Can a dispensary POS system do better than an analytic tool for analysis and decision-making?
When choosing the essentials to run your business, the tech stack always comes as a big step. Mostly because of all the online buzz around choosing the correct software for your business and, of course, important things like competitive advantage and scalability.
Also, if you’re just starting out, you don’t want to overspend on analytic tools you won’t use. Not when you have a POS system with all your data already. So, do you need analytic tools on top of your POS system?
In this article, we’ll go over the differences between dispensary POS systems and analytic tools to find out.
What Are the Three Types of Analytics?
First things first!
To analyze data, you must understand the three different types of analytics you’ll stumble on to. Here are the definitions:
- Prescriptive Analytics: Answer questions related to “what should I do next?”. With prescriptive analytics, you consider different scenarios based on your data. Then you choose the one with the optimal solution.
- Descriptive Analytics: This one is about “what happened?”. Descriptive analytics use historical data to tell you what has happened over a period based on raw data.
- Predictive Analytics: It answers the question “what might happen next?”. Predictive analytics, as its name suggests, uses data to predict an outcome. It analyzes current and historical data to look for trends in case these repeat.
Now that you understand these general terms, we’ll discuss how these apply to POS systems and analytic tools. However, as there are diverse analytic tools with different capabilities, we’ll use Happy Cabbage Analytics in this context.
POS Analytics Are Almost Always Descriptive
If you did your research when looking for dispensary POS, you’ll find that software like Treez, BLAZE, Dutchie, and Flowhub all have these analytics on their dashboards:
- Inventory: Updated in real-time, like the number of products in stock and the ones about to expire.
- Budtenders: With multi-user and permission-based software where you can see the performance of your budtenders.
- Sales: Like daily sales and percentage of sales per product or per product category.
- Products: The top-selling products, so you can increase your sales.
- Client information: Yes, even this. Some POS save relevant information about their customers as a way of giving them a personalized experience every time they visit.
These descriptive analytics show you a story of what has already happened and “what is” on your dispensary. Still, descriptive analytics by themselves aren’t enough for decision-making. They don’t answer questions like:
- What products should you re-stock based on their sales velocity?
- What products are slow-moving?
- Are your daily sales driving significant revenue?
- Are your discounts affecting your profit margin negatively?
Those questions have answers when you export your excel spreadsheets and do the manual work. Or when you get an analytic tool that does this for you.
3rd-Party Analytics Tools Are Descriptive, Predictive, and Prescriptive
Analytic tools are descriptive, prescriptive, and predictive. But how do they come together with dispensary POS?
Typically, 3rd-party analytic tools integrate with your POS system to get historic data and deliver insights. Happy Cabbage Analytics, for example, plugs into the transaction data in your POS and reframes your data (reducing the manual work for you). This data transform into insights so you can choose a course of action.
Some examples of how you can leverage this data are:
- Marketing strategies: Some tools use machine learning to segment customers according to relevant data. This gives you the upper hand when you need to send targeted text campaigns with promotions, which are widely used in the cannabis industry.
- Inventory management: A lot of POS systems send you reminders to re-stock products. But that reminder doesn’t tell you if it’s beneficial for you to keep re-stocking certain products. Analytic tools, on the other hand, access your historical data and give recommendations about what products are high on demand and which ones are better to remove.
- Customer profiles: There are tools that save information about your customers and analyze it. Then, when your customers check in at your dispensary, the tool shows personalized product recommendations on its dashboard. This helps budtenders make suggestions to customers increasing their chances of making sales.
- Demand insights: Analytic tools also collect data about the busiest times of the week, month, or even year as well as your most valuable customers. Then the tool identifies trends and notifies you of peak hours so you can have enough personnel or products.
- Pricing strategies: With sales data from analytic tools, you can determine which price strategies (like discounts and bundles) are working for specific products. Having an increase in sales is great until you see it’s not benefiting your profit margin.
Why You Need Both POS & 3rd-Party Analytics for Your Dispensary
As you may have already guessed, you need both a POS system and analytic tools to make informed (and accurate) business decisions. Your POS system can’t make predictive or prescriptive analyses. It’s designed for you to understand your transactions at the store level.
But 3rd-party analytic tools, like Happy Cabbage Analytics, take the data from your transactions to perform descriptive, predictive, and prescriptive analysis. And you just need to make sense of the results instead of doing the math yourself.
As a side note, even though analytic tools can make all the types of analysis in the book, they still can’t replace your POS system when it comes to processing orders and unifying your store operations.
- POS systems provide only (or most of the time) descriptive analytics, which helps you understand your store’s performance over a period.
- An analytic tool provides descriptive, predictive, and prescriptive analysis. This helps you understand your operational processes at a much deeper level as it analyses your historical data and helps you decide what to do next based on trends.
- You need both a POS system to process transactions and unify your dispensary operations and analytic tools to get insights and make informed decisions.