Is Your POS Ready For Black Friday?

The Link between POS Throughput and Sales

It’s Black Friday tomorrow! Now I know, Black Friday is the huge shopping day after Thanksgiving in the US (and seems to be gaining popularity here in Canada), but it’s so much more. That retailers and restaurant owners often don’t understand the greater importance of this day is more than a little surprising. Whether it is Canadian or Is Your POS Ready For Black Friday?American, the symbolism of Black Friday for retailers and restaurant owners needs to be clearly understood. In addition to being a big shopping day for brick and mortar stores and online retailers alike, Black Friday is the date that accountants say retailers stop being in the “red” for the year and begin making a profit – or are in the “black”. That retailers operate for 11 months of the year at a financial loss is a mind blowing concept that many people have a hard time coming to grips with.

Black is Good

Black Friday seems like such an ominous term. Too bad it can’t be Green Friday… it sounds nicer, and more like money… but we Canadians don’t have green money… Oh well. Black Friday it is and we should be glad for it. If nothing else it’s a date on the calendar which seems to give us permission to pull out the garland, play carols over the loudspeakers, and start those Christmas promotions rolling. It gets customers excited about the Christmas season, even if they’re not quite ready yet. So it’s a calendar date you should mark every year as an important reminder of your need for POS Readiness.

What is POS Readiness, you ask? Have you taken the required steps to review your POS and make any necessary improvements and do the proactive maintenance on your point of sale system to ensure your Christmas season hums along profitably? Let me put it another way: If your profit for the year is earned over the next 4 weeks, it means that customers are going to spend more money over the next 4 weeks than they have all year. Ideally, you want them to spend a lot of that cash with you. Are you ready to take advantage of it? Remember, failing to plan is planning to fail.

Do NOT Make Customers Wait

I can’t stand waiting to spend my money. In fact, I won’t. I have too much to do, too little time to do it, and zero tolerance for wasting time being made to wait for a retailer. If I walk into your store or restaurant and see a line-up I may turn around at the door. If I don’t turn around and end up in your checkout line, during my idle time waiting I start thinking about what is not being done while I’m waiting or what I have to do next. Make me wait too much longer, and if I don’t really need or want the item you’re selling me, or I think I can pick it up more conveniently somewhere else, I’m gone. This is death for a retailer. If I happen to find it at the next place easier, faster, and it’s cheaper or better, I’m probably gone forever. I’m not alone in this behavior.

A recent retail time survey done by Great Clips, a Hair Salon chain, recently determined that your customers are not willing to wait long either – 5-10 minutes or less is considered reasonable by 94% of respondents. Any longer than that and they think your business is poorly run, or worse, that you don’t care about their business. Long wait times was ranked 2nd by those surveyed as the thing that annoyed them most – it was a close second behind “rude staff” which was ranked number one.

Study Your Lines

Take an honest assessment of your lines – if you haven’t opened your retail store or restaurant yet, look at the lines in the stores of your peers, and by lines, I mean the line-ups at the point-of-sale terminals or cash registers. Are they long? Are they too long? Get a stopwatch out if you have to. Do customers have to wait longer than 5 minutes to spend their money with you? To solve this you need to take a good hard look at your point-of-sale system. Do you have enough POS terminals to serve your customers at the busiest times of your year? In my experience the answer is no. That’s because most retailers tend to say the same thing when investing in point-of-sale, “We’re not that busy Monday to Friday, we really just need it for Saturdays,” or my seasonal favorite, “We’re only open from this date to that date, we really don’t need it during the rest of the year.” If there was ever a formula for retail or hospitality failure, that most assuredly is it. Most people buy their cash registers for the first 11 months of the year – and they think they can coast on what’s “satisfactory” for the most crucial periods of sales. You can’t. Not if you want your business to thrive over the long-term and have a loyal customer following.

Let me put it another way. If you wanted to move a pile of something from the front of your store to the back of your store, would you get it there faster and easier if I gave you one wheelbarrow or two? Now think of your POS system – your cash register – as your financial wheelbarrow, and you need it to carry the money of your customers from their pocket to your pocket. It’s mission critical – you can’t do it effectively or efficiently without it.

It’s one of the simplest principles in retail – the more POS you have, the more money you make. You will find that more POS terminals increase your non-Christmas sales too. Why? If you’re a restaurant your table turns happen faster due to the increased efficiency and redundancy, so your customers are more likely to come to you for breakfast, lunch, or before a movie time, when time is of the essence. Get them in and out quickly and they will return again and again. If you’re a retail store, triple-A+ personality types like myself are more likely to stop on the way home after work for that quick one or two item pick up, and if happily affected, are more likely to make it a routine. But if you make me late for work after lunch, or drag out what has already been a long day while I’m trying to knock something off my “Honey-Do” list, you’re never going to get me in your store again.

Cashiers! To Your Posts!

If a POS terminal is installed but there is no one there to man it, is it really there? If you do have enough POS terminals at your point of sale, please, PLEASE, man them with staff. There are few things more annoying to your customers than standing in line only to find that you have 5 POS stations but only two of them are open. If you doubt this fact consider your local bank, which is famous for having 7 teller wickets, but only two are open. Customers hate it. If you appropriately personnel your operation your customers will show their appreciation by spending more money in your store.

Every Business Has A “Black Friday”

I recognize that not everyone benefits from the wave of consumer insanity brought on by the Christmas season, but I would be willing to guess that nearly every retail operation has something similar to it. The Black Friday for a garden centre might be the Easter or Victoria Day weekend, depending where those dates fall and what the weather is like. Their “Christmas” season comes in the spring. They literally make it or break it during a short period of time between April and June.

So what’s your “Black Friday”? Put another way, what is the most important day or days of the year for your business? What about Mother’s Day, Father’s Day, Valentine’s Day, Halloween, Thanksgiving, or New Year’s Eve? For summer seasonal businesses it’s all about June to August, with their Black Fridays being the two or three coveted long weekends in between. The number of POS stations you have is directly linked to how you are able to cope with the increased sales volumes at those critical times. Your ability to cope with the increased traffic is directly linked to your image in the eyes and minds of your customers. Ultimately, what your customers think about you is the only thing that matters. Image is everything.

If you’re reading this today, it may be too late for Black Friday, maybe even too late for the Christmas season of 2012. But it’s never too late for a retail or restaurant manager to recognize this important customer service strategy. This lesson is universal for any retailer or restaurant; you just need to apply these principles to your busiest season and adjust appropriately. If you do, you and your customers will see a lot less red and your bottom line will be more likely in the black.

How To Setup A Great Loyalty Program

Loyalty ProgramIn It To Win It!

If you’re in the retail or restaurant business and you’re not paying close attention to loyalty programs, you should be. It’s hard these days not to – they’re everywhere. For example, it was no surprise to me that 86% of Canadians are members of at least 1 loyalty program. The average Canadian is a member of 4 programs and the average Canadian household is a member of 9 or more programs. Folks are collecting box tops, trading cards, stamps, points, and buying memberships anywhere they can, and they have been conditioned to do so by the chains that nationalize their programs.

To my amazement, independent retailers and restaurants in Canada are not doing loyalty programs, much to their own detriment. Loyalty increases the frequency of existing customers and improves retention of new customers. Running a WagJag or posting a coupon in the local paper is much more expensive than marketing to your existing customers, and this has been mathematically proven over and over again. Unless you are deliberately trying to attract new customers so that you can capture them in your loyalty program, save your money and invest it in your own loyalty offering.

Whatever promotion you offer, it should be intended to do four things:

  1. Drive more customers into your business
  2. Increase profits and revenue
  3. Increase stock rotation and preferably slow moving higher margin stock
  4. And provide you with customer data to remarket or analyze down the road.

In my career here at Armagh, I have seen hundreds of promotions offered by my customers. Many of them, unfortunately, do not do what they were intend to do, so here’s a few things that I have learned along the way that might help you to customize your own loyalty program for your retail store or restaurant.

Look Before You Leap

Consider your point of sale system and include your service provider in the discussion. I have seen retail store and restaurant owners have meetings and print marketing materials and send out email blasts only to find out that the loyalty program they have dreamed up isn’t possible with the POS system they currently own. This usually leads to self-inflicted strained relations with their POS system provider and is completely avoidable by simply doing some homework first. Whatever you plan to do, it must be compatible with your POS system, as the POS system is absolutely critical in the tracking of whatever program you launch. If your POS system doesn’t have a points or loyalty program, or there is no compromise available between what you want to run vs. what is available in your system – you need to change POS systems. If you’re a new business owner and you haven’t selected your POS system yet, you should consider Catapult for retail or Digital Dining for restaurant. Both systems we offer have loyalty programs that are very detailed and easy to use, and even if you don’t select one from Armagh, you should use them as a benchmark for whatever system you ultimately choose.

What’s In A Name?

It must have a catchy name. I know. It’s cosmetic, and that’s unlike me, but it really matters what you call it. Remember, if you market the loyalty program effectively to your customers you’ll eventually have thousands of members and the program will be around for decades. You really need something that your store can be proud of and your customers can easily remember so they can pass on to other customers by word of mouth.

It Must Be Well Planned

They call them loyalty plans for a reason – they’re planned. Once you have a great loyalty program name, you need to carefully organize the details of the program. You can’t do this willy-nilly. If you need some professional paid help with this, get it, and I can’t stress this enough. You need a program brochure outlining the details of the plan so that your staff can easily educate themselves and hand out to customers asking questions about the program. You need a sign up form asking for the customers information so that your staff doesn’t unnecessarily tie up POS terminals with data entry. You need a customer card or key-tag so that customers can be easily recalled at the POS and their purchases and redemptions can be tracked with ease. You need to determine the percentage return on your loyalty plan and how your customers will realize that reward.

Keep It Simple Stupid

Remember who will sell this program – your staff. Make it too complicated and they won’t even try. Even if you sell the loyalty program yourself, remember who you want to join the program – your customer. Make it too complicated and they won’t try either. You should also actively try to avoid program contradictions with other marketing initiatives. It’s not a good program if it causes you to get into arguments with your customers over whether or not you’ll include one thing or another in your loyalty program. Make the reward calculation simple – it should be a points or dollar percentage return based on purchases, and your POS system should track it automatically. Beware of anything you have to mail, count, track, or redeem manually – it is unlikely that any plan you create that has an intense labour requirement on the part of you or your staff will be successful. Any promise you make that is not fulfilled is worse than making no promise at all. In other words, if you promise a customer you will mail him a gift certificate if his purchases reach a certain level and you fail to follow through because it’s too much work or you don’t have time to do it, your loyalty program will be contrary to your goals.

Quid Pro Quo

Don’t be afraid to ask for some information in return for a decent loyalty program and make sure your staff are trained on how to ask for it politely. Ask for their name, address, postal code, telephone number, cell phone number. Also ask for their birthday and anniversary if appropriate. The information that you gather when people join will be invaluable for tracking sales preferences, remarketing to your client base, keeping your customers informed about new products and services, and monitoring for fraudulent use of the program.

Make sure your sign up form has a question about receiving a newsletter or information from your company. Make sure your brochure has a sincere statement about privacy that you intend to follow and be honest about how you intend to use their information.

Make Your Loyalty Program Worthwhile

Customers are better informed today than ever before. Using Google, they can easily look up other competing loyalty programs online and determine which ones are the best , and they will not be easily fooled by a loyalty points scheme that promises much and delivers little. On the other hand you don’t need to give away the store either. Shopper’s Optimum program gives back $1.70 for every $100 spent – that’s 1.7%. Canada’s most famous program – Canadian Tire Money – gives back 50 cents for every $100 spent, which works out to a 0.5%. It doesn’t seem like much until you consider how many programs boost their programs for customers by offering double and triple points to encourage customers to buy slow moving but higher margin products. A triple points item on Shopper’s Optimum pays the customer at a rate of 5.1%. On the flipside, they will encourage redemption when they need cash flow and stock rotation by offering double and triple redemption days at strategically slow periods during the year. Theoretically a Shopper’s Optimum customer purchasing a triple points item and redeeming on a triple points day can be paid back at a whopping rate of 15.3%!

It’s An Investment

If you take nothing else away from this article, remember this:

You are investing in your customer. This is not the same as a cost. Investments pay a return on your money and you can measure it. One of the most common mistakes that I see when people set up their customer loyalty program is the assumption that they will lose money on their regular customers – there is a fallacy that says “they would buy anyway”. Unless your store is in a prison and your customers are prisoners, this is an incredibly foolish assumption. Even if you’re the only game in town your customers still have lots of options. They can make their purchases online; they can go one or two towns over. Worse yet, they can decide to stay home. There’s a difference between liking your brand and being loyal to your brand. Customers that like your brand buy from you. Customers that are loyal to your brand recommend you to others and buy from you.

Two more things to consider – the relative cost vs. the relative redemption. At a rate of 1.7%, in order for your customer to get $20.00 worth of value they have to spend $ 1,174.47! And let’s compare this to other promotions you may have run in the past. For example, a restaurant might offer a two for one coupon. That’s a discount of 50% plus the advertising cost of running the coupon in the magazine or newspaper! WagJag and Groupon deals are even more expensive. By investing in a loyalty program you take your advertising dollars, give them directly to your customer, and then they take those advertising dollars and spend them in your store. By running the program yourself you eliminate the middleman and can offer more value to your customer for the same or less money.

Sell! Sell Sell!

Your goal should be that 100% of your customers become a member of your loyalty program – period. To do this you need to sell the heck out of it and to do that you need to get your team on board. There shouldn’t be a single customer that comes to your cash register that doesn’t get asked at least once if you are a member and would like to join. When new customer boarding on the program begins to lag, offer an incentive plan to your service staff to board customers on the plan. Pay them 50 cents for every customer that joins during their shift.

Your customers will have questions, so you should have a simple brochure that explains the loyalty program in detail and has a FAQ (Frequently Asked Questions) list. Your staff should be well acquainted with the details in case they are asked a question.

You must be dedicated to the long term success of the plan. You can’t run it for a week and complain that the program isn’t working. You have to use it as a long term strategy for increased sales and ultimately increased profits.

Signs Of Success

Say it out loud with me… “Redemptions are good.” A loyalty program that is never redeemed is not a successful loyalty plan. The best loyalty programs have a high rate of redemption. Remember, we want to build long-term loyalty – not run a flash-in-the-pan promotion. For the loyalty program to work, customers need to perceive value for their time and effort to participate. You should also by now have a database of information that you can now market directly to.

Review and Measure Your Loyalty Program

Ultimately, you need to sit down and look at the data, confirm if the program is working. You’ll need to get some reports out of your system such as total sales vs. total redemptions, and evaluate the return on your investment. You may not be 100% successful at first try and therefore may need to make some adjustments to get it right. Eventually, your loyalty program will begin to pay off. By then it’s on auto-pilot and you can turn your marketing attention to other things, like getting even more customers.