A Deep Dive into Point of Sale Data Analysis & How it Can Help Your Business.
Reporting tools are a crucial touchpoint of any business. That might seem like a bold claim to begin this article with but hear us out—good reporting tools (analytics, data, statistics, metrics, etc., whatever you choose to call them) are what drives good point of sale systems and good inventory systems.
Without up-to-date, accurate, and consistent information acting as the driving force behind your point of sale system, your business won’t be able to make informed decisions based on data—instead, you’ll be forced to play guessing games in an effort to manually identify trends. And, when compared to the strategy of making decisions based on solid data, you’re often left in the dust trying to capitalize on your business’ efficacy and proficiency.
This is where POS Data Analytics—otherwise referred to as point of sale analytics—comes into play.
In this article, we’re going to take a deep dive into helping you understand point of sale analytics, explain how making business decisions based on data and data collection is beneficial, and importantly, uncover how point of sale analytics can help you make greater strides in your business’ growth than ever.
What Is Point of Sale Analytics? How About Data Collection?
To begin, let’s start with a basic definition of a point of sale system—just in case you’re not quite sure what that is in the first place.
A POS system is a structure that’s made up of both hardware and software and is designed to incorporate these two tools to work seamlessly together in order to streamline day-to-day operations, better manage your business, and provide you with accurate reports.
That last part we mentioned—providing you with accurate reports—is mostly what we’re going to focus on today. Your POS system should be able to offer you tailored features that harvest data and then report that data back to you in order to help you make better, more informed business decisions based on that data.
Ideally, a POS system should do more for you than just take payments from your customers, they can also help you leverage data that’s available from your integrated POS system, in other words, your point of sale analytics.
This happens through a process called data collection—sometimes called passive data collection because your customer isn’t required to take a specific action, all your data is being collected by your POS system.
Passive data collection can include a myriad of factors, but some of the common points look at information about repeat sales, purchased merchandise, geographic location, demographic data, and even record the time of certain sales. This type of data collection is used to help you make better decisions by creating a prediction of user preferences that are rooted in your historic profile of interactions. In other words, this passive data collection curates a review of useful information to help you understand your customers better so you can make better choices to serve them more effectively.
Alternatively, active data collection means that a customer must take a specific action either in your brick and mortar stores or on your website in order to provide you with more information—while this is a less common type of data collection in terms of POS systems, your active data collection information can certainly be stored in your robust POS system.
How Do Point of Sale Systems Collect Data & Provide Analytics?
To answer this question effectively, it’s important to first acknowledge that every point of sale system is different, which means that each type of system will likely collect data, as well as combine it for analytical purposes, in different ways. That being said, though, many POS systems collect their analytics in similar fashions.
Ultimately, if you’ve invested in a sophisticated enough POS system, every single time you use it —for any action—you should be accessing and creating a multitude of data points. These data points exist in regard to your customers, their buying habits, the market that you serve, about your own capabilities as a store chain or eCommerce and Click&Collect sites.
Typically, point of sale data will be collected on both a micro and a macro scale—this includes any checkout from a single customer or multichannel eCommerce trends. That means that data analytics comes from a handheld POS hardware or a QR scanner on an app as well as a cohesive conglomerate of data from a shopping mall or city-wide data.
The point here? Data analytics is sweeping and broad but can also be pared down to help you make better business decisions—and much of that efficiency is going to be based on the choices you make for your own POS system.
Why is Data Analytics So Important for Businesses?
Without exaggeration, data analytics and POS data aren’t just important, they’re absolutely essential and critical for your business’ success and survival. Consider point of sale analytics and data collection as the foundation for your business—this is the point at which your data collection starts, all else will build upon this as you interact with your customers.
Data analytics allows you to do a few key things:
- POS analytics allows you to provide your customers with what they want. When you collect data and analyze it, you’ll be able to make better choices about what to provide your customer with—because ultimately, you’re reading and analyzing real data that shows you the trends of their decisions, their purchases, their wants, and their needs.
- POS analytics ensures that you’re running your inventory management program as effectively as possible. If your POS system stores and reports data about your inventory, you’ll be able to have a better idea of what you’re selling, what you’re storing, and what isn’t moving. That collection and analysis of data can allow you to effectively store, maintain, and manage your inventory as well as keep a keen eye on customer trends.
- POS analytics often go hand-in-hand with marketing data, one of the most important aspects of running a successful business. Marketing data is crucial information that teaches you how to run successful promotions and explains what you’re doing right and wrong.
- POS analytics provides you with exceptionally relevant information on your most valuable asset—your customers. Every time you make a sale, your POS system should record the information about the customer who purchased from you—that helps to build up a background about that customer (and customers like them) to help you create more effective sales strategies.
As a note, it’s not incredibly crucial for small business owners, single-shop retailers, and online stores to have the most sophisticated POS systems of all, but it is crucial to choose a POS system that collects, stores, and analyzes data to help you make better business decisions. Whether you choose a terminal POS, a Cloud-based POS system, or a mobile POS system, we highly advise that you seek out a platform that passively and actively collects crucial data, then provides you with thorough reports to help you better run your business, understand your target market, and serve your customers better than ever.