Customer Focus, Multi-Channel Connections Top List of POS Initiatives in Aberdeen Report

It’s no longer enough to improve store productivity and decrease the cost of operations with a new POS system. Today’s smartest retailers are also focusing on increasing customer satisfaction and revenue growth, as they implement new POS systems, according to the February 2008 Aberdeen report titled Migrating to Customer-Centric Point of Service.

Aberdeen’s report is a compilation of feedback from 175 global retailers.

The problems for current retailers begin here: 60% of those surveyed report that their POS systems are five years or older, and of those 60%, 35% are running POS systems more than 10 years old. To achieve improvements, these retailers must upgrade to next-generation systems. When they do so, then they will be able to improve order management, increase loyalty and streamline checkout.


Three Contributors to Checkout Back-up

Old, legacy POS systems that are not updated and upgraded create major hold-ups at checkout, leaving customer frustrated as they leave the store. The three primary areas that can benefit from POS upgrades include: order management, payment processing and Loyalty programs & guided selling.

  1. Order Management: Outdated technology causes touch-screen failure, receipt malfunctions and scanning inaccuracy.
  2. Payment Processing: Without software upgrades retailers are facing card reader problems, payment authorization failure and increased system downtime.
  3. Loyalty Programs & Guided Selling: System slowdowns frustrate customers with card reader malfunctions and ineffective promotion execution

How to Identify Successful POS Strategy

Aberdeen takes three key performance indicators (KPI) into account when evaluating POS strategy: percentage of satisfied customers, average checkout time, and increase in transaction size year over year. The top 20 percent, best-in-class retailers report the following results:

  • Percentage of satisfied customers: 84 percent of best-in-class retailers report that 80 percent of more of their customers are satisfied.
  • Checkout time: The best checkout time reported is 1.5 minutes on average.
  • Increase in transaction size: The top 20 percent of retailers report a 19.5 percent increase as an average improvement in transaction size over 2007.

Best-in-Class Strategies for Success

The top retailers are focusing on three key areas to improve the bottom line through better POS strategies: integrating the brick-and-mortar channel with the ecommerce channel; accepting new forms of payment; and expanding loyalty functions.

  1. A multi-channel approach: By integrating their POS functions with cross-channel service functions, retailers can offer a more unified customer experience and simplified payment processes. Customers can now shop across channels, such as ordering online and picking up in-store or purchasing online and returning in-store.
  2. Better delivery of payment: Retailers are addressing payment issues in a number of ways, including accepting more types of payment such as gift cards and contactless payment. They also are beginning to accept mobile payment through handheld POS devices.
  3. Creating a loyal customer: POS software enhancements improve retailers’ ability to store customers’ loyalty records, thereby improving promotional offerings. Expanded loyalty offerings can include gift cards, branded credit cards, individualized reward programs and customized incentives at checkout.

In the report, Aberdeen also cites specific retailer examples of recent POS successes. For more information access the report at:

Posted on 4/23/08

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