Ask not what your POS can do, but what your POS can do for you. The challenge of choosing a POS system may be the first decision you have to make for your business, whether you’re a brick and mortar retailer, a restauranteur or an online ecommerce website. Features and benefits galore, there are some POS systems that are tailored for eateries, some for retail stores and some for multichannel online ecommerce websites, but it’s not so much about what your POS can do, it’s what data you get from your POS that can help you make business decisions.
Your great business idea may have been a stroke of genius, but to make it work, you’ll need data. You’ll need to make decisions based on solid data to make effective decisions that will help grow your business. A point-of-sale system can be much more than an effective way to take payments from your customers, but few business owners are leveraging the data that is available from an integrated POS. Globally, the POS software market is a growth industry, and while that does serve to highlight its importance it also leaves business owners with a lot of choices to make before deciding on an integrated solution.
There are essentially two ways in which data is collected from customers online. An example of the first would be a POS system. This is known as passive data collection where the customer is not required to take any specific action and data is collected by the POS. This could be anything from information about repeat sales, time of sale, merchandise purchased and even geographic location and demographic data. Passive data collection is used to help “predict user preferences based on an historic profile of interactions with a company or site.” Another example of passive data is the analytics provided about website usage, including most visited pages, time of visits, time to purchase and non-linear path to purchase. Even though the user/customer/client may not be taking any specific action on your website, think people who visit a restaurant website before making a reservation, for example, there is still a large amount of data available about users that can be quantified and acted upon to improve and implement growth strategies. Particularly relevant to ecommerce website owners looking to improve SEO/SEM results based on website data.
Active data collection means that a customer has had to take a specific action on the website to provide you with more information about them. This type of data collection can also be managed through a robust POS, depending on where the user is in the buying cycle. Good examples of this are registration forms as part of the purchase process. It’s important to note that there is not only a limit to how much information a customer will provide (there is a limit to how long people will spend answering a survey on your site) and the ever-increasing fears about privacy and security. While active data collection can give you a lot of data to help your business make informed decision, the process needs to be handled sensitively or run the risk of driving potential customers away from your site or store.
Every time you use your POS, you are accessing and creating multitudes of data points about your customer, about buying habits, about the market that you serve and about ecommerce capabilities and potential growth areas for your business. Each business will find different aspects of the data collected relevant to their specific business model but there are a few common data points that can be used by any type of business that is in business online. Understanding POS data is an important first step to take before learning how to use it.
Your point of sale data is data collected by a business when a transaction happens. On a micro scale this includes any checkout at a retail store, handheld POS hardware and even QR or barcode scanners from apps. On a macro scale data is collected from groups of retailers, like all ecommerce stores in a specific niche, shopping mall data, or even city-wide data. A cash register for example, is a micro level data gathering tool in the macro level that is your whole business – this is where multichannel ecommerce is so important and can provide so much more relevant data to help business growth. POS software within POS hardware is where the data magic really happens.
SMB Business Owner Tip: Smaller retailers and single online stores do not need to have the most sophisticated POS systems to get a lot of useful data. It’s more important to choose a POS system that works best for a) your type of business and b) your specific business needs. You’ll want to compare POS solutions that include:
Terminal POS: Hardware and software solutions that may include barcode scanners, cash registers and app scanners.
Cloud-Based POS: online POS systems, often used in conjunction with existing hardware like tablets or computers. Heavily utilized by online stores and ecommerce websites.
Mobile POS: normally used as payment processing systems, usually adopted by small business owners
The most important aspect with regards to data collection will be that you are able to access the data in a granular and easily readable format.
Not just important, it’s essential. It is literally the point at which your data collection starts and the foundation for any other data that you collect, whether passively, or as you increase engagement with your customers, actively.
There are many examples as to why POS can be a critical success factor for any business, the most significant of which is inventory management. To run a successful business, you need to know what you are selling. You can’t effectively manage inventory if you don’t know what customers are buying.
How can you provide your customers with what they want, if you don’t know what they want…?
So now you have your data, it’s not going to do any good, sitting in a report somewhere if you’re not going to do anything about it. Data is only effective if you’re using it. If you’re able to integrate your POS data with other ecommerce tools and strategies, including your website, you’re sitting on a gold mine of data that could mean that you’re sitting on a gold mine of success.
We’ve discussed just how important inventory data is to the smooth running of your business and in helping you make decisions about what products are popular or not and how to manage your inventory. For retail stores, POS data can provide information about increases or decreases in foot traffic through the store.
Marketing a promotion data can be tied to POS data to give you crucial information about successful promotions. Tying a marketing promotion to specific sales can give you a wealth of information about your promo specifics and how to improve them. For solely web-based ecommerce businesses, this is where data collected from A: B testing of different web pages, different offers and different conversion strategies is indispensable. If you’re setting up an online store, you must ensure that your platform (website, ecommerce solution) is able to handle effective A: B testing. It’s a must-do to get can-do data. Under marketing, naturally comes social media marketing and SEM (Search Engine Marketing) and PPC (Pay-Per-Click).
All this data when combined with your POS data will not only tell you what you’re doing right, but where you can improve and how you can maximize your profits while minimizing your marketing spend by making decisions about marketing promotions that are based on ideas rather than facts. Just because it’s a good idea, doesn’t mean it’s a good idea for your business.
Every time you make a sale, your POS system records information about your customer. Multiple sales to a single customer and you start creating an order history that provides additional data. Sales in a specific area – gives you data which can help with inventory management, specifically shipping. If you can engage your customers at point of sale and get them to sign up to your mailing list, you have additional data on how customers respond to marketing promotions even start getting loyalty card/app data to help you further.
POS data can even help you create personalized customer service strategies and marketing promotions for individual customers. It can also be used to help forecast future demand and sales. That trend line and effective extrapolation of your POS data can help you prepare for holiday sales. Demand forecasting has very real implications when it comes to inventory management. This case study published by Science Direct shows just how POS data can be leveraged to improve purchase and manufacture planning.
I Have the Data, What Do I Do?
It can be overwhelming to look at your POS data and not know where to start, but at the very minimum you need to look at three key insights to get started:
Sale Value: What products are selling and where you are selling most of them. The first is essential for every business and the second is vital for online stores.
Promotion Value: Are your promotions yielding sales? Makes sure that you’re set up for multichannel ecommerce on an integrated platform to get the best insights into the link between your promotional efforts and sales. Measuring the incremental effect of your promotions will help you develop new marketing ideas and manage inventory during promotion cycles.
Pricing Value: Optimized data about pricing can help you increase margins depending on POS data on specific items.
The obvious advantage of using data-driven insights is the risk, or rather the decreased risk of making errors that could be disastrous. Data never lies. It can’t be manipulated by emotion; it cannot be transformed or tell a story that you want to hear to make you feel better.
It’s the cold, hard truth, and it’s the very best way to guarantee success over hoping for the best.