Point of sale (POS)
Point of sale (POS) software definition
Point of sale systems help businesses conduct transactions with their customers, primarily for purchases and payments. More sophisticated POS systems can also manage inventory, staff, marketing, loyalty programs, e-commerce, analytic insights and more.
POS systems have come a long way since they were created to help businesses accept payments digitally. Businesses of all sizes use them to simplify and speed up transactions.
Like most digital solutions, these systems often come with features that offer insights into customers’ buying habits and can help you run your business more efficiently. Most sync with your accounting and inventory management systems, allowing you to further automate time-consuming tasks.
All entrepreneurs should be aware of POS technology to decide if it would be beneficial for their business.
What is a POS system?
A POS system helps businesses conduct transactions with their customers in real time. At the most basic level, these transactions primarily cover purchases and payments, but today’s POS systems offer much more. They help you run your business with capabilities such as appointment scheduling, managing loyalty programs, inventory, staff, marketing, e-commerce and more.
They can also offer powerful data analytics that will help you grow your business. They can provide real-time insights on sales trends, customer behaviour, staff performance and much more. This can save you a lot of time and eliminate guesswork.
POS systems are gradually taking over from cash registers, connecting to other parts of the business and offering more features, such as invoicing and customer management. They allow businesses to integrate customers’ digital payments into the overall business.
What types of businesses use a POS system?
While traditional retailers are the most common users, there are POS systems for virtually any type of business across most industries.
There are numerous examples of POS systems:
- Restaurants can use POS systems to take reservations, manage tables and for take-out and delivery orders. They can enable an interactive menu experience for customers and instantly communicate orders to digital displays in the kitchen.
- Spas, health clinics and beauty salons use a POS that allows customers to schedule appointments online with their favourite staff member, enable the spa to bundle services and offer packages, sell and accept gift cards, manage multiple spa locations, schedule staff and much more.
- Mechanics, dry cleaners and other service-based businesses use a POS system to manage parts, labour for repairs, supplies, shop capacity and staff.
How do you choose a POS system for your business?
A POS is comprised of two components:
- Equipment (hardware): The physical device that the customer or your clerk uses to enter the information at the point of sale. Depending on the POS software you choose, this could be a fixed terminal, self-service kiosk, computer, tablet or even a smartphone.
- Application (software): The software system designed to create, capture and process sales transactions, manage other aspects of your business, such as products, service options, schedules, pricing and customer contact information, and generate useful insights to help you grow your business.
It’s important to find a POS system that is well suited to your business and industry.
What capabilities do you need to support your day-to-day operations?
At the outset, most sole proprietors will find that a basic POS application with a payment processor that connects to their smartphone or tablet is sufficient for their needs.
To help your business grow, you may consider a system with more sophisticated features. A POS system can help you with:
- gathering data to better understand your customers (including previous purchases)
- reporting and analytics
- offering a membership or customer loyalty program
- customer relationship marketing
- sending digital invoices and receipts
- saving payment method details (for e-commerce)
- collecting employee time sheets and distributing commissions and tips
- providing an omnichannel retail experience for customers for both online and brick-and-mortar operations
- managing your accounting records
If you’re considering investing in a POS system, it’s important to make a list of key features and functions that would be most impactful in running your business. You may also do a little exploratory research to discover what POS systems can do. This could open up new possibilities and provide inspiration for new service options you might be considering offering.
What capabilities do your customers want?
Are there services you’d like to provide but lack the digital systems to deliver? Or maybe you’re not sure what your customers would want but you’re open to exploring possibilities.
Think carefully about the customer experience you currently provide—and the one you aspire to.
- How are my customers expecting to interact with me? Do I fulfil those expectations?
- What is the customer journey and experience like?
- Are there bottlenecks or pain points? Where are they?
- Would my customers prefer a more personalized service?
- How can I make their buying and shopping experience more convenient and enjoyable?
Once you’ve answered these questions and mapped out exactly how you want to serve your customers, you’ll be clearer about the features you’re looking for in a POS system. Make a list of the must-have and nice-to-have features so you can find a system that best suits your needs.
How to assess POS systems
Here are some tips for finding the best system for your business.
- Ask other businesses in your industry what POS systems they use and whether they would recommend them.
- Do an internet search for the most popular POS system in your industry. For example, “Best POS system for restaurants Canada.”
- Review the search results and weed out the systems that don’t have the features you’ve identified on your list.
- Take a deeper look at the top three contenders by:
- watching any demo videos they may have
- reading resources on their site such as articles or case studies
- Reach out to companies and ask for a product demonstration or a free trial to make sure it fits your needs. This would include:
- systematically trying out all the features you expect to use, such as:
- add a customer
- add a product
- go through the checkout process
- schedule/accept an appointment
- enter and manage inventory
- assessing how easy or difficult it is to use each function
- confirming compatibility with your existing hardware or software systems
- discovering whether you need to purchase your own payment processor equipment or services
- systematically trying out all the features you expect to use, such as:
- Assess the cost for each option and ask if there are discounts or promotions. You can typically expect:
- subscription fees for the software
- fees for each payment processing terminal or connection device
- Find out how quickly funds are transferred from the payment processor to your bank account.
- Ask about the training and support they provide to set up the system and if they provide ongoing help with any issues that may come up.
- Read online reviews of each product and ask the vendor to provide references.
For more on the many ways you can use digital adoption, see our article What is digital adoption?