How to implement Point of Sale marketing strategy based on customers' behavior
Point of sale marketing is nothing new. Merchants have been doing it pretty much since always. However, how they do it and what strategies they implement can draw a line between a happy customer and an annoyed customer. In this publication, we are going to look into where do retailers most commonly get point of sale marketing ideas and what are the problems associated with different approaches. And finally, we are also going to cover how to do it in the least intrusive and most effective way.
Figure 1. Example of a point of sale transaction
| Different approaches to pos marketing |
Before we start talking about different ways of doing this type of marketing, let's briefly explain what it is. So, a point of sale marketing is the type of promotion where a retailer tries to sell additional items to a customer at the till, just after they have already filled their basket with everything they needed. From a merchant perspective, motivation behind this is obvious. Do something to trigger the customer to buy more to increase the store revenue.
Living in a consumer-based world, we see this type of marketing tricks almost every day, in every shop we walk in. However, as some of you have already noticed, there are some forms of it which can really annoy us. And there are some forms of it which can actually make us buy more.
To give you an example of an annoying form, do you remember when you came at the till of a petrol station to pay for fuel and the cashier started selling you this special-offer chocolate bar? The retailer hoped it would increase the revenue by selling more chocolate bars but did this really work? Not from your perspective. Most likely, the only thing you wanted was to get out so this chocolate bar selling can stop. So why did this happen? Because someone just started unsolicitedly nagging you to buy an unrelated item which you didn't want. This is kind of intrusive to say at least. And nobody likes that. In our humble opinion, this could even be called the worst form of point of sale marketing strategy ever invented.
Another example we are going to look at takes a completely different approach. Some stores do sales analysis to find out what are the products that sell best but, are also, within an affordable and acceptable price range. When they identify such items, they do a bit of cherry-picking on top and once they have the best candidate, they display them immediately next to the cash registers. You know how supermarkets sell chewing gums or cold refreshing drinks at the tills? This is exactly why they do that. Everyone needs chewing gums or, will eventually get thirsty after a long and exhausting grocery shopping session, right?
However, let's review how effective this point of sale marketing strategy is from a more critical point of view. The whole logic behind this approach is to put the best selling item in a prominent place and hope it will sell even better. While this is not as intrusive as the example where the cashier is pulling your hand to but this special-offer chocolate bar, it is usually not as effective as merchants would hope. The reason behind this is that while the items on display are the ones everyone uses, they are not necessarily the items that most persons need at that very particular moment. That's why only a small single-digit percentage of persons who pass by the till, actually buy the products which are marketed there. On top of that, it is obvious to the people that retailers are doing this as a sales tactic and direct sales tactic never work quite well.
Completely differently to the first two examples, we've also been in a situation where a store gives us a coupon book at the end of the pos transaction. This is the least intrusive form of point of sale promotion, and we actually quite happily read through the coupon book later. Why wouldn't we as coupons and discount are always good, right? After all, receiving something at a lower price than everyone else creates a feeling of exclusivity.
The only problem with this is that, as we scrolled through all the coupons we got, there wasn't a single item on offer that we actually need. So what's it all worth when we won't use those discounts? Not a single one.
From a customer experience perspective, getting a list of coupons was a great feeling but, unfortunately for the retailer, none of them converted. Now, if the coupons were for something customer really needed right there and then, it would be a completely different story. The one with highest conversion rates and happiest customers.
But how can a merchant know exactly what a particular customer needs at a very particular moment so it can issue them coupons for exactly that? It's hard to know that for every single person given the fact we usually have quite a big retail assortment on offer. Or, is it really that hard?
| Let artificial intelligence do point of sale marketing |
Shoptimality has been developing AI technology for brick-and-mortar retailers and this is one of the problems we solved within our retail management software. Namely, our AI technology analyses your customers' behavior and learns what your customers like. With this data-driven approach, our AI is able to see what items are in particular customer's basket and then figure out what is the most likely product that that particular customer will need next. Following that, Shoptimality issues a Personalized Receipt Offer containing a coupon for exactly that product.
Figure 2. Personalized Receipt Promotion Coupon Example
Now, imagine if a customer came to a hardware store and bought a hammer. And Shoptimality printed a 10% coupon for nails. It's not intrusive as it would be printed on the receipt without anyone pulling the customer to buy something. But it's still something that particular customer would need as he bought a hammer. And giving an exclusive personalized offer to a customer for something they need anyways would just make them feel great. And, what's even more important for you as the retailer, would most likely make them to avail of that offer meaning more revenue for your business. That's exactly what we at Shoptimality believe is the best and most effective point of sale marketing strategy.