Ins and Outs of Point of Sale Analytics and Data Analysis
There’s an innocuous machine (a chain of several, perhaps) that quietly collects data about your customers; data that customers willingly give up.
Over time, this data becomes a treasure trove of information, and when analyzed, can reveal volumes about your business, its customers, inventory, staff, and more. That machine is your point of sale (POS) system.
When customers dine out or purchase services, online or offline, they pay in either cash, credit, or debit cards at a POS system. There are two types of POS systems: software- and hardware-based systems that are integrated with cash registers, and web-based services that are incorporated into e-commerce sites for online purchasing. Every time they do that, customers leave behind information about themselves, their payment method, the commodity or service purchased, the frequency, the time, and the month. It’s a long list.
Many merchants continue to view the POS as merely a machine used to charge customers at the time of checkout, and are unaware that, even today, this data is pure gold and can be analyzed to gain a granular understanding of the business they are in.
What is POS Analytics?
Analytics is critical for business in any industry. It’s the scientific approach to helping business owners understand what’s working and what isn’t, enabling them to make better-informed decisions to grow their business.
Point of sale analytics is the process of utilizing data from sales transactions to enhance your business operations. This data can be used to track trends, understand customer behavior, and make more informed decisions about marketing, product development, and operations.
The advantage here is that POS data provides real-time information, giving you insight into how customers shop and process transactions with your business.
The astute merchants among us have already begun using their POS data to make dramatic, positive changes in their business strategies, thereby increasing sales and fostering loyal customers.
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What is POS Data Specifically?
Sales data is information collected from a point-of-sale system. This data can include information on what was sold, when it was sold, and the quantity sold. POS system data provides information on product sales, customer purchases, and staff interactions with the products.
Point-of-sale systems store data about customers and their purchases. This data can include the customer’s name, contact information, and purchase history. POS systems can also track inventory levels and sales data.
This type of data is collected from a POS system’s scanners or bar code readers. This technology enables a POS software to determine what inventory to maintain and which products to stock in order to meet sales goals.
POS systems are capable of tracking this information based on the customer’s purchase.
By understanding the various types of POS data, businesses can learn how to optimize their operations for growth.
How can POS Analytics Help My Business?
Analytics of the data collected at the point of sale helps a business by showing the path to the most profitable strategies, including fast-selling products.
For example, point of sale analysis (POS data analysis) can show that a product’s sales volume has increased, but its profitability has decreased.
If a product is underperforming, POS data can indicate which stores are contributing to this issue.
POS analytics can also reveal sales trends. If store profitability has been decreasing and the number of hours spent per customer is increasing, then it’s likely that there is some factor causing the decrease in profitability.
A business can utilize POS data analytics to make informed decisions about its operations. For example, by knowing which products have decreased profitability and which have increased it, adjustments can be made to its operations.
Analytics of POS data can give insights into:
- Sales Volume
- Product Profitability
- Product Ranking
- Store Sales Trend
- Best Day of the Week
- Coupon and Promotion Frequency
- Product Selling Seasonality (e.g., peak/low sales)
In fact, POS companies like Lightspeed POS have begun to offer fully integrated retail POS systems for restaurants, e-commerce, and other applications, positioning them as “the technology for the future.” So, you don’t buy just a sales machine, but an entire omnichannel ecosystem, complete with analytics, for the next era of commerce.
Others, such as Toast POS, offer systems and analytics specifically for the hospitality
business. Its “restaurant-first” suite of tools and services includes not only the POS but also integration for online ordering, self-ordering kiosks, and take-outs.
What is Point of Sale (POS) Data Analysis For?
A POS (Point of Sale) data analysis is a type of analysis that examines the point of sale data for a business. This data can include information such as the number of sales, the average sale amount, and the types of products being sold.
If you can utilize this data to inform business decisions, it can significantly enhance the health of your business. For example, you might use the POS data to figure out which types of products are most profitable for your business and which ones are not.
Using POS data can also help you determine the best pricing strategies for your business. That way, you can maximize revenue and minimize loss.
As we mentioned earlier in this post, the majority of retailers capture and store a large amount of business-relevant data, but they often don’t know what to do with it.
Retailers can utilize POS data analysis to gain a precise understanding of consumer behavior and the impact of sales at every point of purchase.
6 Benefits of POS Sales Analytics
- Sales analytics is the practice of analyzing data to help sales teams improve their performance.
- The benefits of using sales analytics include identifying trends, optimizing resources, and improving close rates.
- Sales analytics provides insight into customer behavior, which will help salespeople make better decisions.
- Sales analytics is not just used by retail salespeople and companies in the consumer products industry. This tool can be used to improve any sales and marketing team.
- The goal of sales analytics is to enable salespeople to make informed decisions. This can be done by having more information about customers, sellers, and products. With more information, the sales team will have better tools to make informed decisions and provide personalized service.
- A sales analytics tool enables salespeople to generate more accurate reports, facilitating easier tracking of metrics and informed decision-making.
Here’s where it helps:
Inventory management
A POS analytics system makes it easy to keep track of your store’s inventory in real-time, so you can manage your stock more effectively.
With a POS system, when you receive new inventory, you can simply scan the items and enter the quantities. This saves a significant amount of time compared to manually tracking your inventory and reduces the likelihood of errors.
Vendors like Clover POS, for example, offer inventory control as part of their POS offering.
Better customer management
With a sales analytics tool, you will have better customer management and customer support.
Knowing how much each customer spends, their spending pattern, and the products they purchase will help you track customers more effectively.
By sending your customers promotions, you can encourage them to visit your store more often or build customer loyalty.
The system allows you to track each customer and offer targeted promotions based on their behavior.
Better promotion offers
With a POS system, you can utilize reports to create more effective promotions for your customers.
At a glance, you can understand what kind of products each customer buys and the cost of each item.
This will help you determine which products to include in the promotions and how much to charge for each item. You can even create promotions for “Christmas in July”, or any other holiday, to build brand loyalty and increase sales.
What Data is Absolutely Necessary?
There are a few key points of sales analytics that are necessary for any system. The first is sales data. This data is essential for understanding what products are selling, how much they are selling for, and which customers are buying them.
This information can be used to make decisions about inventory, pricing, and marketing. Another critical point of sale analytics is customer data.
Knowing what people are buying can help you determine which products to sell and which ones to avoid.
Tracking customer data can help maximize revenue, minimize loss, and increase profitability.
In addition to customer data, tracking customer spending habits is essential for understanding who is buying what and how much.
Customer spending habits can be used to optimize future marketing and promotional campaigns. There are a few other common points of sale analytics that are critical for maximizing revenue.
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What are the Advantages And Disadvantages of Such a Type of Analytics?
The advantages of POS analytics include its value in understanding specific product data and analyzing sales trends.
It can provide answers to questions like – “Why are we losing customers?” or “Why aren’t we selling more products?” or “Why do some customers buy more of our products than others?” Moreover, POS analytics can provide a clear picture of the relationship between promotions, pricing, and product sales.
The disadvantages of POS analytics include the fact that it only allows for continuous understanding and analysis, and not actual sales control.
A critical element of POS analytics is data enrichment, which refers to the process of using additional information to create a more accurate picture of a specific situation.
Using these additional data helps to solve difficult customer questions, manage marketing plans, and optimize business goals.
Sometimes, enriching data could allow mistakes to creep in.
Additionally, POS systems require software and hardware updates, which can prove costly in the long run. But updates are necessary to ensure the system does not become obsolete. Also, there is the standard apprehension of bugs creeping in.