Gaining on customers with targeted information

They speak the language of bar codes. They impart knowledge as valuable as profitable year-end sales. Who knows how they work, with their miles of minuscule wiring and billions of computer bits? They just do.

Basically an electronic data collector within a cash register, point-of-sale (POS) systems are fast becoming a business necessity to retail toy operations of any size. Though retailers customarily have turned to them just for purchasing and inventory control, POS systems can do much more. When properly programmed and intelligently used, they yield priceless information about customers and their purchases to help you increase sales as you respond to their buying needs. The result? A long-term and loyal clientele.

When you know what your customers want and can deliver that, you do more than make a sale. You can also target your marketing to specific groups of customers and predict who your preferred customers are likely to be. In doing so, you are establishing a lasting relationship with them. In short, an effective and creatively applied POS system increases your chances of seeing your customers return to your toy store, again and again.

"In today's market, you must retain the customers you've got. A sluggish economy and growing competition demand it," stresses Bellair International's Jean-Paul Cormier. Bellair is a leading POS supplier in Markham, Ontario. "Customer information becomes very important for retailers to respond to their customers' needs."

Once upon a time, most shop owners knew every one of their customers by name, as well as what they did over the weekend and how their kids were doing. These days, this kind of relationship between store owners and their customers is almost unheard of, except maybe in smaller communities. Yet, more and more consumers are demanding quality individual treatment when it comes to service and products. Retailers must comply, if they expect to outpace their competition in the race for a loyal clientele and healthy profits. With a POS system, you can keep in much closer contact with the people who shop your toy store.

It all begins with getting to know them. Today's POS software provides comprehensive customer profiles from information established at the time of sale. Along with name, address and phone number, it records customer-purchasing history. This can tell you everything from what toys they bought their nieces last Christmas to when their own kids' birthdays are.

What customer doesn't enjoy being called by name and recognized for which toys they buy from you? But more than that, depending on the information you gather from them, you can market specific products and promotions to a particular customer base. For instance, if you know the names and addresses of those customers who regularly purchase a certain brand of dolls, you can selectively send a mailing to them when your supplier offers you a deal on that brand, instead of everyone in your database.

With a POS system, you can also find out who your biggest customers are and who they're likely to be, based on the '80-20 rule' that 20 percent of your customers make up 80 percent of your sales.

But don't forget your suppliers, manufacturers, employees and financial institutions. If you use a POS system to answer only to your customers' needs, you won't receive the best support from the others to help you better serve those customers.

"With suppliers, it's a matter of talking more intelligently with them, by providing the information to help them plan their inventory levels," says Nunzio Cernero, president of Business Growth Consultants, a business consulting firm in Hamilton, N.J. "If you can let your suppliers know about an increasing customer demand for a certain product, for instance, they'll more likely have that item available for you when you need it."

Employees who know the demographics and purchasing preferences of your toy store's customers can better serve them. "When employees know what products customers buy, they can talk to them with that in mind. Your staff should also know who your best customers are. To not be aware of who are spending the most money at your store is to risk losing those customers when they don't feel properly recognized," notes Cernero, who encourages retailers to also reveal store sales levels and trends to staff. "There's a lot of research that shows you get better results with employees when you share that kind of information with them. They feel more a part of the business in helping to contribute to its success."

You can provide that same sales data to inform and impress your banker. "It blows them away to give them an analysis of your customer base regarding who they are, and how sales are growing or leveling off," says Cernero. "By supplying this, you show that you understand where your business is and where it's headed."

A POS system is only a tool, however. It can't tell you everything. Some information is too individualized for the system. Information such as how customers heard about your toy store, why they enjoy your selection of plush or what they think of your sales help. These questions can be very subjective, yet very fundamental, in gathering information from, and about, customers, so you can find out if they're getting what they want from you.

The critical issue before you take on any POS system is, ultimately, to make it work for you rather than you work for it. The information your POS system collects for you should provide a service to your customers, vendors, employees and financial institutions that translates into more sales and increased profits for your toy store.

First, know what to look for in a POS system. "Get only what you need, something simple and easy to use. Skip the bells and whistles like statistics, bell curves and consumer behavior modeling information. Many systems are way too complicated for most smaller retail businesses. You want something that offers basic data such as customer demographics, products purchased and dollar amount," says Cernero.

Once you input customer information in your POS system, their future purchases automatically are tracked. When customers are ready for you to ring up those toy trucks or teddy bears, you can easily retrieve valuable information simply by keying in their names or phone numbers. With that information, you can identify and keep a record of loyal customers, reward them with special promotions and establish a growing rapport with them.

For example, when your POS system records customers' names, addresses and phone numbers, you can notify them of that upcoming buy-two-get-one-free promotion. If you know the birthdays of customers' children, they'll be pleasantly surprised by the greeting card they receive with an offer for 10 percent off their next purchase! Say you program your POS system to indicate information about the toy preferences of your customers' children. Next time that person comes in to buy toys, your staff will be quite impressive, already knowing a little something about playthings preferred by that customer's kids. Too, with a system that monitors how often someone shops at your toy store, you can even celebrate that customer's 100^th visit by giving him or her a free gift.

Your customers may not realize that your sophisticated POS system is doing all the work, but they can't help but notice that you're interested in and responsive to them. That, and the quality products and service you provide, will increase their chances of visiting your toy store, instead of your competitor's.

In spite of their inherent technical complexity, allowing for all the benefits they provide, POS systems are surprisingly easy to use. Many systems have customized keyboards specifically designed for fewer keystrokes, which makes for simple training and quick inputting. The newest ones offer 'touchscreen' technology whereby a mere touch of the finger directly on the computer monitor activates a transaction. And if bar code and credit card transactions are included in the system, often the 'total' key is the only one that needs a tap.

Communications has come a long way. Rather than just the telephone lines and a slow connection at night to transfer data between stores, you can now take advantage of new technologies, such as cable, ISDN or DSL. These dedicated connections allow you to share information more easily between store locations, access centralized functionality from any location and establish newer forms of communication with your clients, from e-mail campaigns to computerized customer loyalty programs.

If a well-designed and fully supported POS system offers so much, why do many toy store owners and managers still rely on just cash registers? Fear, suggests Cormier. With little or no computer experience, they imagine a POS system as some ominous machine looming over them with nobody knowing how to run it.

"The answer for reticent retailers is to venture out and look at these systems," he says. "Ask for a demonstration, operate the system yourself and show it to your store managers. You'll then see the simplicity of the operation, and your concerns will probably be resolved."

Your new POS system will allay more than computer anxieties. There is no better method of recording and utilizing meaningful customer information. But be clear about how you want your POS system to work for you. Collect information with the continuous growth of your retail toy business in mind. If you want to develop long-term relationships with customers, you'll need to measure long-term results.

"Set goals with your POS system," advises Cernero. Do you want to reduce costs, increase sales or lower inventory levels? Do you want to reduce shrinkage from inaccurate sales calculations or employee theft? "Measure results before you install the system and again afterwards. If it's not doing what you intend, or it's taking you too long to accomplish something, then re-evaluate the system and its worth to you."

When you recognize where in your business you can benefit from a POS system, you're that much closer to providing the best service you possibly can. In return, you can expect the loyal customer base that serves as the foundation for any successful toy store.