A point-of-sale, or POS, system is a common component to brick-and-mortar businesses. They’ve replaced the old-school cash register with a more sophisticated, tech-forward approach to the checkout process. As a result, today’s businesses get to take advantage of a number of benefits of POS systems, including greater efficiency, increased sales, and happier customers.
Let’s take a look at 10 key POS benefits:
1. Provide Faster Service
The biggest pain point for more than 70% of consumers is the checkout experience. A POS system has technology that speeds up the checkout process, in turn shortening lines and increasing sales and customer satisfaction.
Red Hook Winery uses ShopKeep by Lightspeed POS to speed up the checkout process and enhance the customer experience. “It really streamlines our checkout procedure and allows us more time with the customer to talk about the wines, which is really what we’re here for,” said owners Mark and Sandra.
Plus, modern POS options offer a multitude of checkout experiences—including curbside pickup options, mobile POS solutions so associates can make sales right on the floor, and easier returns and refunds.
2. Process More Payment Types
As commerce continues to evolve, consumers also have more choices in how they pay for goods and services. In addition to cash and credit or debit card transactions, today’s POS systems can accommodate mobile payments, contactless payments, saved payment information, layaway options, payment plans, buy online and pick up in-store (BOPIS), and gift cards. A POS can also handle your customer loyalty and rewards programs, so customers can “pay” for items with their earned points.
Nearly 40% of American consumers were using mobile wallets by 2017, a number expected to climb to 56% in 2020. Business Insider forecasts $503 billion in sales via mobile payment this year alone. BOPIS is also on the rise, growing by 43% from 2015 to 2017. According to one survey, BOPIS accounts for up to 30% of total online revenue for 29% of businesses. In other words, being able to accept mobile and online payments is critical for growing your brick and mortar business.
Aloompa, a company that sells merchandise at concerts and events, started using Square POS so customers could pre-purchase and pay for merchandise and then skip the lines to pick up their products. “Square helps us streamline transactions so that we continue to be successful in improving the fan experience via our mobile offering,” said co-founder Drew Burchfield.
3. Boost Sales With Reporting and Analytics
While you can track analytics manually using spreadsheets and shared drives, it can quickly become cumbersome and tedious—taking you away from more important business matters. With a POS, most of that tracking is automatically done for you, so you can spend time on more impactful tasks like helping customers and merchandising your sales floor.
Consider tracking these metrics with your POS:
- Average Transaction Value (ATV): The typical amount a customer spends when they shop with you
- Items Per Purchase: How many products they buy on average; items per purchase, also sometimes called units per transaction (UPT), measures the average number of products sold during a customer transaction in a specific time period.
- Sell-through Rate: The percentage of an individual product sold during a certain time frame
- Sales Per Square Foot: The average revenue your store brings in for every foot of sales space
- Conversion Rate: Compares the number of people who enter your store or visit your website with the number of people who make a purchase
- Cart Abandon Rate: The percentage of online shoppers who place items in their shopping cart but leave the site before purchasing, essentially abandoning their virtual cart
- Gross Margin: The percentage of store or product revenue that is profit
- Sales Per Category: The total sales a retailer has for each type of product
- Sales Per Employee: How much revenue each staff member is bringing in
- Customer Retention Rate: A retailer’s ability to hold on to current customers and keep them coming back
To learn more about retail KPIs and how to use them, check out our guide: How to Use Retail Data Analytics to Drive Sales.
4. Automate Inventory Tracking
Retail automation is a great way to run your business more efficiently and accurately. If you choose the right POS, you can automate inventory management and tracking. This takes some of the busy work out of staying on top of stock levels, as well as mitigates costly issues like stockouts or excessive dead stock.
With a POS, you can automate inventory counting, low-stock alerts, reordering, and purchase order generation, among other things. Some POS systems will also offer advanced features, like predictive analytics and vendor management.
As your retail business grows over time, these POS benefits become increasingly valuable. You’ll have more inventory to manage, and it will become more unwieldy to do so manually. With a POS, you can increase your capacity for inventory.
That’s exactly what happened for LUC Design when it integrated a POS into its business. The home, art, and fashion retailer originally managed inventory by hand, but knew its move into a bigger retail space would require a more sophisticated system. The company started using Vend POS and was able to successfully manage four times more inventory.
5. Track Data Across Multiple Channels and Outlets
The days of single-channel commerce are long gone. In the US, consumers purchase from retail locations, online stores, Amazon, eBay, Instagram, Snapchat, and Facebook, to name a few. Even traditional brick-and-mortars are adopting these avenues.
While new channels expose your retail business to new customers and growth opportunities, expanding also brings a number of new logistical challenges. A POS can help address these. By connecting your POS to all your selling channels, you can sync the data in real time, making it easier to manage inventory, customer, and sales data from anywhere in a centralized location. This is important because business decisions need to be made with real information, not inaccurate data.
6. Store Data Securely
One of the benefits of POS systems is the amount of data it can handle. But as technology and data management continues to advance, so do cyber-attacks.
According to one PwC survey, 35% of customer records and 30% of employee records were compromised in 2017, and 29% of survey respondents suffered from some sort of internal data loss or damage. Interestingly, employees are still the top source for these compromises in data protection. With a POS, you can set user accounts with different permission levels to mitigate these risks.
POS systems also have added protections, including encrypted payments and stored payment information.
Learn more: POS Security Best Practices
7. Create Highly-Targeted Marketing Campaigns
With all that data, you can start to build more targeted campaigns to reach potential customers with personalized messaging and promotions. In 2018, more than half of marketing leaders increased personalization spend—yet it remains a top challenge. A POS makes these personalization efforts easier and more effective. However, the majority of marketers struggle to scale their personalization efforts.
Many POS systems have built-in marketing tools or the ability to add marketing apps and features. These might include email, social media, SMS, and other channels.
8. Measure Employee Performance
Retail has one of the highest turnover rates of any business at 81%. This turnover rate is costly and takes time away from other parts of the business, as your team has to focus on recruiting and onboarding in addition to employee development and retention.
This is why another one of the benefits of POS systems, the ability to get employee-specific information as it pertains to their job performance, is so important. Your POS can be the clock-in/clock-out station, so you can see who’s working and when—and who’s consistently tardy or absent. Other features include commission tracking and goal-setting.
You can often pull reports and review the metrics with staff and managers, using it as a way to motivate, engage, and develop your team. Plus, you can easily recognize and reward top performers.
9. Streamline Accounting
Business accounting is a critical but tedious task many retailers struggle with. More than a quarter of small businesses don’t even have separate business accounts.
Luckily, a benefit of having a POS is that it makes your accounting processes a lot easier and more accurate. It connects with your accounting systems to share and sync data, so your numbers are accurate across platforms at any time.
Some of those metrics might include:
- Labor details
- Profit and loss (P&L) statement
- Daily reconciliations
- Economic Order Quantity (EOQ)
In addition to connecting with traditional accounting software, many POS systems, like Square, offer payroll services to handle the financial element of your business in just a few clicks.
10. Manage Your Business From Anywhere
A cloud-based POS allows business owners to manage their businesses from virtually anywhere. Web-based dashboards, mobile apps, and email or SMS notifications allow business owners and managers to stay on top of the business wherever they are.
And when data is synced in real time, you can check-in at any time to see what’s currently going on, and make important decisions or changes as needed.
This is one of the reasons Sargent Steam has benefited from using Lightspeed POS. It used to use a POS that was tethered to a physical server, so the entire team had to work on-site. The company migrated to Lightspeed’s cloud-based platform, and it allowed them to run both the retail and the ecommerce sides of the business from a single system—anywhere, anytime.
“With Lightspeed, you get to give customers an omnichannel choice of how to shop with you without hours of extra work on your end,” said CEO Julie Verrinder. “Our business model has evolved about four times in the last 27 years, and we’re very pleased to have support from Lightspeed for the next phase.”
Bottom Line: 10 Benefits of a POS System
POS systems have advanced rapidly over recent years. Businesses get a number of POS benefits, including:
- Provide faster services
- Process more payment types
- Boost sales with reporting and analytics
- Automate inventory tracking
- Track data across multiple channels
- Store data securely
- Create highly targeted marketing campaigns
- Measure employee performance
- Streamline accounting
- Manage your business from anywhere
The best POS systems act as a virtual command center for your entire business, integrating with your tech stack to sync with all areas of the business. Read our guide on the best POS systems for small businesses to find one that best fits your business.