Retail Customer Experience: Five Underutilized Features of the Modern POS
By James Bickers,
Editor, Retail Customer Experience
Through
a special arrangement, presented here for discussion is an summary
of a current article from Retail
Customer Experience,
a daily news portal devoted to helping retailers differentiate the
shopping experience.
The retail
point-of-sale system has come a long way from its mechanical roots. The
first cash
register, patented in the late 19th century, did little more than ring
up purchases and store cash. Today’s POS does those things, of course,
but it is also a sophisticated tool capable of amassing enormous pools
of business intelligence.
But for many
retailers, it is still essentially a cash register, and some of its most
ROI-rich capabilities are going unused. We identified five POS features
that retailers can make better use of:
Suggestive
selling: Amazon
has conditioned consumers to expect suggestive selling. While online
retail is perfectly suited to the “you bought this, you might also like
this” approach, a properly populated POS installation, combined with
appropriate employee action, can create the same effect in the store.
It’s not perfect
for all flavors of retail – nobody is going to get out of line at the
grocery store to get one item that is suggested at the checkout – but
it’s a perfect fit for many other purchasing environments where queuing
isn’t such an issue, such as a high-end mall apparel store.
Comprehensive
remote management: Until
just a few years ago, Allen Wier, director of retail industry marketing
for NCR, said, many retailers were running DOS-based POS software, which
made any sort of comprehensive remote management difficult. “Now, pretty
much everybody is on Windows or Linux – in the U.S., mainly Windows,” he
said. “Now, you have the ability to do remote diagnostics.”
Every platform
is different, but most major POS vendors offer varying levels of remote
management functionality. In NCR’s case, for instance, the system can
predict device failures based on the number of communication retries,
as well as keep a line count on the receipt printer so that it knows
when paper will run out.
Cashier training: Even
in the busiest of stores, there are times when terminals are left unused.
During these times, retailers can use the machines to carry out employee
training. That training can be existing assets from the company’s web
site or Intranet, or it could be something designed especially for the
terminal.
Inventory management: Retailers
of any size already have inventory management systems at work in the
back office. But integrating that system with the front-of-house speeds
up business intelligence, giving managers a close-to-real-time view of
what’s selling, what is needed, and what opportunities are being missed.
Data mining
and product assortment: Data
generated by the POS enables managers to plan their restocking strategy,
but it also enables a higher level of planning, specifically in regard
to which products to carry at which stores. Many
POS systems offer sophisticated Web-based dashboards that aggregate data
across multiple store locations – and allow managers to “click down” into
specific stores, to compare and contrast the activity of given products
in different locations.
Discussion Questions:
Which of the newer POS capabilities show the most promise? Which
ones seem most easy to capitalize on and which will likely prove
to be a challenge?
Internet enabled POS terminals are simply an input device for complex systems and analyses that provide the inventory management and assortment planning benefits. These benefits do not require real-time inputs or outputs. While these benefits are important, they can be provided by POS terminals that are not Internet-enabled.
On the other hand, the suggestive selling and training benefits require the interactivity available only from Internet-enabled POS terminals. Internet-enabled POS terminals can offer a benefit beyond suggestive selling. Sales associates using the Internet-enabled POS system can offer merchandise that is not stocked in the stores but available through the retailer’s website to customers seeking unusual sizes, for example.
It’s gotta be suggestive selling. I need margin and I need to see that basket pushing the envelope. Whether it’s batteries, gum or even reusable bags, I want to see my last-line people selling and topping up the order.
This is the same story whether it’s POS software, or any other software. People typically utilize a small fraction of the capabilities. We did a utilization assessment at a retailer who wanted to rip and replace a large application. We found they were using only 10% of the functionality of the old app that was installed six years ago.
For POS, the sky is truly the limit. There are so many functions that can be turned on, however, there are also best practices that can be combined with the software. Albertsons has been doing a great low-tech suggestive sell at the POS by simply having a featured item stocked at the bagging section of the terminal with a small price sign. Simple, but effective. Get one out of ten customers to pick up that item, and, well, you know the rest.
Department stores have been utilizing POS data for decades, and more effectively than supermarkets. New software takes it to the next level to provide previously unseen shopper insights. In-stock conditions can be improved with this ties in with inventory management capabilities, also.
Many retailers have used idle terminals for training for decades, so that’s really nothing new. I think retailers should simply take a new look at what they already have installed and determine how much they’re using.
It’s all about suggestive selling. A time-starved customer who has already presented a credit card at point of sale will likely appreciate learning that something she wants/needs is on sale. It definitely won’t work in a high-SKU environment, but in less-trafficked mall apparel stores it could be a winner.
Suggestive selling and training go hand in hand. Without the proper training, the suggestive selling will never take place.
Retailers scream about the lack of sales and the effect on profits but are still missing the point that the easiest person to sell is your present customer, especially when they are in the store already.
The challenge with POS has always been the errors and lack of real-time visibility and accuracy of the data. The University of Arkansas did a study at Walmart utilizing J&J air freshener products as the proxy to determine the level of accuracy between POS data with what is actually available on the shelf for sale to the consumer.
The results were fairly significant; the variance between what POS was saying versus what was on the shelf was 65%. The end result was that J&J and Walmart were carrying 13% more inventory to cover the out-of-stock positions. This translates into a large amount of inventory carrying costs in the store for J&J.
Additionally, POS has high a high error rate, given that it’s predominately driven by humans entering data into the system via some kind of bar code usually. The error comes in when the cashier has 6 items to scan, 2 each of a SKU to scan. The cashier sees 6 similar items and picks up one and guns it 6x. Now the SKU counts are off and the entire system just went out of balance.
The other challenge with POS systems is they are predominately a batch driven system, running off hours, while it updates daily the end-game results do not reach those who can impact change in the supply chain in a timely enough manner. By the time they catch up with the critical data they need to drive the business, it’s way too late to impact change and back up a 12 week supply chain for all the stakeholders involved. Typical response rates between demand planners at the manufacturing level and their counterparts at the retailer can run out to 4 weeks. By then it’s way too late to enact meaningful change.
And when you mix in a promotion on top of all of this, things can really get interesting. Now you have a highly funded promotion going sideways on you from an execution standpoint, which the brand category managers just hate since they have already paid for displays, promotion trade dollars, and manpower to load it into the store.
Near real time, highly accurate, reliable, in-stock inventory visibility is what the industry really wants.
Mel makes a great point–any POS feature is only as good as the compliance of the cashiers. The same is true for frequent shopper cards, which can yield incredibly valuable data, but only if cashiers take the time to ask for cards.
It all comes down to the old saying: “Garbage In, Garbage Out.”
If you plan to make use of frequent-shopper data, suggestive selling, inventory management, or any other POS feature, start by making sure that your staff knows how to use the POS accurately and consistently and understands that doing it right is a priority. Otherwise, you will be wasting your time.
For smaller and independent retailers, the big issue remains using POS data to productively manage inventory and to appropriately tailor assortments. In many cases this is the difference in today’s economy between success and merely hanging on. Those that have used their data to manage their inventory and assortments smartly are generally sitting in a much better cash position than those that don’t.
Safeway is currently begging for donations at POS for prostate cancer research. You have to say “no” on the credit card machine, and “no” again when the checker asks you for a donation (they admit that they are required to be redundant with this request). Here in NorCal near Safeway’s HQ, their stores are always begging for something. Yet, when asked if they are matching the funds donated at checkout, their answer is always “no.” So, I say “no,” too.
At Staples, checking out is like running an obstacle course. “Do you have a card?” “Would you like to join a program for fixing your computer?” “Have you signed up for our training courses?” Makes me crazy. When I drop in for a quick purchase of blank DVDs I say, “Please just let me pay and leave.” Certainly the training at Staples is superb and the checkers are hopefully being bonused for signups. But there needs to be an “off” button for shoppers who want to avoid their process.
And therein lies one of the conundrums of POS usage: How to implement or deliver on your data. Hint–don’t irritate your customers.
The greatest opportunity for internet-enabled POS extends far beyond suggestive selling; it is the ability to extend customer knowledge to the sales floor.
The goal is to present a customer experience that reflects knowledge of a customer’s history with the organization. In this way, the company is saying to the customer, “We know you.” That form of recognition is critical to customer retention and, in the end, loyalty.
For that knowledge to be leveraged to drive customer loyalty, it must first be captured, and then used in subtle ways to improve the experience and also in more overt ways through customized offers.
1. Data capture is absolutely critical for successful leverage of customer information in the experience. Stores and sales personnel should be measured constantly for compliance.
2. Salespeople must be trained to look for customer information and then integrate it into their customer interactions. This must be done subtly so as not to look “creepy,” but can be quite effective when done. Salespeople can also be trained to recognize customers and preferences on sight, when possible.
3. Marketing offers should be carefully structured, and learn from experience. They should be structured to avoid overloading the customer, as another comment describes. They should learn from experience, so as not to repeat offers to customers that they have declined previously.
In this way, intelligent POS can help to recreate, in some small part, “the corner store,” and grow relationships and profitability with repeat customers increasingly over time.
Anything that increases basket size, improves consumer satisfaction and makes retail fun is a good thing. Technology can certainly help accomplish these goals.
POS systems have too often been little more than glorified cash registers for many. It is time to put this technology and make it a POS-itive investment. Small, medium or large, POS systems are a great tool. The tool will only be useful, however, if a commitment is made to good data fueling the system, concerted effort to understand its many capabilities and consistent operation.
I don’t think you can generalize the important POS features for ALL retailers. Every retailer is different and each feature or category of features will vary in importance from one retailer to the next. Some of the features mentioned, I think are really back office type of activities and should not affect the stores at all. Stores have to be given the opportunity to educate/inform their customers and sell. That’s it. They have to be enabled to provide great service and a great in-store experience through training and the use of technology, and POS cannot be a hindrance to doing this. If retailers would focus on these points when implementing new store systems/processes, I think they will be better off.
I think this discussion needs to separate into 2 distinct categories…Data Acquisition and Decision Support, and Register Level Actions. The first category leads to improvements in category management, promotions and one-to-one marketing. Especially when this data is tied, real-time, to the customer through in-store mobile technologies, you’ve got a recipe for both increasing customer satisfaction and basket size. The integration to these technologies is actually easier than one might think. The key for retailers is to prioritize and begin to pick the areas with the greatest return. Focus on getting the in-house data in order and accessible. Then find mobile technology partners to deliver connectivity.
The second area, register level actions, boils down to individual retailer priority. The key is keeping things simple for the associate and smooth for the customer. Cross-selling and up-selling need to be balanced with corporate priorities and brand mission. Customers, at a maximum, will stand for 1-2 “suggestions.” Use them wisely.