Point-of-sale (POS) systems come with dozens of sales reports that can give you a wealth of statistics about your business. Most systems have a dashboard that displays key metrics, plus various reports to customize with filters to get an in-depth look at your sales data.
The downside is that POS dashboards can be so data-rich that it becomes challenging to figure out how to sift through them. We’ll explain more about POS sales reports and outline four steps to help you interpret and learn from them.
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In addition to ringing up sales for your store or restaurant, POS systems capture information to inform myriad business decisions. Every time you ring up a sale or enter inventory into a POS system, data is collected and analyzed. Business owners can run reports daily, monthly, quarterly and annually to analyze that data.
Through these POS reports, business owners get actionable information on sales trends, employee performance and inventory management. This knowledge can give you an overview of the entire business or a snapshot of specific areas. Because POS systems integrate with back-office software, including the best accounting software, you can get a detailed picture of your business’s financial health.
If you’re working with a cloud-based POS vendor, you get the added benefit of accessing reports on demand and on the go. You don’t have to be at your store or restaurant to run POS sales reports because everything resides in the cloud.
Here are three critical POS sales reports you should plan to run regularly.
Consider the following four elements of effective POS sales report interpretation:
The first step is to decide what you want to learn from the POS sales report data. Ask the following questions:
The right questions help you focus on the data you need. They also help you understand what’s happening with your business so you can make more informed decisions.
Next, you must decide on the POS sales report that can provide the knowledge you want. You may need to filter your report by criteria such as date ranges to find the right data set. Multiple reports or filters may allow you to look at the data from different angles, augment it with additional details, or isolate it from other variables.
Next, examine the data you glean from POS reports over time. For example, compare your current data to the data from the previous day, week, month and year. This analysis helps you determine your sales averages and gives you a benchmark against which to measure current numbers.
Jim Barksdale, former president and CEO of Netscape, said, “You cannot manage that which you cannot measure.” If you don’t measure your data by comparing it against historical numbers, you won’t be able to identify abnormalities that indicate that something good or bad is happening with your sales.
Next, look for data patterns to gain insight into your customers’ buying habits. POS reports can reveal the following:
You must apply context to interpret data trends and learn from your sales reports. Context includes information beyond the statistics that explains why customers buy (or don’t buy) specific items. Here are some examples of context that can inform your sales report data:
Bringing context to your POS sales reports helps you understand the story behind the numbers so you can interpret what’s really going on with your sales. Contextual factors can explain sudden upticks, sales drops and other anomalies and inform your responses.
Say you have a children’s clothing store and suddenly sell out of the little white gloves you usually sell just a few pairs of in the spring and winter. However, you learn that a local dance class is using these gloves as part of a costume for an upcoming performance. This information explains the demand.
If you didn’t know the context of this increased demand, you might assume it’s a trend and order a massive quantity of these items. Then, because it was a one-time occurrence, you’d be left with excess inventory you’d have to sit on or deeply discount to move. However, considering the context, you realize it’s a one-time occurrence and can restock at the same levels as before.
The best POS systems provide robust reporting features you can access in real time from mobile apps. Before you commit to a POS system, ensure it has the precise reports you need to run your business efficiently.
Sales reports can be basic or detailed, depending on the information you want. Here are three benefits of generating and analyzing sales reports:
When you interpret your POS sales reports correctly, you learn valuable information about your business. As you get more familiar with your data and POS system, the process will get easier. You’ll be able to ask more in-depth questions about your sales numbers, product mix, employee performance and customer behavior.
The more often you run POS reports, the better you’ll understand which reports and filters will lead you to the answers you need. You’ll also become familiar with the patterns you should look for in your data, put the data into context and consider how various factors contribute to the story your sales figures tell you. That way, you can make smart decisions that help your business prosper.
Max Freedman and Donna Fuscaldo contributed to this article.