Using a POS system to help process payments and manage your business can take some of the pressure off of your shoulders and make the job that much easier. With many tools available to help you manage inventory, marketing efforts, and even your staff, POS systems are a crucial part of the modern business. Here are five lessons your POS system can teach you about your business.
1. What Your Customers are Buying…and What They’re Not
POS systems contain sales tracking tools as well as the ability to create customer profiles, giving you a clear picture not only of the products your customers prefer, but also the effect certain items have on your sales numbers.
A clearer picture of what items are actually selling in your store can help you redirect your marketing efforts and other resources to further the success of those items. You’ll know which customers purchase which items, so you can customize your promotional materials and emails to encourage greater response from your customer base.
Looking at your sales numbers is about much more than learning how much profit you’ve made over the last month or year. In fact, a detailed sales report can give you plenty of information about your customers, your products, and how you’re running your business.
Pay close attention to growth in specific sectors. If you’re a department store, and your cosmetics section has begun skyrocketing over a few weeks, allocate some resources to that section of the store to maintain and advance that growth.
From a detailed report, you can also see which items are not selling. Maybe an item you thought would be a bestseller turns out to be dead stock. In this case, you’ll be able to remove or replace those items that aren’t selling and remove dead stock from your shelves.
2. How Well Your Promotions are Reaching Customers
It can be difficult to figure out just how many customers are reached by your ad or promotional campaigns, short of asking everyone who comes through the door if they saw your ads. Luckily, you can leverage your POS system to figure out just how well your marketing efforts are doing.
POS systems will save a record of each sale, in which you’ll also find the customer’s method of payment, as well as any promotional codes or coupons/discounts they used for their purchase. You can also view a sales report to see if your marketed items had a spike in sales during the promotional period.
By tracking individual purchases, you’ll know which promotions have the most impact and drive foot traffic to your store. This is vital to a better understanding of how your promotional efforts reach your customers. The better you understand this, the better you can market your brand.
You can also provide your customers with a short survey at the time of purchase to learn whether or not they were responding to an ad campaign, or if they came into the store of their own accord.
3. Where Your Inventory System is Lacking and What it’s Costing You
Inventory should not be underestimated as a potential expense of your business. Incorrect counts, a badly managed system or outdated software, or even vendors intentionally providing incorrect amounts to save themselves money can all negatively affect your inventory.
Overstocking causes dead stock, which turns no profit but simply gathers dust on a shelf or in a storeroom. Ordering the proper amount of stock can be tricky, but once again, the POS system can help. Not only will it help monitor inventory in real time, but will provide notifications when stock runs low.
Additionally, those all-important sales reports can help you plan for busy seasons and allow you a better estimate of how much inventory you need to order. If you’ve got dead stock sitting on your shelf not moving, it’s costing your business money. Use your POS system to make more informed choices when ordering your inventory.
4. What Your Employees are Doing and How They’re Performing
Many POS systems are also clock-in terminals for employees, so you can track their time punches and learn which ones are punctual and which are…not so much. Additionally, when logged into the terminal, you can see which employees are making which transactions; allowing you to track and manage sales goals.
A good workforce is a crucial component of any successful business. If your employees are constantly tardy, not meeting sales goals, or simply not performing at their best, your POS system can help identify these issues and encourage you to make necessary changes to get them back on track.
5. Gross Profit Margin
Sales reports from your POS system can reveal one very important metric: your gross profit margin. This is defined as how much is left over once you deduct the cost of the goods you’ve sold from your total profits. It’s also referred to as your gross profit ratio and is usually expressed as a percentage.
From here, you can learn just how much it’s costing your business to acquire and sell your inventory, helping you make decisions such as changing suppliers or raising/lowering prices. You might find that your supplier is charging far more than their competition to deliver inventory to you.
Gross profit margin also lets you know an estimate of how much money you’ll have to reinvest to the business. Once you know how much you’re working with, you’ll be able to decide exactly what you want to allocate those funds to.
Conclusion: A POS system is so much more than a payment processing tool, helping you manage inventory and track sales for increased awareness and profits for your business. If you haven’t updated your POS system, now is the time to do so!
