According to Grand View Research, in 2020, the market size value of POS software reached $9.3 billion and may hit $18.1 billion by 2027. It is not surprising to know that the industry is growing, given its advantages in centralizing the management in retail businesses.
The analysis of POS reports starts with asking yourself the right questions to narrow in and focus on the data you will gather. Identification of patterns and trends in your POS sales data will give information about your sales and inventory, so you can effectively strategize for promotions.
POS reports will give insights related to your business’s performance, like the effectiveness of your marketing efforts, customer buying patterns, and seasonality of your products and services. Learn more about POS reports, their importance, interpretation, and types that can help you grow your operations.
What Is a Point-of-Sales (POS) Report?
A POS report is data gathered from the point of sale system- records of your sales and inventory. It captures details used in informing all sorts of business decisions. Modern POS systems allow tracking sales, credit card transactions, and employee working hours and generate reports daily, weekly, or monthly.
Business owners get helpful information about their sales trends, inventory, and employee performance from POS reports. Moreover, it can give a glimpse of the different areas in your business or an overview of it in its entirety. You can get a picture of your business’ health because the POS system integrates with your back-office software.
Also, if you are dealing with a cloud-based POS vendor, you can easily access reports on demand and wherever you are.
Why is Running POS Reports Important?
POS reports give you crucial information that can help you assess various aspects of your business. It can make your decisions related to sales forecasts and marketing strategies more effective. Below are the reasons why you should run POS reports.
1. It Drives Staffing Decisions
Data collected from the POS system helps you know the working times of your employees. Based on data, you can create shifting schedules that would work best for your company. For instance, you can place top-performing employees on peak hours.
Identify the number of employees on a shift. You get to know your business’s slow and busy times, so you can prepare and prevent being under or overstaffed.
2. Helps in Making Purchasing Decisions
Manual inventory tracking and management may be a tedious and stressful job for business owners. Having sufficient stock and inventory is a crucial decision to make. With the help of a POS system, the process can be made automated.
Inventory reports will help you decide for your purchases to avoid getting out of stocks, especially hot items, and having too much stock when the sales are low.
3. Comparison of Sales across Stores
If you are working on multiple sales channels or many storefronts, you might have difficulty tracking sales. With a POS system, you can compare the performance of different stores according to their location. It will ease your burden in making sales, marketing, and staffing decisions based on demands.
4. Marketing Strategy Optimization
The key to business success is retaining regular customers and reaching new ones. Data from POS reports will help you improve your outreach and marketing. It will ensure that you are hitting the right target market.
Most POS system have customer relationship management software that can provide insights on:
- Possible customers
- What they are likely to purchase
- How often are they going to make a purchase
Using this information, you decide when is the best time to offer promotions and if you need to change your marketing strategy.
5. Growth Plan Setting
One way to keep regular customers is to give them loyalty rewards, such as discounts or promotions. POS reports will tell you which customers deserve these deals.
What a POS system does is determine new customers and the people who have purchased from you before. The generated data is crucial in gauging the health of your business and operations. If customers are coming back, it only tells you that they like your services and product. It is also a sign to get new ones.
How to Interpret POS Reports?
Interpretation of POS sales report has basic steps. Here are some of them that you can follow.
1. Start with a Question
The most critical step in analyzing your POS sales report data is starting with the right questions. It could be about your products and services, sales, inventory, employees, or customers. Here are some of the questions you may ask:
- Should I reorder a specific product?
- Was the promotion run last week successful?
- What employee routine generated the highest sales volume?
- What makes your customers keep on coming back?
By asking the right questions, you get to narrow down and focus on the data that can give your answers and better grasp your business operations.
2. Collect and Measure Data
Once you have questions, you need to decide which report has the data to answer your questions. Also, be wary of the filters you may apply to get a more precise and accurate data set like data ranges. Multiple reports enable you to look at data from different perspectives or isolate it from others.
After getting the data, compare the current one to the old ones. Doing so will help you determine your average sales and provide you a benchmark to gauge the present numbers against it.
3. Identify Trends and Look for Patterns
Following the data collection is the pattern and trend identification. It will provide insights into your customer’s purchasing habits and reveal crucial information like the seasonality of products and promotion effectiveness. Such information will help you arrive at decisions on purchasing and promotional efforts.
4. Apply Context
Trend interpretation from your sales report requires the application of context. Context is not just about numbers and statistics but also explanations behind why customers purchase a specific item.
Context can also be about external- seasonality, competitor’s actions, weather, or suppliers’ activities (ex. price increase, tariffs, discounts) or internal- losing or gaining employees, or increasing price. The context will explain to you why you have such numbers in POS reports.
Conclusion
Running POS system reports will help you make better decisions in your company. Knowing how to interpret it is crucial because what you will get from them are just numbers. You still have work to do in applying context to see the rationale behind those numbers so that you can take appropriate measures next time.
Sources:
Featured photo created by pressfoto – www.freepik.com
https://financesonline.com/pos-statistics/
https://www.businessnewsdaily.com/11127-learn-from-pos-sales-reports.html
https://www.acceleratedanalytics.com/blog/2019/01/25/pos-data-analysis-a-crash-course/
https://www.businessnewsdaily.com/10449-time-saving-pos-reports.html
https://www.merchantmaverick.com/top-5-standard-pos-reports/
