Mike Beaudry, Founder + CEO of HERBL, quoted about brand loyalty in mg Magazine

July 7, 2021

Build Brand Loyalty by Owning the Customer Relationship

When the price is right

When it comes to opening more retail accounts, pricing is the most important single detail for retailers. Set the wholesale price too high, and the chances a buyer will take a risk on your brand decrease. Set the price too low and you risk putting too much downward pressure on margins, leaving yourself unable to offer deals, which are essential for a successful to-market strategy.

“What we’ve seen is when you have the right price-to-quality ratio, there’s a connection made between the brand and the buyer,” said Mike Beaudry, founder and chief executive officer at distributor HERBL.

Beaudry’s team has an extensive alignment checklist they use to determine whether a brand can be a successful presence in its category, and correct pricing is at the top of the list. “Get it right and there seems to be a willingness at the buyer level to stock the product, and often all the SKUs from that product line,” he said. “But get it wrong and we’ll never know how consumers respond, because the products won’t make it onto the shelves.”

A fateful pricing adjustment was a catalyst in Cann’s rise in 2020. After some digging into the product’s sluggish sales velocity, Anderson observed that unlike the beer and wine Cann pitts itself against, the brand’s little 2mg cans were savored, not enjoyed as a routine social libation. “We want Cann to be an alcohol substitute,” said Anderson, who spent six years as a consumer packaged goods (CPG) consultant at Bain & Company prior to launching Cann. “Nobody is treasuring their White Claws and saving them for special occasions.”


HERBL delivery van drives along the California coastline.

The problem was the price. “It was just too expensive,” he said. “Taxes brought the price to $38 out the door for a six pack, and that meant people were keeping them as a special treat. We dropped [the price] to $24 at some retailers, and we saw the velocity triple.”

Once Cann had a price point that resonated relative to alcohol alternatives and not dollars-per-milligram cannabis products, the company’s sales increased dramatically and its products cracked the cannabis-infused-beverage category wide open.

But pricing is just the first step in what Beaudry describes as an “obstacle course” to opening new accounts and creating success. “You first have to get in the door, then get past the buyer or the owner, then get the budtenders on board, and finally convince the consumer,” he said. “It’s tough, and a lot of brands don’t fully understand the obstacle course—particularly those coming from traditional CPG.”

Differentiation

Clear differentiation from the competition is of enormous help for brand loyalty. “Say you’re coming in with a vape,” Beaudry said. “Who are the top players and why? What kind of oil are you using? Are you able to demonstrate some level of differentiation? If you just say, ‘I have a vape pen. It has CO2 oil and it’s X dollars per gram,’ that’s not going to win many hearts and minds at this point.”

Ciencia Labs launched its cannabis sleep brand dreamt in December 2019. Entering the market with a comparatively expensive vape, co-founder and Chief Operating Officer Benjamin Mitchell leaned heavily on the science supporting the products to open doors. Science “was the biggest differentiator for us,” he said. “The stores all knew people were coming in and looking for something for sleep, so we explained to them that our products were supported by science and the others weren’t. We showed them the research and taught them how to explain the science to consumers.”

Beyond having the right product for a certain segment of the store, Mitchell quickly learned buyers dictate the terms and new brands should be prepared to “meet the store wherever they are.” The store is “the customer, and you have to give them the things they need in order to buy,” he said. “If that means terms, small orders, or aggressive amounts of sell-through assistance in the form of [patient appreciation days] and promos, then so be it. You need to do those things to open new accounts, especially when you’re a new brand and don’t yet have a reputation or credibility.”

Building credibility is particularly important in a nascent marketplace with a relatively uninformed consumer base. One of the most effective paths toward credibility is winning the support of budtenders. Because of their direct, frequent interaction with customers, budtenders play an enormous role in helping brands develop the kind of traction needed to become successful. They will recommend products in which they see value, but if they think the price-to-quality ratio is off or they simply don’t know anything about the brand because no representatives have visited the store, brands can become invisible.

“Until it’s more like traditional retail where you walk in and pull things off the shelf, I see budtenders continuing to play an important role,” said Beaudry. “If you think about CVS, Walmart, anywhere in retail America, you go in by yourself, make decisions by yourself, and buy by yourself. In a dispensary, customers are assisted through the purchase. If you don’t have the attention of that budtender, your competitors’ products are going to move faster than yours.”

To read the referenced article, visit here.

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