This is a post by Alexandra Sheehan.
A retailer’s point-of-sale (POS) system is more than just a tool with which to process transactions. Technology has advanced greatly since the original cash till, and with today’s POS options, retailers have access to more data than ever before.
While many retailers are collecting data, it’s those who are actually DOING something with the insights from those metrics that are jumping ahead of the competition. Below, we’ll examine the importance of this data and which key metrics you can use to improve your retail business.
The importance of your POS data
Why would you want to leverage the data from your POS?
Let’s start with the fact that omnichannel, once an industry buzzword, is here to stay. Brands weren’t initially able to wrap their head around what omnichannel is, let alone how to execute an omnichannel strategy successfully. But the tides have changed.
More merchants have caught onto the importance of creating and maintaining a consistent customer experience, online AND offline. And in order to do that, you need to collect and analyze data across different channels.
Fortunately, today’s technology makes this entirely doable.
Shops which are using their POS data to bridge the gap between what’s happening online and in person are already giving themselves a competitive advantage. The best part? You don’t have to be a data scientist to take advantage of retail insights. You can use the templatized reportsthat many POS systems offer out-of-the-box.
At the end of the day, any time you can make data-backed decisions in your business, you’re putting yourself in a position to have a greater chance at succeeding.
And by paying attention to these metrics and insights, you’ll be able to iimprove the customer experience. More than 60% of survey respondents said the biggest benefit of omnichannel is the ability to provide better customer service. And we all know that better customer service = more customer satisfaction and loyalty = more sales.
3 ways to use POS data in your retail business
Now that we’ve established the benefits of collecting data, let’s talk about how you can use the information and infights you glean from your POS.
Optimize your inventory and stock levels
Consider this: Almost half of small businesses either don’t track inventory or use a manual method, per Wasp Barcode’s State of Small Business Report. That means a lot can go wrong, or even missing. In 2017 alone, shrink cost retailers nearly $100 billion globally, per Tyco Retail Solutions’s 2018 Sensormatic® Global Shrink Index.
With the right POS data, your business doesn’t have to be part of that statistic.
Most modern POS systems enable you to conduct the following actions to help you manage for stock. They include:
- Inventory counts
- Check stock levels at different stores
- Transfer stock
- Manage returns, etc.
- Automated reorder points
When you use your POS to help you stay on top of stock levels, it’s easier to track items every step of the way — from product ordering through the point of sale (and even returns). This helps you make better forecasting, purchasing, and even marketing and advertising decisions.
Most importantly, the POS data you receive will help you ensure that your stock levels are optimized. Automated reorder points, stock transfers, inventory counts and other key features enable you to always have the right products at the right time.
Gain product and customer insights
Your POS data can provide you with plenty of product-specific insights:
- Product affinity (which items are frequently bought together): Use this information when bundling products and recommending related products at checkout.
- Order history: Learn what specific customers like, then make smart recommendations for future purchases and retargeting campaigns. 64% of consumers want personalized offers from retail brands, according to Salesforce’s 2016 State of the Connected Consumer Report.
- Sales by product: Identify sales trends by product (or category) and dig deeper into those trends to find out the WHY.
- Refunds, returns and exchanges: Find out which items are being returned, what customers are buying instead, and even who’s a serial returner.
Dishthefish in Singapore sells fish to their customers, and owner Jeffrey Tan used Vend POS to learn about which products were selling the fastest. He was surprised to see the data, which proved his hypothesis wrong. He was then able to adjust purchasing and forecasting to more accurately meet demand.
The data from the POS has also informed Tan about product affinity — in other words, which products are frequently purchased together. This enabled him and his team to make more relevant recommendations to customers, and help increase average order value (AOV).
Many POS systems will also create customer profiles. As Big Data has fueled a shift to attribution level, or 1:1 marketing, the data from your POS supports and even fuels this approach.
This excerpt from Forbes’s Data-Driven Retail: Extracting Value From Customer Data provides a great explanation: “A single customer view is a way to bring everything that is known about a customer into one manageable place, unifying it into a ‘golden record,’ or single source of verified information, linked to a known physical or digital address for each customer. That record can then inform manual and automated decisions, such as those around intelligence-based marketing, planning and expansion strategies, and cross-channel campaigns.”
Misha Kaura, who owns her own fashion label MISHA KAURA and frequently uses pop-up shops to make in-person connections with her customers, finds great value in the data from her POS system. She uses it to inform her designs and even color options for various products.
“I look at search terms and number of units sold to help inform the merchandising and design processes,” Kaura says. “I’ve changed some designs so that they can continue to be bestsellers and either adapted several or eliminated a few to better fit the merchandising strategy.”
Make staffing decisions
One straightforward way to use your POS data to learn about employee performance.
This can help you understand who’s doing well, who deserves recognition or even a promotion, and who could use some extra training or motivation. Those top performers often make great trainers for new employees.
Remember to consider more than just total sales. Consider basket size — both in terms of price and number of items — to see who’s proactively making an effort to cross-promote and upsell customers on your products.
This staff-specific data can also inform staffing decisions. Anticipating extra foot traffic for an upcoming busy season or campaign? Schedule your best employees. Noticing trends for busy days or even times? Again, get your top performers on the roster.
But you can dig deeper into your POS data, beyond simply sales. You can look at time periods when you generate a lot or minimal sales and consider your staff to sales ratio. Do you have enough people on the floor to help all of your customers at any given time? It’s important to stay on top of this, especially considering that 6% of all possible sales are lost because of lack of service, according to one MIT Sloan study.
Want more information on critical metrics? Download Vend’s Retail KPIs guide, a resource that gives you a deep look at the numbers you should be tracking in your business.
Download the guide and you will:
- Learn which metrics can help you make smarter forecasts and decisions
- Discover the formulas that’ll help you identify your KPIs so you can start measuring your way to the top
- Wise up on the metrics that you need to track, and know exactly when and how to measure them
Moving forward with your POS data
We’ll wrap up with another quote from Forbes: “There’s little value in collecting data if it’s not used to generate new insights and drive decisions. Targeting and personalization efforts both require interrogation of data to understand where and how resources should be directed.”
Many retailers have realized the value of data at this point. Now it’s time to understand how to use that data most effectively, applying insights to your strategic decision-making processes in your business.
But the data output is only as good as the input. That’s why it’s so important to find the right POS system that can capture accurate data and generate reports and insights that will help you make an impact on your business.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.