went into one of the first rec stores when Canada went legal, and I stood in the cannabis store and watched as transactions happened all around me, and nobody understood what they were purchasing. The pricing didn't make any sense, and the merchandising wasn't connected to how the customer actually used the store. I was standing there thinking, I don't know everything there is to know about weed, but I do know a lot about retail, and maybe there's something here. That was about four and a half years ago, and we've been in the space ever since. At Vetrina, we work with retailers to drive in-store profitability through things like loyalty programs, assortment strategies, and promotional plans. But it really comes down to being aware that retail happens one transaction at a time, and cannabis retail is a lot of little transactions — you've got a lot of customers and a lot of moving parts to figure out all at once. Bryan Fields: So elaborate on 'one transaction at a time' — what does that mean? Krista Raymer: When we think about how to grow a retail environment, we think about attracting customers, retaining them, increasing purchase frequency over a year, and increasing how much they spend while in store. It's easy to say 'we need a lot of new customers, we'll just spend this' without paying attention to your cost of customer acquisition. The long-term play is how many of those customers turn into repeat purchasers — what does the days-between-purchase look like? Understanding the customer life cycle is so important. Transactions don't just happen — a lot leads a customer to the transaction, and a lot defines whether they come back. Every retailer, inside and outside cannabis, has struggled with how to bring in more customers, keep them, and get them to spend more, for basically the last century. Kellan Finney: There's a lot there I want to elaborate on. Tracking the data internally is probably very difficult — understanding costs transaction to transaction is hard, but having buckets to put people in is helpful as a structure. And on the consumer side, I wonder how many people listening are wondering, 'was I sold this product, how did I know that triggered this reaction to go in?' We forget there are a lot of messages we see regularly that lead us to take action — that's the beauty of marketing. Krista Raymer: When we work with budtenders on how to work with customers, we talk about understanding the customer's set and setting. If you understand what the customer wants as an outcome and where they'll be consuming, you can share relevant information at the right time. Marketing and retail are about touch points — making it feel relevant to the customer. In the best stores, you see your own values reflected back to you. There's a historical marketing idea that you need seven touch points to make something resonate, and it works in retail too — you just bring it into physical form, combining digital and physical touch points. A customer standing in store saying 'I want this pre-roll' — is that their own idea, or was it influenced by information along the way? That's really difficult to track, because the data points show up in how someone uses a website or moves through the sales floor, but bringing it all together is hard in cannabis. Bryan Fields: It's a little different from normal retail, because typically you walk into a dispensary and interact with a budtender who has significant influence on what you purchase. How do you help retailers educate their budtenders, and guide them in customizing that interaction to drive certain transactions? Krista Raymer: Even before the customer gets to the store, they've likely looked at the business online, and that creates anchoring. If an ounce is listed online for $99, the customer assumes ounces are $99 — a built-in assumption walking in. Does the budtender align with that same assumption, or bring a brand new one? That's one of the hardest things to get right in cannabis — connecting the online experience with the in-store one. Probably not aligned in most cases, and it's not the budtender's fault — there's something called budtender bias, the bias they bring into interactions based on their own consumption preferences, brand education, or their economic ability to access and try different products. Are we doing a disservice by stocking expensive products while budtenders make just over minimum wage and can't afford them? That will influence their ability to sell a pricier product. Training needs to include awareness of these biases and of how the customer perceives the business before walking in, since online and in-store are more interconnected than we give them credit for. Kellan Finney: So to take it further — they see the ounce online for $99, come in looking for flower, get to the budtender, say what they're interested in, and the budtender can read the cues: this person can be upsold, is looking for value, premium, or a deal. Krista Raymer: Totally. What open-ended questions is the budtender asking? Often it's 'what are you looking for today?' — which assumes the customer knows exactly what they want. Most customers know the concept but maybe not the exact product. Budtenders are incredibly influential and can get customers to try different products, so there's a big opportunity to close that loop. Bryan Fields: How long do you think budtenders are going to be a staple in the industry? McDonald's has a digital board now and barely any human interaction — how long until cannabis looks similar? Krista Raymer: A lot has to go right for McDonald's to leverage a board — consistency being number one; everyone understands what a french fry tastes like. You couldn't pop up a McDonald's somewhere without hamburgers and fries and expect it to work without support. That's the disconnect in cannabis — we still have massive product innovation and huge, complex menus, much more than McDonald's roughly 80-something products. As long as there's continued innovation and complexity, having a knowledgeable team in store remains really important. Bryan Fields: I can only think about walking into a dispensary and being handed a binder — my anxiety spikes. I know I want edibles, can I just get the list? It's a full binder, they say 'page 12 through 14' — I just take the three I normally get. Krista Raymer: We got super nerdy and analyzed strain sell-through across markets, and usually the top-performing strains have food or color in the name. Is that because customers are truly attracted to those strains, or because the names feel familiar? For more advanced consumers — those making more than eight transactions a year, confident in their purchasing — the strain names tied to their purchases were often more aggressive, without much relation to color or food. So color and food work for most customers, but experienced consumers gravitate toward more aggressive strain names. Bryan Fields: Were those strain names maintained across different product types — flower, edibles, vapes? Krista Raymer: More so across different brands. There'd be bias if you looked at it without controlling for that. It's hard to connect the pattern outside flower and maybe some concentrate or vape in different markets — it doesn't show up with edibles, which makes sense. You need to analyze it based on purchases across different products and brands. Bryan Fields: Let's go into the problem. Someone in cannabis comes to you and says, 'Krista, I think I have a problem, not sure what's going on.' Where do most people in the industry fall — full understanding, no understanding, or somewhere in between? Krista Raymer: Most people we interact with are really good at one area and struggle to connect the other parts. The groups we work with at Vetrina have been in the industry a while and now we're getting into optimization — gross margin improvement, increasing purchase frequency, optimizing customer acquisition, regaining lost market share. We always start with the data, then the team, then marketing, in that order, because they all need to be aligned. You can't market a store that doesn't have the right inventory, and you can't guarantee retention if the team doesn't sell the right way once people arrive — that's lost investment. Bryan Fields: When you first get in contact with retailers, do they typically have a robust data set some know how to use and some don't, or is this something new? Krista Raymer: More than 90 percent have a really good data set — the question is whether it's organized in a readable way. Cannabis has so much data, and it's so specific because of regulatory frameworks, that it's really about knowing what to do with it. The first thing is whether the format allows sorting by similar attributes — product masters and naming conventions matter, like having flower subcategories instead of just 'flower' as one bucket. Flower represents a huge portion of revenue and often 200+ SKUs, spanning eighths to ounces, and the purchasing pattern and decision tree differ hugely between them. Without parsing that out, you might think you have the right inventory but actually have too many eighths and not enough ounces, or be over-indexed on indica-leaning strains and under-indexed on sativa. We see that happen all the time. Kellan Finney: That has to be a difficult conversation — the person is excited, and you open the data and say '90 percent of your business is in a flower category we can't parse out.' Is there an ego difficulty in going back to the drawing board, especially when the founder set it up and moved on, and it's just been tracked the same way historically? Krista Raymer: Maybe it was the right way when it was set up — there needs to be evolution to all of these things. What worked three years ago in edibles doesn't work today given new SKU assortments, flavors, and sub-formats. Anytime we deal with a business, there's personal attachment to what's been tried, so the question is whether the business today matches when it was set up. We often get in and help rebuild it rather than just telling someone to change everything — it's a pain to do, but the impact is great. Kellan Finney: I like how you handled that — 'it could have been the right way back then' — that instantly de-escalates those conversations. Bryan Fields: Once it's cleaned, parsed, and organized, what low-hanging fruit does your team go after first to help retailers start making data-driven decisions? Krista Raymer: Understanding that the 80/20 rule (or 70/30) plays out in inventory, team, and marketing — about 80 percent of revenue comes from 20 percent of SKUs, 80 percent of results from 20 percent of the team, and 80 percent of marketing initiatives aren't moving the needle. First, understand customer segmentation — organize customers by spend, frequency, or product type, and identify who's most influential to revenue versus who's on the bubble (likely splitting spend with competitors) — there's an opportunity to recapture share of basket there. The real opportunity is figuring out what the best customers or SKUs have in common and diversifying, instead of just deepening the best further. Bryan Fields: Businesses spend money to acquire customers, and while a second visit costs less from a marketing standpoint, there's still investment involved. For example, I buy edibles every two months, enough to last me — if I got an email that my preferred brand was on sale, I'd probably come in early. That's why marketing matters, to pull more out of consumers. Krista Raymer: What's complicated is, if an offer got you to buy twice as many edibles, would that push you out of the store for a longer period? Bryan Fields: It depends — I might be more willing to give products away because I have more, without the fear of needing to restock soon. I'm a consistent user, one a day like medicine — it's less precious when you feel abundance, so it's easier to hand out. Krista Raymer: Right, because you have so much more. Early on, we looked at grocery analysis and detergent purchasing behavior, since cadence seemed similar — retailers would get customers to buy twice as much detergent, creating a revenue blip but pushing them out of the store longer since nothing changed. That's something to consider when building promotions — there are unintended consequences to changing customer behavior. Pre-rolls and edibles might get shared more loosely when abundant, but would that hold for concentrates, which are harder to share? That push-and-pull on demand is part of why 4/20 is so complicated. Bryan Fields: So how do companies make informed decisions without hurting the business, since you could be inflating short-term numbers while pushing out the next visit? Krista Raymer: Part of the analysis is looking at profit dollars, not just top-line revenue, and the long-term impact. Edible consumers naturally have longer days-between-purchase than flower consumers. Could those behaviors be influenced by assortment or marketing? Absolutely. It's about understanding what influenced the behavior and defining what success looks like — dropping prices 20% one weekend might create a lift but also a drop-off the following weekend. 4/20 shows this pattern every year — inflated Friday/Saturday revenue followed by a dip the week after, three years running. Bryan Fields: So sophisticated operators are either revenue-focused or margin-focused with their promotions — is that the kind of conversation you have with retailers, asking what they're trying to drive in a category? Krista Raymer: Yes — what's the intention: bring in new customers, service existing ones, or get customers to try something new? We've been building a data set analyzing promotion impact: the very best promotions increase velocity with limited margin erosion, and the worst create no velocity improvement with massive margin erosion. What works for pre-rolls might not work for concentrates or ounces. Understanding intention and goals shapes the cadence, frequency, and targeting of a promotion. Kellan Finney: First-time customers might need more incentive since they're more hesitant, but they could be more valuable long-term — hooking them into a new price category can grow their lifetime value, like shifting from a six-pack a week to a pre-roll. Krista Raymer: Acquiring customers is the most expensive part of marketing compared to retention. We define customer life cycle as one year, since beyond that there's too much market noise. The key is moving customers from one to three visits, three to five, five to eight — the average customer makes eight visits a year, and eight-plus visit customers generate a significant share of revenue. The one-to-eight range is all opportunity, and figuring out how to motivate, retain, and keep those customers happy — after already paying to acquire them — is critical. Bryan Fields: Another variable we discussed pre-show — cannabis is fragmented across the U.S. In mature markets like Colorado, neighboring states legalizing caused sales to drop. How do these factors influence customer evaluation? Krista Raymer: This might be one of the most under-discussed topics — our historical data is messy. Traditional retail won't make decisions without seven years of data, pulling out anomalies like COVID. In cannabis, that's not really possible in rec or med markets, so it's about figuring out what we can actually see. We do have a lot of customer information through things like ID scans. A revenue decrease could come from purchase frequency/amount or the number of customers contributing — usually a combination of price compression and demand shifting to neighboring markets. Even normalizing units sold gets complex — Michigan averages more than two units per transaction, while New Jersey and Illinois struggle to get past two. Kellan Finney: It must be even harder since these are signals you notice after things have already gone bad — is there any way to build in early alerts before losing your best customers? Krista Raymer: Not exactly alerts, but first, stop looking at the business month to month — I hate months as a measurement because they're not created equally; different numbers of Fridays, Saturdays, and days overall skew results (like May with extra Fridays and a holiday). Use weekly analysis instead, and compare trends to seasonal patterns. Second, segment who's contributing to revenue and watch for shifts — if a segment drops off, dig into what they have in common, like an assortment change or discontinued brand. You won't know anything unless you segment, and week-over-week is far more useful than month-over-month. Kellan Finney: And some data should be viewed defensively — protecting the core business — and some offensively — acquiring and upselling customers. You need both lenses. Krista Raymer: Yes — how easily can you spot a loss, and what's in place to protect against it going forward? Is your cost of customer acquisition outpacing customer turn? Bryan Fields: Basically features versus benefits — are they the same, different, and is the industry using them incorrectly? Krista Raymer: Did you read one of our blogs? Features and benefits get conflated constantly in cannabis — thrown at budtenders, teams, and buyers as if they're the same thing, but they're different. Features are the technical aspects of a product; benefits are the outcomes a customer gets from those features. For whitening toothpaste, the technical aspects are the features, and the whitening outcome is the benefit. Coaching budtenders to always give two features and a benefit rounds out product education. Bryan Fields: Where does price fit — feature or benefit? Krista Raymer: Price is neither — thanks for reading our blog. Price is the value a customer assigns to a product, and different customers are willing to pay different prices for the same product depending on their perception of value. We shouldn't sell off of price, but it's a common tactic used by the majority. Bryan Fields: It's the easiest fallback when you don't know how to talk about a product. You'd never sell me this pen based on price — you'd talk about its features and benefits. Price doesn't change its value to me; it's almost a cop-out. If we connect product value only to numbers, it becomes really hard to sell more expensive products long-term. Kellan Finney: But cannabis is already so hard — why not just take the easy way out and lower the price? Krista Raymer: Go for it — you'll see a velocity increase, there are real positive impacts from lower prices. I can't just say 'sell everything at higher prices' in a perfect world — understanding the customer's definition of value relative to price is where we need to spend more time, instead of just repeating features and hoping budtenders remember them. Bryan Fields: Do you think education can help with that, or is education kind of a lost cause from a marketing standpoint? Krista Raymer: Education can become a black hole — sativa, indica, CBG, CBN, CBC, 'this makes you sleepy' — it's information overload. What I see teams struggle with most is applying the information, not learning it. Many budtenders are well-educated on features, but communicating benefits is where things go awry. I believe spending more time on sales-based communication training is where the industry has the most room to improve — education should be communication-based, not just features-and-benefits based. Bryan Fields: Does that responsibility fall on brands or dispensaries? Krista Raymer: I think it's everybody's responsibility. Brands should communicate features and benefits clearly, and retailers need to build their teams' confidence in creating interactions — confidence only comes with practice. Scripts are great until a customer goes off script, and then teams need to know how to guide the conversation and respond to the customer in front of them. It's a team effort. Bryan Fields: Slightly switching gears — if you could put anything on a billboard to reach billions of people, what would it be? Krista Raymer: 'You are capable.' Bryan Fields: What question do you wish more people asked you? Krista Raymer: What does beauty have in common with cannabis? I hadn't thought about it before, but beauty is a complicated product category too — lots of features and benefits that interact differently person to person. You're selling an end vision, a concept, not just a tool like a phone. There's a lot to learn from beauty's product commercialization, seasonal strategies, and core assortment efforts — it's one of my favorite avenues to explore. Bryan Fields: Dream smoking session, three people, dead or alive? Krista Raymer: My grandfather, because he passed before I ever got to smoke with him and I think he'd be very entertaining; someone at the executive leadership level from Sephora, who I could just sit and ask a lot of questions to; and my first boyfriend, who got me to smoke weed and introduced me to it in the beginning. Bryan Fields: Prediction time — is discounting and double-discounting a difficult but successful strategy for retail, and how do you see it evolving so customers don't get addicted to it? Krista Raymer: You combat discounting with newness and freshness — but what feels new to the customer and what feels new to the business are two different things. Instead of blanket discounts like '20% off flower on Thursdays,' expect more brand- or SKU-specific discounts, letting them breathe and succeed before rotating in something new. Our data shows real upside in reducing the number of discounts while increasing how often you introduce newness in promotions. Kellan Finney: I'm glad we had this conversation — I had no answer before, but now I do. Retailers need to determine which product category they're trying to grow revenue in and customize discounts to that category — like discounting concentrates if that's the growth target — similar to what Krista said about being targeted rather than blanket. What do you think, Bryan? Bryan Fields: Honestly, I think flower is probably the biggest opportunity. It makes up most sales, roughly 50 percent for most stores, and going back to an earlier point — if I have more flower, I'm way more willing to share it, so discounting flower likely doesn't push out the return visit the way it might with edibles or slower-consumed products. Kellan Finney: We classified edibles the same way earlier, so that logic doesn't fully hold there — but what about subcategory, quantity, brand, or price point? That's where it gets more custom per retailer, like discounting a specific overstocked brand's eighths rather than the whole category — more granular discounts. Bryan Fields: Right, being intentional about what we're trying to achieve. You're spot on — I used to think discounting would get me to purchase more and come back sooner, but there's actually been a delay before I return. Krista Raymer: Recognizing that, businesses hurt themselves twofold — they make less money, and Bryan doesn't come back as often, stretching from every four weeks to every six and a half. Bryan Fields: Right, so understanding that nuance matters, but I think turning over inventory might be even more important than discounting — creating urgency around limited supply, and using better data on turnover to avoid having to price-promote and dump product. Krista Raymer: What if, in your edible situation, the discount wasn't for what you usually buy, but a different flavor or seasonal item within the same category that still feels familiar — would you buy it in addition to your regular purchase? Bryan Fields: Depends on the flavor of the week. But where I usually get caught, and I know I'm a sucker for it, is the pre-roll upsell — I've got a bunch of edibles already, and they say 'here's this pre-roll,' and I just throw it in every time. Krista Raymer: It's the accessibility of the price point and ease of use — such a convenient add-on product. Kellan Finney: What's the impact of a straight discount versus something like 'spend $50, get a free pack of joints' — same effect on return visits? Krista Raymer: It has a different type of impact, and importantly you control the cost better — you know your COGS on what you're giving away, unlike a blanket discount. Where possible, I'm a big fan of product-based incentives over straight discounts, especially discounts on whole transactions — that's a scarier place to be. Bryan Fields: Main takeaways — data is very important, actionable data is extremely important, and segmenting your understanding of it leads to good, informed decisions. Krista Raymer: Data means nothing without context — give it context if you want it to mean something. Bryan Fields: For those listening who want to dive deeper into features, benefits, and pricing, where can they find you? Krista Raymer: You can find us on LinkedIn — our whole team at Vetrina is active there sharing accessible tips, or on our website at vetrinagroup.com. Bryan Fields: Thanks for taking the time, this was a lot of fun. Krista Raymer: This was great, thanks guys.