Points Of Surprise!


Image: Bro Vector / Adobe Stock

Last year, I wrote an article singing the praises of what a Point-Of-Sale (POS) system can do to elevate a business’s profits (“Point-Of-Sale Systems: They Got The Name Wrong!” April 2022). 

I renamed the POS system a “Profit Optimization System” and dove into many facets of how the data it collects can make operating a store not only more efficient, but more profitable.

Since then, I’ve had numerous retailers approach me asking, “Going beyond the basic functionality of a POS, what else can the data tell me?” Glad you asked. Let’s go beyond the basics and look at other ways data can help any store make better decisions in an unclear and difficult market economy.

Ever considered sales data could help decide the marketing budget? Well, it most certainly can!

POS & Payroll

How about we start with likely the second largest expense behind inventory — payroll. You might ask, “How does a POS system help me with payroll?”

If you have been in business for even a short period of time, using monthly selling data along with employee productivity reports can help optimize the staffing schedule. Let’s get into our data and see how.

First, it’s critical we use historical data to give us a realistic estimation of how many sales we plan on having in the upcoming month. If we look at the same month in the prior year(s) we can use this as an estimate for the upcoming month’s sales volume.

Adjust to current market conditions — be it up or down — and you now have a fairly accurate estimate of how much business you plan to deliver on for the next 30 or so days. Now take the sales team data and look at the average sales per hour per salesperson. If we plan to deliver $80,000 in sales for the next 30 days and our average sales per hour have been around $200, then we simply divide $80,000 by $200 to see if we will need coverage for 400 hours of sales coverage for this period. 

We can dive even further and look at which days of the week see the most sales to schedule even more accurately. Based on our example, with 400 sales hours over 30 days, it means we need roughly two salespeople, on average, on the sales floor to cover these goals. If, however, we see that Monday through Wednesday are the slowest days and Saturday and Sunday are the busiest, we might only need to schedule one salesperson for the Monday through Wednesday time frame and have three salespeople on Saturday and Sunday.

It’s all too easy to just boilerplate the staffing schedule and later find yourself spending extra cash on payroll — only to have staff standing around doing nothing. Or worse yet, be understaffed and lose out on sales because the customer load cannot be accommodated.

POS & Marketing

Let’s take a sharp turn and look at another facet of how data can impact your business in unexpected ways. Ever considered sales data could help decide the marketing budget? Well, it most certainly can!

It’s often good to set a genuine marketing budget for your store. Many stores simply come up with some random amount of money they feel they’re willing to spend on advertising their store.

What if instead, you let sales volume dictate the marketing budget? It’s highly recommended a retailer set up a “percent of sales” they’re willing to spend on marketing and advertising.

Whether it’s 1%, 4%, 8% or whatever you feel the business can afford, use sales figures to dictate the budget. Say for example, the business generates $1,000,000 in sales annually and a 2% budget is set. This means there would be an annual budget of $20,000 for marketing. The trick here is as business improves, so will the marketing budget, and if those funds are being used effectively it will accelerate sales just like compounding interest boosts a bank account.

Bonus tip: Sales data can also be used to aggregate “sales by manufacturer” to chase down co-op marketing funds. Many, if not most, manufacturers will give extra marketing dollars to spend based on a percentage of sales you have generated within their brand. 

Use these funds to offset your marketing spend, and consequently, keep more profits. Better yet, use them to create additional marketing opportunities to supercharge those marketing efforts.

The data generated by a robust POS system can provide immensely valuable insights to help optimize any store.

POS & “Shrink”

For the last glimpse into alternative ways to use POS data to benefit our stores, let’s look at an under-utilized facet of data that can help us visualize a very unpleasant aspect of every business: theft (sometimes called “shrink”).

By regularly checking the in-house inventory position and comparing it to what the POS system says we should have on hand, it can help us see patterns of loss in our business. When we ultimately get a variance report from an inventory audit, we can look for patterns in the data.

Do we see missing items all coming from the same location in the store? This might be a strong indicator we need a security camera in this area or to at least consider shifting around the locations of product displays to minimize these theft zones. If on the other hand, the missing items are mostly high-end items, maybe we have an employee theft issue.

Even more innocently, if we see the missing inventory list indicates a lot of ammunition is leaving the store unaccounted for it might be something as simple as employees are using “free ammo” as a negotiation tool to sweeten a deal for a customer but not logging it out correctly. These are all issues that would need to be addressed to optimize your business, establish expectations or highlight staffing issues.

POS & Value

All in all, the data generated by a robust POS system can provide immensely valuable insights to help optimize any store, retain more profits and ultimately grant you far more control of the destiny of your business. The key here is to regularly use the data already being collected to its best effect and get the maximum value out of your POS system!

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