Winter 2007

Show Me the Money! Saying Yes to POS By Jeff Haefner

How POS Software Can Help

POS software can give you a massive boost in profits by reducing pricing errors. Because each item’s price is entered into the computer only once, and not every time an item is rung up, you will no longer lose money, nor, equally important, have an unhappy customer.

An important factor for a gift shop with many items to track is that POS software can simplify your inventory management system and reduce inventory costs, by instantly showing you which items aren’t moving and which items are. This will enable you to track your best sellers and slow movers, and adjust pricing and inventory accordingly. Some packages also allow you to track special orders and layaways, automatically create purchase orders based on sales, and show you where you are overstocked or understocked.

POS software can also amplify your marketing efforts. Your single most powerful marketing tool is your customer list, which is stored in your POS software. Most software programs come with a variety of integrated marketing features that allow you to identify specific customer segments by sales, demographics and buying habits. Thus, you are able to target these customers with specific marketing promotions, discounts and sales.

Your software’s integrated Customer Relationship Management features can allow you to send sales letters or promotions to your existing customers. It can also allow you to set up automated mailings and thank you letters to promote customer loyalty, and can produce reports that allow you to monitor your marketing efforts. When these CRM features are integrated into a software package without additional cost, they can be significantly more economical than hiring a separate loyalty service provider.

POS software can reduce your bookkeeping and accounting work by calculating your monthly sales tax in a matter of seconds; print monthly sales, receivables and other accounting-related statements with the click of a few buttons; automatically enter transactions into your accounts receivable; and show whom you owe, and how much, so that you can control your cash flow, create journal entries, and make your year-end accounting much less painful.

Possibly more important than all of the above, POS software can help you serve your customers faster and more efficiently. No more running to the back to find a price, and no more slow checkouts. Customers also appreciate the efficiency of crisp, clean receipts, a clerk’s knowledge of their past purchases, and clear record-keeping regarding their in-house credits and available discounts.

POS software systems show your customers that you are ahead of the game. Check verification becomes fast and painless. Bar code scanning, touch screens, signature pads and electronic check readers make the transaction process fast, easy and accurate.

Where are the negatives?

Now that we have gone over the many advantages of a POS system, it’s also important to point out the negatives. POS systems cost money. In addition to the software costs, you may need to purchase additional hardware and consider training fees, monthly support fees, update and maintenance fees, data-conversion fees, hardware configuration fees, back-up systems, networking costs and Internet access. Prices for these vary depending on your needs and the requirements of your software.

You’ll have to invest a significant amount of time to not only research and find the right software package for your business, but also on training—both for you and your employees. Training time varies depending on the software package, the computer skills of your staff and the training that is available from your provider.

It is important to know that leasing is usually an option, and it can be a very effective cost-saving alternative to a one-time cash payment.

Another potential negative is that the POS system might go down or be inoperational for a while. Most systems have a network failsafe, which means that you can continue entering transactions while the network is down without losing the information. If you experience problems with your software, you must contact your customer support for assistance. So it is important to make sure you have a quality customer support system before you make your purchase.

So, should I buy one?

Is your business large enough to support a retail management system? The answer is probably yes. If you gross more than $100,000 a year, then you probably need a system.

Will a POS system pay for itself and make you more money? Ninety-nine percent of the time the answer is yes, but you have to calculate this one using a cost analysis, or a return-on-investment calculator. Industry standards say that a quality POS system adds 15 percent to your bottom line. If you gross $100,000, that’s an increase of $15,000. And that doesn’t include your time savings, which can add up to five hours a day or more.

The importance of choosing a quality POS system cannot be overemphasized. Talking to your sales representative or a sales consultant to determine your costs and possible financial and time gains is strongly recommended.

Jeff Haefner

Haefner has been working with computers, retailers and POS software since 1993. He is the author of The Point of Sale Software Buyers Guide, The POS Software Comparison Chart and Retail Technology Newsletter, and runs a retail technology consulting and software-selection service.POSSoftwareGuide.com