Before opening their doors for business, small retailers can choose from a plethora of point of sale and retail management software. However, for some, their experience is limited, so cost and popularity typically influence their choices. It’s okay to learn as they go, but they will not have the competitive edge needed in this global economy.
Change Is Good
Let’s be realistic. The economy has changed dramatically in the past 10 years. Small businesses are competing with big box retailers and companies located throughout the world. They need to adapt and evolve with these changes or lose market share, revenue, and profits. One of the ways they can compete is through building efficiencies.
This starts with their retail software. The cheapest or most popular software isn’t always the best, especially if your retail business has unique needs to account for special inventory or complex transactions, such as layaway or customer deposits. Typically, they deal with what they have and find workarounds to compensate for the lack of functionality with their software. Then, they use only the features they are familiar with, because the software they chose was too complicated. Or, even worse, they weren’t trained on it.
- Problems with Inventory
Inventory is the bread and butter of your business. It’s also where most of your money is tied up. Inventory is the primary way any retail business can increase cash flow. With a steady balance sheet, more products can be purchased, which leads to growth and profitability. Any problems with your inventory will lead to poor customer service and loss of profits.
If you’re tracking inventory on a spread sheet, then it’s time to get a retail software solution that scans it into the system and automatically generates purchase orders when stock is low. By design, a manual system is time consuming and less efficient; whereas an automated system accounts for our forgetfulness. You could also be losing hundreds of dollars due to shrinkage and dead stock. The key here is to know that your margins decrease the longer your inventory sits on the shelves. Another problem arises when you use two separate systems to track sales and inventory. Human errors often occur when combining data for your accounting records.
Most retail and point of sale software are designed to report inventory levels. These reports keep you from physically counting products on the shelves. This allows you to optimize your inventory, making slight adjustments along the way to respond to your customer’s needs. Understanding the fluctuations in supply and demand means you can capitalize on market trends.
- Poor Customer Experience
Ever watch someone walk out of your store because the line was too long? While they leave, they set their items on a shelf near the door. Research has also shown that customers will walk past a store with long lines at the counter. Long lines can ruin the customer’s experience.
The loss of one customer is more than a loss in revenue and profit. Replacing that customer can cost you five times more to acquire a new one than the cost of retaining an existing one. Repeat customers also offer friendly and free advice on what products to carry and how to improve the experience—providing invaluable feedback.
How fast a point of sale system processes transactions is integral to the customer’s experience. Ease of use for your employees is also very important. When processing a returned item or making a mistake at the register, they should be able to turn those around quickly (almost unnoticeable to the other customers standing in line). If your employees are constantly asking for help with your current system, then there needs to be a change to something easier, more intuitive.
- Customer Relationship Management
You want to promote a new line of products to your current customers, but don’t have any of their contact information. This is a major indication that your retail management system is not working for you.
Information about your customers gives you important information, such as demographics and geographical locations. This allows you to better understand your customer segmentation, and how you can tailor your retail environment toward their preferences. You can communicate directly with your customers and they will respond with more purchases. Another great thing about catering to your market segments is the effects of direct marketing lessen the costs of customer acquisition.
Some retail software packages have rewards and referral programs. These loyalty programs track purchases and focus on retaining customers by offering discounts, specials and promotions that only special members are able to take advantage of. Many of these programs bring new customers to your store through word of mouth from a friend or family member. Staying engaged with your customers through an automated system can boost sales, increase word of mouth advertising, and create a better experience.
A centralized system can help automate your marketing activities with personalized interactions. Simply create your list and send the promotion through an email, saving you and your employees time with administrative work, as well as time on the floor selling products. Also, you can measure click-through rates, time on page, and downloads of digital coupons. You can also track how many people use the promotions or let them expire.
- Restricting Growth
Can your current system grow with your business or will it cause more work for you and your employees? Will it cause problems with your accounting system and inventory management?
If you have big plans for your business and ambitious goals, you need a software package that will grow with you. Unfortunately, most software packages are not flexible enough to accommodate additional workstations or locations. This can be a very frustrating challenge, because you have a good system in place that has been successful, but it can’t handle the additional workload and restricts your growth.
You also have to think about mobile solutions. The ability to run your business while you are not physically there can save you time and money. Some retailers are using tablets for their cash registers, going mobile on the showroom floor. Apple® was an innovator with this in their stores. Customers make their purchases without standing in lines or changing their minds. If your software doesn’t support multiple devices, such as tablets, phones and laptops, then you may be restricting your ability to achieve those important financial goals.
Do your research and find a cost-effective software that allows for growth. Some software packages are expensive, yet have the same functionality as everyone else. It is possible to have a low-cost retail software and expand your business.
- Reports and Analytics
Reports generated from your retail software should help you analyze every aspect of your business. Acting upon the data from your sales history will help maximize your business efficiencies, while eliminate areas of waste, usually hidden during your busy day. If your system can only give a handful of sales reports, then it’s time for a change.
To be the CFO of your small business, you need to have more than a simple profit and loss (P & L) report. For example, a report on average sales per transaction for each employee can determine who is the most proficient member of your team at upselling items, or offering add-ons to customer purchases. Employees need to do more than run the cash register and stock shelves. They need to offer more value to your customers through product suggestions and upselling.
Another area to look at for reporting is the average transaction per customer. This number tells you how much each customer spends in your store. Any plateau in this number could show a need to adjust your inventory or provide employees with sales training. If you want to grow your business, this number needs to grow, too. You’re not looking for a major jump. Steady growth is sustainable.
A CFO is more than an accountant, they are a financial planner for the business. Being a good CFO means analyzing the data to make sound business decisions. If this is one of the many hats that you wear, then find a software that makes business analytics easy to do.
More Return on Your Investment
The old saying, “If it ain’t broke, don’t fix it,” can actually be detrimental to your business. It’s normal to resist change. But, having the foresight to avoid problems should be one of your best practices.
The good thing is that you don’t need to rush into it, because nothing is broken. Take your time and do your research. Meet with your employees, your accountant, other business people in your network and find out what they think. Then, create a plan and stick to it.
It’s not easy to change systems, while keeping your doors open for business, but it may be imperative that you do it. Remember, whichever software company you pick, they are the experts. Find one that will work closely with you and support your team if any problems arise. I suggest working with a software company that will transfer your inventory and sales data into the new system for a minor fee. You’ll be able to run reports on your historical data, advancing your business knowledge quickly.
The benefits of replacing your old point of sale and retail management software outweigh the perceived hassle of changing systems. An increase in sales, inventory management, and employee productivity will pay for the system within a very short period of time.
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