When cannabis customer relationship management (CRM) software company springbig went public this past June, CEO Jeffrey Harris noted in a press release how the move would help “accelerate our growth strategy as a newly public company.”

Accelerating an already rapidly growing business may sound like a tall task, as Harris and his team already have grown company revenues from just over $1 million in 2018 to $24 million in 2021. But Harris has built a successful CRM company before.

“I started a loyalty company in the late 1990s that developed and managed loyalty and data-driven marketing programs for retailers, financial services companies, [and] insurance companies,” Harris tells Cannabis Business Executive.

After turning over that company to a professional management team to run in 2012, Harris started looking for his next project.

“I went into a store one day and I saw this tablet sitting there next to the point of sale at a yogurt shop where you could type in your phone number and get a digital punch instead of those paper punch cards,” he shares. “And I said ‘I could do that better than these guys can do it.’”

Banding together with members of his former company, including co-founders Natalie Shaul (VP of Marketing) and Sam Harris (Head of Product), Harris launched springbig to “digitize the punch card system, but also get the customer information so you could market to them.”

By 2016, springbig had more than 400 businesses–mostly yogurt and pizza shops–signed up for its CRM services. While looking over customer reports, Harris noticed two California dispensaries had found the platform and were spending up to 15 times more than the non-cannabis users. 

After speaking with the chairman of an MSO his family had invested in, springbig pivoted its entire business to cannabis in 2017. “We totally tailored our technology efforts, our sales, our marketing efforts to cannabis,” Harris says. “Spring Big 2.0 was born in January of ‘17. We had two cannabis customers. I fast forward to today, we have over 1,500 clients. We’re probably installed in close to 3,000 locations.”

Balancing Optionality & Functionality

Building on the company’s founders’ loyalty background, springbig markets itself as a customer relations and loyalty platform for cannabis retailers. “We’re as much a communications platform as we are a loyalty platform,” Harris says. “We leverage loyalty to get consumers to raise [their] hand and say, ‘Yes, I wanna be part of the [loyalty] game,’ but once [they are a] part of the game, the [loyalty] points are a piece of it.”

Beyond simply tracking customer purchases and rewarding them with store-specific credits, the CRM platform can allow retailers to segment store visitors by various metrics, and target those customers in relevant marketing campaigns (via email, text message, or push notification).

“The ability to connect the dots of what a customer is buying and then leverage that data to most effectively communicate with a customer to get them to act again, which is visit the store, go online, make a purchase, is something that our software does very well.”

springbig has integrations with more than 20 POS software providers and counting, and Harris is clear that the company has no intention of expanding the platform into that market. “We’re not looking to get into the e-commerce business or into the POS business,” he says. “We’re looking to provide retailers with an elevated loyalty module, elevated loyalty technology that they could really leverage to drive more business for themselves…”

The company operates in both the United States and Canada. Given the wide geographic–and regulatory–ground it covers, springbig does not have dedicated compliance features. ”We do make sure that we caveat to the customer that we don’t want to be your legal expert on what is allowed and what isn’t allowed,” Harris notes.

“I think our secret sauce is dumbing down the complex, but providing a lot of options for the client to really leverage the tool to get the right message to the right customer at the right time,” he says.

ROI

Another feature Harris touts is the ability for retailers to see the return on investment of their in-app marketing campaigns, including how many people came to the store off a given campaign, how much they spent, and how much the retailer spent to acquire that customer purchase.

Calculating a retailer’s ROI for their use of springbig as a whole greatly depends on the features and functionality to which they subscribe. Monthly subscriptions for springbig core software ranges from $400 to $3,000, and subscription to its messaging services can run up to $10,000 per month, depending on the frequency and amount of messages sent to customers.

The company also has a $950 set-up fee, which can be reduced to $250 for qualifying social equity applicants. There’s also an additional location fee (~$100 per additional retail location, on average, Harris says), and springbig subscribers sign annual contracts. While retailers can upgrade services at any point during their contract term, paring back features (and subscription costs) can only be negotiated at the contract renewal date, Harris says.

springbig’s Market Outlook

springbig’s entry into the public markets came at a time when capital markets are drying up and cannabis markets are maturing, meaning fewer new businesses are launching. “There’s less green as compared to the year before or a couple of years ago,” Harris says.

“So there’s more fighting for existing customers than there was before. Growth is definitely gonna slow down a little bit because the denominator is not growing as fast as it was in the past.”

Despite the headwinds, Harris says springbig continues to add roughly 90 clients per quarter to the platform. “I think a lot of us from a software standpoint are waiting for the bigger states like New York, New Jersey, and Connecticut to really get going with their adult-use program,” the CEO says. Capital market conditions are likely to slow down those markets’ rollouts, he says, and continue to impact licensees and ancillary businesses alike and force them to make tough decisions, in some cases.

Retailers and wholesalers today are going to “really need to be selective,” Harris says, “and they need to really be thinking about what’s gonna be the most important investment or the most profitable investment that they can make to drive the objectives that they’re looking for.”