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The Green Sheet Online Edition

August 08, 2011 • Issue 11:08:01

Can a POS system determine your success in a vertical market?

By Jerry Cibley
United Bank Card Inc.

As ISOs and merchant level salespeople (MLSs), we are often asked by our merchants how they can become more profitable, or we otherwise find ourselves in a position to teach merchants how to increase their bottom lines. Are we strictly the credit card people, or should we take on a greater role for our customers?

If you work in the restaurant vertical, for example, you needn't become an expert in haute cuisine or server training, but you can use the opportunity to become invaluable as a consultant or mentor to your clients by expanding your horizons. Why not do so?

When I worked in the field, it was not unusual for me to receive phone calls from my customers asking my opinion on various potential marketing concepts or asking basic questions such as where they can buy good, used restaurant equipment.

My personal network always included local vendors that I had met in various restaurants. I always had the business cards of a restaurant broker; heating, ventilation and air conditioning company; used equipment broker; web designer; electrician; and refrigeration company. Sometimes I would feel like a human Yellow Pages, but it cemented my relationship with my end users.

Help cut costs, increase revenue

Having been in the POS business for more than 25 years, I am still shocked when I walk into a restaurant and see an antiquated cash register. When operators choose not to have a POS system, two possible reasons go through my mind:

  1. They want one but cannot afford the cost of a system.

  2. They can afford one, but do not understand how a system will enhance their businesses and increase their bottom lines.

Either of these reasons can easily be overcome. To counter the cost argument, you can offer one of the free or very affordable POS systems now on the market. Merchants no longer have to spend the enormous upfront costs once required for a POS system.

The second argument takes a little more explaining, but is just as easily overcome once the business owner has the facts. POS systems offer many crucial benefits to the restaurant's bottom line:

  • Forced accuracy: checks are audited to make certain all served items are included on the bill and that the math is correct. The POS also eliminates handwriting confusion and errors coming out of the kitchen as a result of such confusion. Research has determined restaurants typically lose approximately 2 percent of revenue due to these types of errors which can easily be avoided with a POS system.

  • Servers remain on the floor, allowing them to sell more food and drinks. According to a 1980 Cornell University study published by the National Restaurant Association, the extra sales amount to approximately one extra drink per six customers and an extra dessert per eight. Although this study is over 30 years old, I believe it is extremely accurate and reflective of today as well.

  • Increasing the throughput via automation and added efficiency, the restaurant is able to increase the number of table turns by approximately one-half to one and one-half turns per day. This increase is dependent on the type of restaurant. Fine dining generally has the lowest increase while pub style table service will see the highest increase in table turns.

  • Miscellaneous cost savings on things such as a two- or three-part guest check. Typically, carbonless guest checks cost over 2.5 cents each while thermal paper is only 0.25 cents per guest check. For an average restaurant doing 400 covers per day that is a savings of nearly $8.00 per day on physical guest checks.

Add up all the savings, and the general rule of thumb is as follows: a POS integration can bring as much as 12 percent of the yearly sales back to the owner. In a restaurant averaging $1 million per year, it is not uncommon to see an increase in profits of $80,000 to $120,000 after the installation of a POS system.

Unlike the disclaimers we often see at the end of weight loss television commercials, these figures are typical and should be achieved by the majority of merchants who install POS systems.

Find further revenue opportunities

In addition to these cost savings, many programs can easily be administrated through the POS system to generate additional return for your merchants. Imagine increasing the daily revenue for one of your clients by as much as 85 percent. Here are three ways to do it:

  1. Direct email: email marketing programs are simple to administer and design. Most POS systems can export customer names, or you can easily do the collection the old-fashioned way with paper and pencil.

    Professional quality email blasts targeted to the restaurant's slowest days will have immediate return and can be executed in a matter of minutes if you plan ahead and have predesigned emails in the queue.

  2. VIP loyalty programs: Most POS systems have integrated loyalty programs in which points are given for meal spending. Think of it as frequent flyer miles. The restaurant can choose to run double or even triple reward points to boost slow days with some amazing results. Even if the POS does not have a VIP loyalty program, many stand-alone systems will accomplish the same goals.

  3. Server contests: Promise a $100 gift card for the server who can up-sell the most wines, appetizers or desserts can fire up your servers. Most POS systems can give the owner the requisite information, although it can also be done manually if necessary.

Become indispensable

The bottom line: become invaluable to your clients, and they will not leave you. Provide this kind of business consultation, and they will begin to see you as a trusted advisor.

Cement relationships on a personal level as well. Start by becoming a customer of your merchants' businesses. Then go even further. For example, my wife, who is an excellent cook, often shares recipes with some of my clients.

One of my clients who owns a restaurant called a few years back and asked to speak to my wife (she is a college professor but loves to cook). A chef needed to ask her where to buy a specific dried cranberry and nut assortment that she had suggested for his salad.

I chuckled to myself and happily handed the phone to my wife. On the next visit to the restaurant, we were not charged for our meal. I thanked the owner. He told me to thank my wife and said he would buy his next POS system from her.

This kind of relationship greatly enhances merchant retention. To increase your overall portfolio as an ISO or MLS, step outside the box and find new ways to solidify your residual stream. Consultative POS sales may just be the way to do that. end of article

Jerry Cibley is a 25-year veteran of the POS industry. He has been the founder of three POS dealerships servicing New England during his career. Today, Jerry is the National Sales Trainer for United Bank Card's Harbortouch POS division. As National Sales Trainer, his role with UBC is to train the company's sales partners on the intricacies of the POS business so that they can become POS experts themselves, ensuring their success with the free Harbortouch POS program. Jerry can be reached at jcibley@harbortouch.com.

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