1. Analysis
February 20, 2019updated 23 Dec 2019 9:25am

How can point-of-sale data drive retailer revenues?

As brick-and-mortar retailers face increasing pressure, advances in cloud technology have made the in-store point-of-sale (POS) a data mine that could help boost revenues. David Buckingham, CEO of POS marketing specialist Ecrebo, explains how retailers can take the reins when it comes to till-based data capture.

By Joe Baker

In an era when high street closures are a regular fixture in the headlines, finding ways to gain customers’ loyalty has become more important than ever for brick-and-mortar retailers.

In this respect, UK-based technology specialist Ecrebo sees the point-of-sale (POS) as a critical opportunity. Last year, the company launched its OnPoint Software, a suite of cloud-based solutions that help retailers learn and act on customer behaviour based on data collected at the till.

The software captures real-time data from every in-store transaction – everything from the time, store, checkout lanes, and cashier IDs linked to a transaction can be tracked and presented to retailers in an online user interface. Using learned customer behaviour, retailers such as Topshop, Pandora and Dixons have been able to create targeted customer campaigns and personalised offers at the till.

Joe Baker: Why do high street retailers need solutions like Ecrebo OnPoint?

David Buckingham, CEO of Ecrebo: There are very highly publicised pressures on brick-and-mortar retail. Obviously, many retailers have big overheads in the form of fairly broad store estate. So there’s a big challenge there to try and find ways to reinvigorate that and make some money on it.

Essentially one of the key elements is to give customers a reason to keep coming back. The online giants deliver choice, convenience, options and good pricing. Our belief is it is possible to deliver all of those things in a physical in-store environment with the right technology.

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We are able to identify a customer from a transaction and on the basis of that have some analytics that enables a retailer to effectively target customers with meaningful reasons to come back in-store at the POS. That has a tremendous effect on continuing to build the relationship and ultimately getting customers to come back and spend more money.

For example, if I go into retailer X every couple of weeks and I spend on average £25 every time, that retailer might try and encourage me to stretch my spend to £40. [It could be] a coupon that says when you come back next time, it’s £5 off if you spend £40.

So it’s an incentivised discounted approach to get me to spend more money when I’m in the store, but it’s relevant to me because I’m a frequent shopper. And if they can stretch my spend even through offering a discount, it drives the top line and the bottom line as long as they get the discounting or promotional strategy correct.

JB: How do your clients benefit from your offering?

DB: Each of our clients uses the software in relevant ways to them, and as a result of that they invest quite heavily in software, but also the targeted promotional strategy means they can measure the actual effect on top line sales and follow that through to the bottom line.

The way you can do that is by effectively executing [operations on] a test and control basis, so always hold back a control group of customers that look very similar to the ones that you are executing against. The only difference is the customers are issued with a targeted promotion, and you can see the incremental spend derived as a result of those promotions.

JB: What technology trends have led to these developments in POS data?

DB: Probably the single biggest thing has been the advent of speed cloud computing. As everyone knows, technology develops at a tremendous rate and the cost of technology comes down over time.

Given that we’re enabling retailers to interact with customers at the POS, clearly one of the most important things for a retailer in that scenario is they cannot afford to delay the transaction, so we have to be operating effectively in real time.

When a transaction is closed, there’s about a second between the payment finishing and the receipt printing so that’s the amount of time that we have to do our thing; identify the transaction; send it out to the cloud; do the big lookup; send the information back down to the POS and then, in this case, issue a printed coupon.

There’s a lot of things that probably enable that, but probably the single biggest thing is cloud computing, which has tremendous processing power. That means that the round trip time for the data coming out of the POS, up to the cloud and back again is typically several milliseconds.

JB: What are the next steps for technology in this area?

DB: One is broader adoption. The technology we’ve been talking about here has multiple potential applications in retailers that will vary a little bit depending on the retailer’s strategic direction, but probably the single biggest thing is the omnichannel nature of what we do. So, there’s obviously a massive focus on e-commerce and digital communications.

In the UK, in excess of 80% of all purchases still occur in a physical store. So I think lots of retailers are quite rightly investing in their digital strategy and ways in which they can engage with customers in a digital fashion. Everybody thinks that millennials are all about digital – they kind of are, but they also love paper coupons!

This is about delivering scale to retailers today and tomorrow. What we do today is equally applicable in a brick-and-mortar environment as it is in an e-commerce world but we should enable retailers to follow customers as they move across channels. Don’t miss out on the 80% of transactions that are in the store today. In time, who knows where that will go – is it going to be 75%? 60%? Who knows?

I think there will always be a role for brick-and-mortar retail, but as that number continues to change the point is that this [technology] enables multi and omnichannel communication with customers on behalf of retailers, and therefore that’s probably the biggest application for the future.

JB: Do brick-and-mortar retailers need to take lessons from the world of e-commerce?

DB: I don’t know about lessons but there are some learnings there for sure. What do people like about online retailing? Choice, convenience, there’s never an issue with stocks typically, and personalisation. Amazon knows all about you because it’s got all of your purchase history stored.

So those things can be applied to a physical brick-and-mortar store through the technology we have been talking about and really it’s that personalisation and convenience that is still a tremendous opportunity to really reinvigorate brick-and-mortar retail.

JB: Is it a challenge to ensure that using POS in this way isn’t intrusive to consumers?

DB: It can be. We are now in a post-GDPR world so data protection and privacy are obviously paramount and clearly there are different levels in which retailers can deliver personalisation, from the slightly more generic to the highly individualised and personalised.

But if you are going to go down that path you have to make sure you have the right customer permissions. There are ways in which you can actively encourage and ask for customers to opt-in, but also just by asking for the correct marketing permissions so that you’re not being intrusive in a way that would alienate your potential customer base.

So yes, it’s a consideration. But most retailers if not all are really [aware of] the sensitivities around that. You’d have to be either naive or a little bit unlucky to be falling foul of personalisation regulations these days.