Making an investment in a point of sale (POS) system can be risky for your clients. With consumer behaviors evolving and retail and restaurant technology changing rapidly, it’s hard to know if the POS system you invest in today will be viable — or obsolete — in a few years.
POS as a Service gives merchants more agility. Instead of purchasing a system outright, they pay a monthly fee to use a POS system and have the option to upgrade or change it at the end of the contract term, which may be only 24 or 36 months.
Retail Solutions Provider Association (RSPA) president and CEO John Kirk says, “Any as a Service program should have a refresh mechanism factored in. There’s a comfort to it. It enables the merchants to stay on the forefront — that’s what it takes to compete.”
Why Merchants are Buying POS as a Service
RSPA Sales Strength Coach Dave Menton explains that, in addition to reduced risk, the as a Service model is also attractive to your customers because you bundle service with POS hardware and software into one package. That gives your clients the ability to budget a known, fixed IT cost and not worry about unexpected charges for maintenance or repairs.
Business owners are also attracted to the idea that they can have a POS system with all of the features they need, but they can leverage someone else’s IT resources to upgrade and maintain it as well as POS Software as a Service (SaaS) that runs on someone else’s data center infrastructure. “It gives retailers the freedom to focus on their businesses and do what they’re really good at,” Kirk comments.
Menton adds that the next generation, now becoming business owners, have grown up with the as a Service model, for example, paying a monthly fee for a smartphone and all the features they need. “It’s been the predominant method of purchasing throughout their lives,” he says.
“We strongly encourage our members to deliver solutions the way customers want to purchase them,” Kirk comments.
Why You Should Sell POS as a Service
As beneficial and attractive as POSaaS is to your customers and prospects, selling solutions under this model can be just as compelling for a VAR or MSP. Kirk and Menton share four reasons:
- Recurring Revenue
The monthly payments you receive from selling POS as a Service builds a predictable revenue stream. “As a VAR, if I can wake up every day and know that my OPEX is covered, that’s a position of strength,” says Kirk. He adds the goal should be to establish a recurring revenue waterfall that not only covers your OPEX, but drives free cashflow. “When achieved, this position will foster strategic decisions. You will hire the people you want to hire,” Kirk says. “You will be in a positon to take calculated risks as you grow your business. In essence, you will be playing more offense as you attack new market opportunities.
- Happier Customers
Menton says with service included in a POS as a Service solution, you are in a much better position to take care of customers and keep them satisfied. “They can pick up the phone anytime they want. It eliminates clients wondering, ‘Do I pay for this?’ It’s all covered.” He also points out that the model eliminates the annual discussions you have to resell maintenance agreements.
Kirk adds that one of the elements of the POS as a Service model is proactive maintenance, rather than reacting when something goes wrong. Your customers will see you checking in to make sure their system is in a good place,” he says. “Retailers will remember that when they have a decision to make.”
- Market Position
The as a Service model also allows you to position yourself as a trusted advisor. “It lets you win your home games — when a retailer in your space has a tech need, you want them to think of you,” says Kirk. “It positions you to provide other things outside the core POS world, like social media integration, web hosting or video cameras. As a Service serves as a foundation for the transformation to trusted advisor.”
Menton says if you don’t have an as a Service offering, it may limit your business growth. “You won’t be able to compete in some circumstances,” he says.
Move Forward Slowly and Deliberately … But Move Forward
Kirk advises making the transition slowly. “There’s a cash flow reality that’s different versus traditional sales where it’s all paid up front,” he says. “Know your break-even point and the impact of attrition.”
He says when you’re considering whether to transition to offering as a Service solutions, it’s eye-opening to make a gross profit comparison of a traditional sales versus a POSaaS sale over three to five years. “Gross profit is far greater in an as a Service model,” he says.”
You also need to determine how you will fund POS as a Service solutions, whether you will self-fund, work with a financial services company, or partner with a vendor that offers an as a Service revenue share model. Other considerations are funding replacement or loaner service equipment you need to keep on hand and how you will compensate your sales team.
“Have a very intentional plan,” advises Kirk. “For example, start with a goal of 10 percent as a Service sales. That will let you test drive what it will mean to your cash flow, compensation plan, internal processes, and market position. There’s nothing wrong with being in the discovery stage initially,” says Kirk. “When you evolve, it will create new challenges, but when you solve them, you’ll be in a better place.”
Kirk points out that the answers you are looking for are available. “The RSPA has a tremendous community IQ that you can tap into and shorten your learning curve. Some folks have already figured this out.”
Menton says breakout sessions at RSPA’s RetailNOW event provide information on various aspects of transitioning to the as a Service model. “We work together and collaborate to help the VAR community grow stronger,” he says.
The Most Important Thing to Do Today
Menton comments, “As a Service is here, it’s now, and if you are not doing something to move toward it, you’re missing out on opportunities.”
Menton and Kirk confirm that POSaaS is a growing trend, with vendors bringing POSaaS solutions to market and RSPA members successfully selling these solutions in all verticals and to businesses of all sizes.
“The most important thing you need to do today is to start the process,” says Kirk. “You have to get miles on the odometer to make the journey.”