Up Your Manufacturing Company’s Marketing Game with Point-of-Sale Data

By Jim Perdue, Director, Client Strategy

Your manufacturing company recently launched a new marketing campaign. Naturally, your next step is to measure the success of your campaign by tracking the ROI on your investment. You know how much you spent. Now you just need to follow your customers’ trails to see how that spend relates to sales.

You can see that users are following a pay-per-click (PPC) search ad to your website, then navigating to a where-to-buy listing of your distributors. You can even see that they clicked-through to a dealer like Grainger, or Acme, or Amazon. But once they do that — poof! — the trail disappears. You’re left with no further data needed to calculate things like campaign ROI, or lifetime customer value.

You can correlate campaign spend with orders or a leading indicator like dealer referrals. But this does not take into account factors like seasonality, conversion rates, and delayed time-to-impact. Existing AI machine learning technology can see through all that and accurately calculate the relative impact on business outcomes like revenue, margin, and cash flow. But it cannot tie a specific campaign to a specific customer transaction involving specific products on a specific date. For that, you need access to point-of-sale (POS) data.

The trouble, of course, is that most manufacturers do not collect any first-party POS data. Unless you sell direct to your end-users, your distributors are the ones holding those cards. And in most cases, they won’t share this data with you as a matter of course.

So what is POS data analysis, exactly? Why is it so important? And what can you do to gain access to your POS data? Read on to find out.

What is POS Data?

Every time a consumer makes a purchase, they generate point-of-sale data. That data is a record of all the details related to their transaction. Taken together, a company’s POS data is an extremely powerful resource. It allows marketers to analyze buying decisions with a level of clarity that simply isn’t available through secondary data. POS data allows you to understand the relationship between order history, pricing, loyalty programs, promotions, seasonality, product sequencing and bundling, product innovation, operational efficiency, and so on.

POS data can be used to drive smarter marketing decisions at the micro and macro levels. For example, on the micro-level, it can be used to craft customized marketing communications for individual customers based on their purchase histories. And on the macro level, a company could take the previous year’s Black Friday POS data to plan inventory and marketing activities for the following year’s holiday season.

In an era of seamless multi-channel buying, POS data is essential to your manufacturing company’s success. Without it, you’ll never have a real handle on your customers’ activities — or how your company is truly performing.

Passive versus Active POS Data

There are two different kinds of POS data: passive and active.

Passive POS data is data that is collected without querying the user for personal information. Put another way, passive POS data is data that is collected implicitly rather than explicitly. As you might expect, passive POS data is mostly transactional and anonymous. For example, it might include:

• Where the transaction took place (for example, in a brick and mortar store or via an online retailer)
• The exact items purchased in a given transaction
• The date and time of the transaction
• The prices paid (including any discounts)
• The method of payment (cash, check, or credit card)
• Path to purchase and time spent on various pages (for products sold direct on a manufacturer’s website)
• Device and browser information, in the case of online purchases

Active POS data, on the other hand, is point-of-sale data that customers actively provide over and above passive POS information. This type of data is collected using things like online order forms, product registration forms, warranty cards, surveys, and so on. Active POS data includes:

• Personal identifying information (PII), such as a customer’s name, email address, and physical address
• Credit card information
• Demographics, such as age and gender
• Other personal details, such as job title, industry, and so on

The Benefits of POS Data Analysis

Point-of-sale data makes your company smarter, full stop. In particular, it can give you deeper insights into:

• Pricing. POS data can help you identify the correct pricing for your products because it tells you your true market price or the price your customers are already actually paying for your products. Without POS data, you’ll likely never know whether your customers are buying your products at a premium or at a deep discount.
• What is selling and when. POS data shows your team what is selling and, perhaps more importantly when it is selling. This enables you to make better-informed decisions about everything from seasonal inventory fluctuations to staffing.
• Inventory management. Concrete, on-demand POS data can guide your team in making fast, flexible, and responsive decisions about inventory management.
• Product sequencing and bundling. By analyzing your POS data, you can identify purchasing trends, such as which products are most frequently purchased together. In some cases, you can even predict which products a customer will most likely buy next based on their previous purchases. The opportunities for individualized marketing, up-selling, and cross-selling are wide open.
• Program success and promos. POS data allows you to close the loop on sales transactions so that you know with certainty if a sale or campaign was worth the investment.
• Maximize touchpoints. Using integrated API (application programming interface) systems, you can maximize touchpoints. In addition, you can see how your customers are behaving, including repeat transactions across different locations and markets.

Gaining Access to Your Manufacturing Company’s POS Data

If your manufacturing company sells direct to consumers (or has recently started transitioning in that direction), then it’s really just a matter of thoughtfully leveraging the data you are already amassing.

If, on the other hand, you sell through two-step distribution, then you face more of a challenge. Your best bet is to try and broker a deal with your distributors to get access to your POS data (either in whole or in part). The more leverage you have over a given distributor, the better chance you have of getting them to agree to share POS data with you (but don’t hold your breath when it comes to a behemoth like Amazon). Keep in mind that you may have an easier time negotiating access to passive POS data rather than personally identifying information and other active data that distributors are bound to value more highly. However, if you manage to gain access to just the passive, transactional data, that will give your firm a big leg up.

If you aren’t able to negotiate a satisfactory deal with your distributors, then you’ll need to think creatively to try and figure out some of the same information using workarounds (more on that in a future article).

Point-of-sale data is an indispensable resource for any manufacturer. If you don’t yet have access to your own POS data — or if you do have access but aren’t fully leveraging it — now is the time to shift your priorities.