Retailers: Is your Point of Sale system generating revenue?

Some of you may be aware that I’ve spent a fair amount of time in the point-of-sale (POS) software world.

If you aren’t, here’s the 15 second summary: Between 1998 and 2005, I bought, grew 12x and sold a vertical marketing point of sale software company targeted at professional photography studios. Now you have a little context for the rest of this post:)

A lot of the consulting I do seems to come as a result of or at least an offshoot of that experience. Retailers, service businesses, software companies that doing point of sale, or needing information from their POS that they can’t get now, or just looking for things they are no longer able to recognize because they’re too close to their business (forest vs. trees).

Yesterday I was talking with a friend who has a similar point of sale programming background and we were discussing a mutual, er, acquaintance (a company) that sells POS software, and that company’s future as they change markets and in fact, appear to be on the cusp of completely changing the type of customers they serve.

During the discussion, my friend asked if I thought the point of sale software market was saturated and the opportunity mostly gone. I told him this:

POS systems have always been marketed as a tool, or a cash register replacement, never as an revenue generating asset (among other things). Lots of opportunity when you look at it in that light.

My friend knew of what I was talking about because he’s done some of it, but he didn’t know specifically what I was referring to, so he asked me how I thought a POS can generate revenue, in addition to the traditional tasks of trimming expenses, controlling loss, optimizing inventory ( via stock management / open to buy ) and of course, replacing a cash register or cigar box.

So I thought you folks might want the list as well, so here it is.

What your point of sale (POS) system should, could be doing to generate revenue for you:

  • It can/should know more about the clients and their purchases than even the most attentive owner/clerk. It should know that Mary buys the 2.7 ounce can of Tetra SuperFish once a month and gets the charcoal TurboFilter replacement cartridge every 2 weeks, and that she is a member of the RetailFishFreaks buying club, which earns her points (if she has a paper punched loyalty card, the POS doesn’t know this). As such, it should know to prompt your sales staff to ask her if she needs a TurboFilter the next time she comes in and rings up TetraSuperFish. In fact, it could even put the script on the screen for your staff: “Mary, did you want to pick up your TurboFilter while you’re here? It might save you a trip.”
  • It can track and report information that it has gathered to predict or promote sales, not unlike all those emails you get from Amazon saying “people who bought <what you bought> also tend to like <some other thing>”.  If you bought Santana, you might like Stevie Ray Vaughn. Or “Our customers who buy <this high end product> quite often find that this <cleaning kit> really helps them get the most out of <the item> and helps it last a long time.”
  • It can keep track of the items people bought and when service is needed, it can produce a report, or an email, or a postcard (etc) to remind your sales team and/or the client about these services. “Your mower hasn’t been in for an oil change since last November. Mowers need a fresh dose of oil in their tummy every year to prevent corrosion from the moisture and fuel-based corrosives that accumulate during use. In addition, your air filter should be re-oiled annually to clean the gunk out of it and allow your mower to breathe fresh, clean air. Did you know that if you were a member of our DoItForYou Club (only $39 a month), we will pick your mower up, change the oil, clean the filter, winterize it and store it in our warehouse till you tell us you want it back. Before we bring it back to your home, we’ll replace the spark plug, fill it with fresh fuel and make sure it starts. No matter what, please take care of these maintenance items so that you get the best out of your investment in the mower you bought from us. The next time you buy a mower, we want you to remember that the last one you bought from us lasted a good long time and gave you a great mow.” And so on…
  • It should be able to produce a report to your sales team for customer care. Doing the same types of things as above with the mower or with Mary’s fish tank gives them warm leads. Obviously this would be for higher end items, but those client relationships (and the associated items purchased) need more care anyhow. Now you have an automated “nag system” in place to remind you and your staff to make these things happen.
  • It should know how long it has been since Mary was last in the store. If the average time between her visits is exceeded (or is about to), promotions can be generated (email, postcard, labels, or just a call list) to “save her”. It can motivate her to come back with a promo, or simply remind her (people are busy, you know) that she hasn’t replaced her filter in 92 days<g> and you’d be happy to charge her credit card and put the filter in the mail, unless she wants to pick it up. And of course, remind her that you can put her on your filter by mail plan so she never forgets to change it.
  • It should know that Lynn drops off 3 pantsuits a week for dry cleaning, and that she wants them delivered to her office. If Lynn doesn’t drop off 3 pantsuits this week by the usual day, it should remind you to contact her and see if she needs pickup service (remember, you don’t want to lose her business).
  • It should know that I buy coffee beans (or drip grind, or whatever) by the pound, and which type I buy. It should prompt your counter staff to ask me if I know about your Coffee-By-Mail program (because it knows I’m not a member) and remind the staff to hand you a brochure about it (and remind someone to mail one to your home) so you never run out of your good coffee and force me to buy some crappy coffee from the grocery store, which breaks the habit of buying your good coffee.

And so on.

Is your point of sale doing more than replacing a cigar box or a cash register? It should be.