The value of data is undeniable when it comes to running a business. Specifically, you use it to inform the decisions you make, thanks to actionable insights that show you exactly how you're performing on a day-to-day basis.
This is especially true if you sell products, whether it be online or in a physical store, because knowing where and how you're making money can help you allocate resources to the right parts of your business. Tracking data for an online store is easy, but with physical stores, you need a point-of-sale (POS) system that can track all your transactions, customers, products, inventory, and even coupon data in one place.
In this guide, you'll learn exactly what POS data analysis is, how it can be used to help your business, and which industries can glean the most from this kind of analytical assistance.
For starters, a point-of-sale (POS) system is the device or terminal used at a physical store that can process transactions, allowing customers to pay for products from the aforementioned physical store.
POS data is information collected by your point-of-sale system. Every time you process a transaction from a customer, a wide range of data is tracked by your system, typically falling into one of five categories, including product data, inventory data, customer data, transaction data, or coupon data.
This can help you make informed decision about your stores and how they contribute to your overall business, provided you crunch the numbers. That's where POS data analysis comes in, which is simply the process of extracting actionable insights from the mass of data your POS system collects processing transactions.
Now that you know what POS data actually is, you can start taking advantage of it to improve your business. So, how exactly are you supposed to analyze POS data? It all depends on what kind of data you're working with.
In this section, we'll explain how to best analyze different types of POS data, including product, inventory, customer, transaction, and coupon.
Check out our roundup of the best retail POS systems for more information
POS product data
POS product data describes the information you get from the POS system that pertains to the actual products that you sell. More specifically, this kind of data is analyzed in three ways: how much products cost, how well products sell, and what kind of profit you're making from selling these products.
If you're wondering how exactly you can use this data, its most common usage case is analyzing which of your products has the highest profit margins, so you can specifically focus on selling those, as they'll make you the most money in the long run.
POS inventory data
While product and inventory data may sound similar, they obviously aren't the exact same when it comes to specific data. Unlike product data that focuses on sales and profit margins, inventory data prioritizes exactly how many products you actually have and where they are in your system.
Inventory data isn't nearly as interesting as other data, but it is vitally important to keep track of for the basic functioning of your store. This kind of data can help you avoid sellouts and product shortages, informing you when you're running low so you can produce or order more.
POS customer data
Customer data is less frequently tracked than product or inventory data, because not all your customers are going to be signed up for loyalty programs that can keep track of it. Still, this information is valuable, as it shows how long someone has been a customer, how much they have spent at your store, and what kind of products they have purchased.
The most valuable way to analyze customer data is to evaluate loyalty and repeat customers. While attract new customers is always great, retaining customers is the key to success, and if you're physical store isn't manifesting this kind of loyalty, you should make some adjustments to change that as soon as possible.
POS transaction data
Data is all about tracking the nitty gritty details of your business, and transaction data definitely falls into this category. This kind of data will track everything that has to do with a specific transaction, including when it happened, where it happened, how much it costed, the payment method used, and whether or not the item purchased was discounted in some way.
Whether you take card payments, mobile payments, or a mixture of the two, transaction data can give you some valuable insights for your business, particularly when it comes to the time of the purchase. You may notice that the majority of a certain product sales are in the morning, while night sales are non-existent, so you can cater your store to more effectively take advantage of that trend.
POS coupon data
This kind of information tracks everything regarding to discounted items and coupons, including where the coupon came from, how much it was worth, how popular the coupon is, and which customers are using them.
The only reason a business would offer discounts for its products is to drive sales, and the only way to know if it's actually happening is by analyzing coupon data. More specifically, you can use coupon data to see if they are driving repeat visit or purchasing more than they typically do as a result of the discount.
The hospitality industry is one of the driving forces in POS use, as it provides a wide range of in-person products and services for customers. As you can imagine, these restaurants, hotels, and other such businesses need data as much as physical retail stores do to improve their business, which is where hospitality POS data analysis can come in handy.
As you can imagine, though, hospitality POS data tracks different information than that of retail. To help you understand, here are the types of data collected by hospitality POS systems that you can use to help grow your business:
- Guest reports – Knowing everything about how your guests interact with your hospitality business is always valuable data.
- Inventory – This can take many forms depending on your industry, like food at a restaurant or cleaning supplies at a hotel and knowing how much you have is obviously important.
- Employee management – Understanding how your employees are doing, whether it be in food sales or customer reports, will impact your business.
- Sales data – Between purchased meals and booked stays, you'll want to know exactly how you're doing on a day-to-day basis.
- Feedback – The hospitality industry and its POS systems often have customer feedback built in, and analyzing how customers feel about your business can help you grow.
- Reservations data – Knowing whether a customer made a reservation or just walked in can help you establish who your marketing is reaching and how its impact customer behavior.
Generally speaking, hospitality POS data isn't that different from retail POS data, it just changes how you look at it. Remember, if you want your business to succeed, the more POS data analysis you do, the better your insights will be when it comes time to make a decision.
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