Back in April, Benzinga shared an interview with Joel Milton, CEO of Baker Technologies, one of the largest VC-backed cannabis companies in the U.S. The firm offers a customer engagement platform designed for marijuana dispensaries and brands, often dubbed “the salesforce.com, inc. (NYSE: CRM) of pot.”
Are there any real contenders in the space?
We reached out to SpringBig cofounder and CEO Jeff Harris, a veteran in the marketing space, and asked him to walk us through the business, the products and the returns on investment.
SpringBig is a software-as-a-service marketing platform that seeks to provide small businesses with the tools they need to create their own loyalty rewards programs, communicate with customers, and drive clients into their stores. At first, the product was aimed at “mom and pop” operations like yogurt shops, coffee shops, hair salons and the like.
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But, as SpringBig grew, the management team noticed the clients that used the platform the most were medical marijuana dispensaries. So, at the end of 2016, they decided to pivot to focusing solely on the cannabis industry, adapting their platform exclusively for these kinds of businesses. The firm services 90 dispensary locations and has roughly 100,000 cannabis consumers in its database.
“We are primarily providing loyalty rewards and visual communication services to medical and recreational cannabis retailers,” Harris told Benzinga. “We are growing very fast and very excited about what we are doing. We feel like the service we are offering is a service that retailers need.
“Another thing I like about our business is that, since we are operating in the marketing space, we don’t have to focus and worry about state-by-state regulations. This gives us a lot of freedom to work with stores, wherever they are.”
While Baker is often cited as SpringBig’s main competitor, their business models differ. Unlike Baker, SpringBig doesn't provide white-label e-commerce support, remaining solely focused on the marketing side. “This allows us to create a lot more partnerships,” Harris added.
In addition, SpringBig doesn't require that its customers sign pre-established contracts or pay a minimum fee. Instead, companies sign up and pay for each SMS they send to their customers.
Why use text messages to market a product?
According to Harris, 99 percent of text messages are opened, versus 20 percent for emails. And, the average time for an SMS to get opened is 4 minutes, compared to two days for an email.
Crunching The Numbers
Based on some case studies, SpringBig has concluded that, on average, its clients recuperate the value of a yearly contract within four weeks, said marketing director Natalie Shaul. “In four weeks they’ll see about a 20 percent lift in sales, per campaign,” she said.
Harris said SpringBig's clients have said they get between 20 an 50 additional visitors to their store when they run a campaign.
“So, our most successful stores are texting at least 5 times a week. This proves it works; it’s a very inexpensive way to market.”
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The company aims at ending the year with more than 200 locations and $1 million in revenue. Harris says it seems like they're on track to hitting their target — and expect sales of $5 million in 2018. The company also plans to white-label its software for other firms to license, and has recently closed large partnerships with Dispensarly, often called “the Yelp Inc (NYSE: YELP) of the cannabis industry.”
SpringBig is focused on getting dispensaries into a customer’s Apple Inc. (NASDAQ: AAPL) iPhone or Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) devices, Harris said.
“When you get access to a consumer’s smartphone, you have jumped a level of intimacy between yourself and that customer beyond email and other kinds of marketing."
SpringBig has already raised $2 million in seed capital, and is now conducting a $2 million Series A round, which is expected to close by the end of November.