Make Data Driven Decisions with your POS
For Robert Ellis, of Crooked Oak Farm, his Square device is a necessary evil of selling at the farmers’ markets. He accepts credit card payments because he’s committed to top-level customer service, and most customers prefer that payment method. But he resents the high fees. And he gets frustrated that the processing time (even just a minute) slows down the pace at which he can service his customers, and he always has a long line – which for Robert is antithetical to good customer service.
For many farmers, the Square reader is simply a credit card processing device they use at farmers’ markets. And a frustrating device: besides the processing fees, it can be difficult to integrate with QuickBooks… wreaking havoc on an otherwise, straightforward bookkeeping system.
The questions are:
- Do you need it?
- If so, how do you get the most out of it?
- And how do you make it play nice with QuickBooks?
1) Do you need to accept credit cards?
A few weeks ago, I went to Belle Isle Seafood for dinner. Nestled behind the airport with a view of Boston Harbor and the skyline, they have a reputation for serving up the best lobster roll in town. No surprise, the place was packed! We ordered two lobster rolls and a few beverages… the bill came to $75. After the tip, it was closer to $100. While this seems like a lot of money for a few sandwiches (and it is!), it also seemed like the average check size. What makes this remarkable is that they do not accept credit cards. Everyone there knew this and walked in with at least $100 cash in their wallets (even though the average person usually carries less than $40). In an era of Venmo and Apple Pay, their customers adapted their behavior because they know the experience is worth it.
Bottom line: if you effectively communicate with your customers, and you have a product they crave, they will be prepared for cash.
That said,
- Having a line isn’t necessarily a bad thing. Have you been to a food hall, contemplating which counter to buy food and noticed one counter had a long line and the other did not? How did that impact your decision? Often, when we see similar options, we might question why everyone’s waiting in line for one vendor but not the other. And we may select the option with the line because, the logic goes, it must be better if everyone’s in line. Lines beget lines.
- Customers often spend more when they shop by credit card. One study suggested that customers will spend 83% more when using a credit card rather than cash.
Most credit card processors, like Square, are more than just a credit card processor. They are a point of sales (POS) system that, if used effectively, can help you learn more about your customers and make data-driven decisions to improve sales and profitability.
2) How do you get the most out of your POS system?
Matt LeRoux, from Cornell Cooperative Extension, tracked 8 farmers selling at 16 different farmers markets for 2 years to learn what data could be gleaned from the Square POS system, and how that could help farmers…
…Make Data Driven Decisions to increase sales and profits.
The working premise of his research is that there are two levers to improve sales…
- Increase the number of customers that buy from you and
- Increase the amount they spend
A POS system can offer a wealth of data at a farmers’ market that can help you better understand your business. You can learn:
- What does the average customer spend?
- How many items does the average customer purchase?
- What time of day is your busiest?
How can this help you improve sales?
Increase average customer spend
Your POS data will tell you the average price of each item sold. For the items below your “average spend,” you can either eliminate that item, or repackage it to increase the sales price. For example,
- Sell garlic in a bundle of “2 for $3” instead of “$1.50 each”
- Increase the size of a bunch of kale so that you can increase its price
Increase number of items purchased
The more items each customer buys, the more they spend. So if you don’t want to play with your pricing/packaging to increase the sales, then how can you get customers to buy more items? Matt offered a few suggestions:
- Consider arranging your display differently to grow items together
- Offer specials of “buy 3 items for $20”
Another way to get customers buying multiple items is to offer recipes that utilize many of your farm ingredients. If you need ideas for recipe cards, I have a bunch on my website for free downloads.
Improve sales during slow times
It is unlikely you can increase customer counts during busy times, and you have more room for improvements during slow times. If you know when your table will be slow, you can:
- Restock for the slower times so the display looks full and inviting
- Make eye contact with customers to draw them in
- Offer promotions and samples during the slower times.
- Do you have limited availability of a specialty crop… pull that out for the slower periods?
While the sales data does not necessarily tell you what tactic to use to improve sales, you can implement changes and then track your progress towards a new goal. Do you have a higher customer count during your slow periods? Do they spend more on average? If a tactic isn’t working, you can try something different.
You can manage what you measure!
3) How to Integrate Square with QuickBooks
Certainly, Square can be a powerful tool to track sales data, as well as tracking sales strategies for effectiveness. But how do you capture the base sales data into QuickBooks so you can continue with cash flow and profitability management? We all know it can be a mess! When you download the Square data into your QuickBooks, you get a single transaction for every item purchased. And the amount deposited into your bank account according to Square never matches what shows up in your bank feed. While this can feel like a mind-numbing challenge, there is an easy, elegant solution!
I share the process in this video.
How have you used sales and financial data to increase sales?
