9 tips from founders for starting a successful CBD business.
By Sophie Saint Thomas and Forbes
According to Gallop’s 2020 poll, 68% of Americans favor cannabis legalization. Furthermore, at least one-third of respondents are using or have used cannabidiol (CBD) products. As you likely know, CBD is a phytocannabinoid found in cannabis and hemp plants. On its own, it’s non-psychoactive, and while CBD is already legal, entrepreneurs still struggle when starting a CBD business. Roadblocks include difficulty with paid advertisements, changing legalities, and massive competition.
In 2019, right before the pandemic hit, Sophia Trunzo and Lior Root co-founded Paradigm Media, a digital marketing agency. Rather than fall under the stress of the pandemic, they utilized the uptick in e-commerce and quickly rose from a small start-up to an industry staple. With the public perception in CBD’s favor and many prospective CBD entrepreneurs chomping at the bit, we caught up with Trunzo and Root to pick their brains on nine tips for starting a successful CBD business.
Embrace Online Retail
During the pandemic, for most people, going to the dispensary for a CBD vape or even a department store for soothing CBD beauty products became out of the question. As a result, more people turned to e-commerce to obtain their necessities. “A lot of brands were switching from brick and mortar to e-comm and had no idea where to start. We were able to leverage our expertise and knowledge as well as our relationships that we have in the space as we’ve been doing digital marketing to put our CBD brands at the forefront of the industry,” Trunzo says. Even with vaccines, the industry expects the shift to e-comm to stick. However, that doesn’t have to be a threat to your business. Paradigm Media grew exponentially, from two clients in 2019 to over 50 and counting by utilizing their knowledge of the online sphere.
Find Your Niche
The pandemic also revealed that people really like their self-care. “CBD products are there to help better your lifestyle, health, and wellness,” Root says. “More people are aware right now than they were before and are open to trying these types of products.” So, the good news is that people want their CBD. The challenging news is that as a brand, you have to stand out. Root adds that in the last year and a half, there were over 3,000 CBD brands that launched. “You can imagine all of these brands are selling a very similar product. In terms of gummies and topicals, no one has a revolutionary product yet. So every brand has to find what makes them different.” You need to decide if your product is meant for relaxation and sleep, performance enhancement, or as part of a beauty routine. Working with an experienced digital marketing industry can help a cannabidiol company stand out from the crowd.
Identify The Customer
How do you stand out from the crowd, you may ask? Well, it all starts with identifying the customer. “Suppose you’re targeting millennials, for example. In that case, your brand voice will be completely different; the imagery you’re using is completely different, even the price of your product compared to a brand targeting, for example, 40 or 50 plus aged women,” Root says. “They’ll have more of the luxury CBD line. The branding is going to be completely different, the messaging, price points, and so on. To differentiate yourself, you need to find that niche that you’re after as a customer.” So, to find your niche in the CBD industry, start with identifying your client.
Follow The Customer
There are multiple "touchpoints" between a product and a potential customer in any industry before they decide to pull the trigger and buy from your brand. These include email marketing, paid media, and digital ads. According to Paradigm Media, there can be between 25 to 50 touchpoints in the CBD and cannabis business, higher than other industries. "If you're new to the CBD industry, you may not be aware that it can take 25 touchpoints before you acquire a customer, so our strategy allows us to meet the customer every step of the way," Trunzo says. "By offering our clients this, we can provide a one-stop-shop where they have their reporting on metrics all in one place, with strategies for all services in one place, rather than working with multiple vendors." After identifying your target audience, you'll need a comprehensive strategy to stay with them at every touchpoint until they go from prospective customers to official clients.
Be Flexible While it’s essential to find your customer and niche as a CBD brand, Trunzo reminds prospective CBD entrepreneurs to be willing to work multiple roles personally. “As founders, especially in startups, you are challenged every day with things that you didn’t see coming, and jumping into different roles in your business gives you a more personal perspective on how those different roles function,” Root says. “It’s necessary to identify the different hats you wear and decide which are more vital to the growth of your business.”
Prepare For Challenges Anyone close to the CBD industry has heard of the challenges that remain. Even though cannabidiol is legal, CBD businesses face difficulties with everything from banking to securing paid advertisements. “One of the biggest challenges we experience as advertisers in the CBD industry is that most traditional platforms like Facebook, Google, Twitter, Instagram, YouTube, and many more, are not allowing CBD advertisements yet. Policy can change daily, and we have to know how to navigate through that, making sure our clients are always positioned at the top as industry leaders,” Trunzo says.
However, despite these challenges, the country seems to be moving in favor of CBD. Whether you’re a CBD entrepreneur or consumer, the best thing you can do to combat these challenges is to educate yourself and those around you about the potential health benefits (and low side effect profile) of CBD.
Nurture Personal Relationships Staying on top of policies that can change daily, and as a result, getting your ads up can seem near impossible under such circumstances. Part of the appeal of working with a digital agency is that they can manage these changing policies through personal relationships. “We have to work very closely with those policy teams. So with our agency, we just hop on a call with them and find out what the new policy is. As a brand, you don’t have those relationships with those platforms, and you never know this ad changed, and your ad will automatically get rejected. Your account will get disabled,” Root says, rendering you are no longer able to advertise. “It’s essential to work with those policy teams and do everything by the book. Because we’re here to stay, all the clients we work with are here to stay, and we want to make sure that their accounts are in good health and are following the policies,” she adds.
You’ll Need Support And no, we’re not just talking about tech support. Starting a company, especially a CBD company, will take up time and get on your last nerve. “Entrepreneurs find themselves working at odd times of the day, most of the time more than 50 hours per week, so having the support and understanding of your family and friends that the business at times comes first is crucial,” Trunzo says.
Look Towards The Future Reading about the challenges CBD entrepreneurs face can be daunting. However, more people are using CBD than ever before. The public opinion is on your side, and with your family and friends on your side, too, there’s no reason that your company can’t be the next big thing. That’s true, especially if you invoke the help of a digital marketing agency that provides a 360 strategy to propel you forward every step of the way.
Read the full article on Forbes here