Mark Twain once said, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
In many organizations, significant decisions are often made without sufficient evidence. In fact, the higher you move up in an organization, the more likely decisions are made based on industry experience and expertise and less on what’s actually happening at the stores. We hire seasoned professionals and depend on their know-how to help the organization make good decisions. The wisdom of our staff helps us sleep at night because we know the organization uses industry best practices to ensure our success.
However, today’s world changes at a pace that often challenges our ability to predict behavior based on experience alone. Therefore, part of the wisdom we need to bring to our decision-making process should include a thorough understanding of operational details at the store level. Simply put, we need to understand what works and doesn’t work to incent customers to buy our goods and to measure the effect our front-line employees have on our bottom line.
Intelligent Strategies
The larger the operation, the more difficult it is to capture everything that goes on at the front of the store and, ironically, the bigger the effect that information has on the bottom line. Fortunately, there are tools that can help us figure out what’s actually happening at the stores. These tools provide valuable insight that improves understanding of customer incentives and employee behavior and effectiveness—concrete information that drives better decision making at all levels of your organization.
Many contemporary point-of-sale (POS) devices produce a journal of all the events that occur during the day. These events include financial events such as sales, returns and voided transactions, and nonfinancial events such as when the cashier’s drawer opens and closes. Using this information, a business intelligence (BI) tool can track sales of items, categories of items and certain specials over time during the business day. Because the information is collected at the transaction level, one can determine which items are purchased with others and form an intelligent strategy for building combos, mix-and-match deals and other specials.
Nonfinancial events can also be monitored to understand details about how your employees perform. A BI tool can monitor cashier activity and quantify cashiers’ behaviors across your enterprise. For instance, the number of voids and return transactions can be an indicator of suspicious behavior. Because an entire enterprise can be easily monitored by using this tool, your BI program can quickly show you which cashiers you need to monitor. You can then use in-store video to investigate suspicious situations and definitively determine what’s happening.
Sometimes, we ignore the obvious information that is right before us, and a BI tool can help us make those decisions as well. We have seen instances in which a BI tool shows sales information across time. In one instance, a group of stores had been operating on a 24-hour basis for years. However, absolutely no sales were occurring from 1 to 5 a.m. for some of those stores. Armed with this information, the owners closed those stores after midnight and opened them back up at 5:30 a.m. It took the reality of this data to convince the owners to change their practices. Making this change saved this company thousands of dollars in personnel costs.
Minding the Drawer
A good BI tool can take detailed information provided by the POS and display that information using charts and graphs so that the user can easily see trends and other patterns that convey what’s going on. It also can help highlight exceptional behavior. For instance, most successful cashiers are efficient in terms of the time required to process a sales transaction. They keep the cash drawer open only as long as necessary for a transaction.
When we see a cashier who consistently reports transactions that take long periods of time (e.g., keeps the cash drawer open longer), we can look at that behavior and investigate.
An effective strategy for managing employees and product promotions should include the experience of your staff and the extensive information provided by your POS, served up for you by a BI application.
The insight provided by these powerful applications can be just what you need to help you make wise decisions in today’s complex retail environment.
Gregg Peele is president and CEO of CMI Solutions, a software company delivering retail backoffice and wholesale fuel solutions. Reach him at gpeele@cmisolutions.com
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