Show Me the Money! Saying Yes to POS

by Jeff Haefner [1]

Getting the Right POS

The right point-of-sale software system can save you as much as five hours a day, and retail establishments can see an average of 15 percent of their gross annual sales as return on their POS investment. Each system is designed for a specific industry and size, and can offer thousands of features. Because so much hinges on this decision, it is essential for gift shop owners to find the optimal POS system.

This article compares five POS packages based on ease of use, cost and company reliability for follow-up support. These are only a handful of considerations that business owners need to evaluate when finding the optimal POS system for their stores, and the buying decision shouldn't end here.

A point-of-sale software package is, at its simplest, a computer program that takes the place of a simple cash drawer. All sales are made through the computer. A person enters the information, sales and transactions, and the system records and tracks everything. However, POS systems have dozens, if not hundreds, of features, some that you'll need and others you may not.

Such features include: inventory management, purchasing, receiving, payroll, e-commerce, security, sales reports, customer tracking, order tracking, accounts receivable and accounts payable, among others. When you are narrowing your POS choices, make sure to compare systems based on a prioritized list of features that you feel will most benefit your business. An online tool to compare different POS systems can be found at: www.possoftwareguide.com [2].

Buying the best-sounding package is one of several mistakes that buyers make when purchasing their POS systems. Retailers need to take the time to evaluate their needs and consider their future growth. Ask your sales representative for a demonstration, ask for training, and don't buy hardware first, because different software packages have different requirements. Be sure you don't let cost be your deciding factor, because you do get what you pay for. An effective POS system should make life easier, show an early return on investment, and in the long run save time and money. In addition, the cost of the system alone tells only part of the story.

The true cost of the investment will vary significantly when you consider fees for training, configuration, hardware, support and, possibly, data-conversion services. Company reputation is also a very important factor, because you're not just buying a software package; you're buying a relationship. Consider what would happen if your system went down on a busy Saturday morning during the holiday rush and your company's customer support wasn't available until Monday morning.

An ideal POS system needs to satisfy two important requirements. First, it needs to be designed for a gift shop, which has different needs than a dry cleaner, a restaurant or a liquor store. In addition, your POS system should be designed for an establishment of your size.

Microsoft RMS

Microsoft has been in the software business for more than 30 years and has sold its retail-management system to thousands of customers. Company longevity is important because if a software manufacturer goes out of business, customers can be left with no support and no chance of future upgrades.

Support is offered through a reseller and direct through Microsoft, which means that support call-back times, prices and training all vary. A reseller in this case is an individual or a company that has partnered with Microsoft to sell and support its POS software packages. This allows the resellers to establish their own customer service policies and practices. Because you are buying more than a package, you're buying a partnership, it is important to ask questions and get references on your local resellers.

The initial software price is $1,190 per lane for one to five checkout lanes, and $1,090 per lane for six to 20 lanes. This is a very reasonable price for what the product offers. Microsoft RMS is best suited for the small to mid-sized retailer. It is Windows-based, which makes it easy for anyone who is familiar with Windows to use. The general system features the ability to view all printable reports on screen, a report generator that allows you to create your own reports and export them into Microsoft Excel, and a network failsafe that allows you to continue entering information even if your network is down.

A drawback is that there isn't an available training mode that would allow you to practice with your own in-store data, and the variety of available reports may not meet your needs. On the other hand, security is pretty good, allowing you to password-protect each module. Screens and menus are customizable.

PayGo by Christian James Inc.

Christian James Inc. has been in business for five years and has more than 400 customers. A real up-and-comer in the industry, one of its greatest strengths is its customer service and small-business focus. The average call-back time is less than an hour, and telephone support is offered from 8:30 a.m. to 5 p.m. CST every day. Support fees range from $399 to $799 a year, depending on your choice of support options.

Telephone-and computer-based training is standard. On-site training costs $599 a day. Classroom training is not an option, although it may be in the near future. While many software manufacturers, including Christian James, will visit your store and install the software for you, with PayGo there is an additional cost that varies depending on your location and installation needs. One unique feature that PayGo does offer is "virtual installation," where a member of the Christian James staff will walk you through your installation process step-by-step.

The initial software price is $1,799. PayGo can be utilized on personal computers and Macs. It offers a customizable screen, menu and training mode utilizing in-store data at an additional cost. Network failsafe and integrated shipping is planned for a future release.

PayGo does not offer integrated accounting options such as payroll and general ledger, though some of these features are planned for the future. At press time, a major new release had been scheduled for this month (January 2007). The security options are extensive. Another plus is that users are able to issue, track and redeem gift certificates. Overall, the PayGo system is extremely easy to use and has a reputation for good customer support. The downsides are the cost of add-ons and the slightly higher base cost.

Radiant Systems Counterpoint

Radiant Systems has more than 10,000 product installations. Customer support is offered through dealers, so call-back time and availability varies. Radiant offers a subscription service for updates. The starting price ranges from $2,000 to $2,500 per user, depending on the dealer and the options.

Counterpoint is available in Windows, Linux and Unix, which makes it easy to integrate into whatever operating system your store is using. It is a stable and extremely customizable package. Customer reviews indicate that it is also an intuitive package. Training and installation are offered through dealer channels. Options vary.

As with the other POS choices listed so far, Counterpoint does not offer integrated accounting. However, it is a feature-rich package that offers accounts receivable, inventory and customer management, purchasing, gift-certificate redemption, tracking and issuing, definable screens and menus, network failsafe, and a wide variety of security options.

Retail Pro

This company has been in business since 1978 and has more than 25,000 product installations. Customer support is offered by a Retail Pro business partner, so availability and call-back response can vary. Support is offered via telephone, in a classroom, on site and through the computer. Training costs $720 for eight hours online, $795 for three days in the classroom, or $995 for a day on-site.

The price varies depending on the reseller. Retail Pro is a Windows-based package. Integrated accounting and accounts receivable features are not available. But this is an extremely feature-rich product. Just about any POS function, report or task—including inventory management and reporting, customer management and marketing, purchasing, and gift certificates—is standard. Security options are plentiful, multi-store options are supported, and reports are customizable.

Prophetline

Manufactured by Spectrum Retail, which has been in business for 14 years, Prophetline has been installed at more than 2,500 customer locations. Support and training are offered direct or through a reseller, which means that support can vary. Support is available during normal business hours and costs $995 a year—this fee includes updates. Because buyers have the ability to choose modules—such as accounts receivable, marketing, order tracking and design—the total software package price varies.

Prophetline is a Windows-based software package and an extremely feature-rich product. Like the other packages outlined here, Prophetline includes multi-store operations, security-protected modules, network failsafe and gift certificate functions. Another advantage—unlike the others outlined, Prophetline does offer integrated accounting. However, screens and icons are not customizable.

There are hundreds of POS software systems available, many of them designed for the gift shop industry. Visit company Web sites, speak to representatives, ask for and call references, compare products based on desired features, ask for quotes, and always request a demonstration.

Software prices and features change on a continual basis. Retailers are advised to always check and determine the current status and price of each POS system.

Purchasing POS software is one of the most important decisions that a business owner can make. If it is done hastily, business owners may end up with a very frustrating experience, costing themselves and their businesses time and money. If the process is followed correctly, owners will have a business-empowering tool for years to come.

Editor's note: The inclusion of a POS system in the list doesn't imply an endorsement. Retailers are advised to do their own research on the software packages discussed in this article, as well as others that are designed for the gift shop industry.

Get More Out of Your POS

If you already have a POS system, there are several things that you can do to make sure that you're optimizing your investment.

The most important, and maybe the most elementary thing that you can do is to utilize all of the software training available. Training sessions, whether on-site, on-line, or at a seminar, can prove invaluable by teaching you tips, tricks, and best practices in the gift shop industry.

Gift shops that take advantage of their inventory control features can also save a lot of time and money. Use your POS software inventory features to track sales history, track special orders, suggest purchase orders, send orders electronically, and forecast future needs.

Take advantage of the Customer Relationship Management features in your POS software. Most systems offer powerful CRM features that allow you to identity market segments and send targeted messages to those customers.

For example, you can send a coupon to customers that spent over $100 last month—or bring lost customers back in by sending a 20 percent off coupon to customers who haven't bought from you in six months.

Finally, pay attention to your financials and key performance indicators and review them on a daily basis. For example, review key sales reports that show your profit margins for each department and category. If you notice that a profit margin is low, examine why it's low. Maybe there is a big pricing mistake or employee theft is the cause.

It pays to examine all aspects of your POS system to make sure that you are getting the maximum benefit.

Take the time to review your software guide, and if possible speak with other gift shop owners who are utilizing the same software.

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.

Source URL: http://www.giftshopmag.com/2007/winter/unique_giftware/pos_point_of_sale_systems_for_gift_retail