POS Data Analysis | 2 mins read

7 Types of POS Data Analysis for Small Businesses

7 types of pos data analysis for small businesses
Chloe Henderson

By Chloe Henderson

POS data analysis uncovers valuable insights into product performance, employee productivity, sales trends, and inventory levels so businesses can improve their profitability.

Transactions carry much more information than the exchange of goods for capital. Within every sale, businesses can collect valuable customer, inventory, and demand information to pinpoint high-profit items and areas of opportunity.

POS data analysis aims to extract insightful information from sales, enabling companies to improve their marketing, ordering, and customer management strategies. By utilizing POS data, businesses can promote sales, revenue, and customer loyalty.

What is Point-of-Sale Data?

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POS data is information collected from each customer transaction to track stock levels, sales, and revenue. Businesses with POS software can gain further insight into more complex trends, such as demand, retention, and turnover rates.

Restaurants and retailers use POS systems to orchestrate transactions and collect data. Advanced software can use this data to generate detailed reports on performance levels. This information enables businesses to improve their inventory control, marketing strategies, and management skills to promote profitability and expansion.

While a single transaction can give insight into the customer's preferences and purchase history, when it is combined with the complete POS dataset, management is able to define broader patterns and trends. This means that with every sale, a company's POS data grows and gains more value.

Therefore, businesses should consider collecting POS data to enhance their decision-making. Since sales occur daily, companies can harness the power inside each transaction and consolidate information into a comprehensive format.

At first, the data may seem insignificant, but aggregating large volumes of POS data can illustrate a much larger picture. When the information is in its final form, it can be used to develop forecasts on market trends. This enables organizations to capitalize on actionable insights to enhance their competitive edge and tactics.

7 Types of Point-of-Sale Data

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There are several insights companies can access by conducting a POS data analysis, including-

1. Inventory

Advanced POS software records every item that leaves the business during a transaction, making it easy to monitor stock levels at the terminal. This also means that employees can track the turnover rate, profit margins, and revenue generated by each product line.

By incorporating real-time data from sales, POS systems can alert employees when stock levels are low to avoid stockouts. When integrated with an ordering system, the POS can automatically trigger a reorder. However, if retailers experience a stockout, the solution will hide unavailable products from online shoppers to avoid backorders.

Reports also alert retailers of deadstock or products with prolonged turnover rates. Deadstock can take up valuable storage space that could be used to house high-profit items, restricting the bottom line.

When the POS software is integrated with back-office solutions, such as warehouse systems, retailers can locate items throughout the supply chain. This allows stores to transfer and replenish products from within the organization rather than placing a reorder with suppliers.

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2. Popular Products

POS software can generate detailed reports on top-selling product lines and demand patterns. This enables management to stock up on fast-moving items to meet customer demand and promote sales.

Management can even use this report to develop buyer personas for different products. This means that retailers can determine which demographic is most likely to purchase a specific item, enabling marketers to develop targeted promotions. Analysts can then determine what characteristics top-selling products have in common to improve suggestions and impulse buys.

3. Sales Trends

Businesses can program their POS systems to generate sales trend reports based on the product line, region, and timeframe. By looking at these different variables, management can pinpoint their busy seasons and discover how to boost sales.

Sales trends help identify a company's strengths and weaknesses by defining their progression toward sales goals. If sales are unusually low, retailers can cut prices on slow-moving products and increase orders on popular items before the busy season.

Retailers can even determine which sales channel draws in the most sales for each product. By re-evaluating stock levels for each channel, businesses can boost sales and reduce inventory costs.

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4. Returns, Refunds, and Exchanges

Every business experiences returns, refunds, and exchanges. POS data provides valuable insights into why customers are returning particular items so management can determine how to reduce the number of unsatisfied customers.

POS software records the number of exchanges, refunds, and returns associated with every product to determine the frequency of these occasions. If an item is returned frequently, management can investigate if the units are defective or low quality.

Retailers should also take note of which option customers choose to receive their refund. If an overwhelming number of shoppers request cash, it may be a sign of return fraud.

5. Customer Insights

With every online and in-store purchase, the POS system records customers' personal information, including names, addresses, emails, phone numbers, and purchase histories. While this information may not seem valuable, management can use this to generate actionable insights into customer loyalty.

While businesses dedicate much time and effort into acquiring new customers, retaining loyal customers is less expensive. By using POS data, retailers can determine how to improve the customer experience and service.

Based on purchase histories, marketing teams can send customized emails to shoppers with special discounts and promotions to encourage repeat purchases.

Modern POS systems recognize loyalty programs that allow customers to set up accounts, where all of their shopping information is stored. This enables managers to track browsing habits, areas of interest, dislikes, and popular sales channels.

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6. Employee Productivity

An advanced POS system recognizes unique employee logins to monitor each worker's productivity, allowing management to determine top performers. Depending on the type of business, the software can report how many sales, tips, complaints, and revenue are generated by each worker to form a ranking system.

Based on the employee ranking, management can hold extra training sessions for underperforming employees and grant incentives to the deserving staff.

7. Purchase Orders

By viewing sales and inventory usage trends over time, businesses can improve their ordering skills to reduce stock and storage expenses.

For example, if a retailer finds that a particular product does not sell very well during the summer, they can minimize purchase orders at the beginning of the year to reduce storage and ordering costs.