POS systems have traditionally suffered from high churn rates. Integrations are now helping them become more than just a tool for taking orders. In this article, we'll explore how integrations are transforming the POS into a central platform and how it helps reduce churn and generate more revenue.
The starting point : high churn rate and intense competition
One of the main obstacles faced by Point of Sale (POS) providers is the high churn rate, particularly in the hospitality and retail sectors, where roughly 30% of establishments go out of business annually.
Churn happens either because of bankruptcy (for which POS suppliers cannot do anything) or customers leaving for competition. This is particularly true in the very competitive “red ocean” market of POS systems. It is said that POS face a churn rate of 20% per year. This churn is particularly challenging for POS providers as they must continuously acquire new customers to ensure long-term success.
In such a competitive environment, companies have the pressure to strongly innovate or lower their pricing. However, solely competing on price cannot be sustainable in the long term. To avoid getting trapped in that red ocean, POS suppliers should focus on differentiating themselves otherwise. This is where integrations turning the POS into the central platform comes in.
The benefits of having an integrated POS : less churn, more sales and a better product
Restaurants and retailers are looking for the best software solutions to run their business as efficiently as possible. Integrating those systems together becomes thus critical to run their business smoothly. It is an incredible opportunity for the POS systems to become the central platform, integrated with the other tools. Integrations becomes key for growth
Integrations increase efficiency by making data flow seamlessly between the tools. For example, a POS integrated with accounting software automatically transfer sales data without any manual input, saving time and reducing the risk of errors.
But it's not just about efficiency. An integrated POS is way more stickier and drastically reduces churn. With an integrated POS, customers are less likely to switch to a competitor since they are getting more value from the overall solution, which lead to long-term loyalty.This is not only about the features of the POS system itself, but also about the amount of integrations that it offers.
Integrations also helps to sign more deals. The Hospitality Tech’s 2022 POS trends report shows that 86% of restaurants consider integrations when choosing a POS. Imagine the opportunity cost of not having sufficient integrations. A non integrated POS don’t even see most of its potential prospects, they are already looking somewhere else !Offering integrations is a now a key selling point for POS.
Furthermore, it also leads to upselling opportunities with existing customers. According to the same report, 46% of restaurants stated that integrations were driving their license upgrades, demonstrating the strong added value that integrations can bring to businesses and their customers.
Example of integrated POS
Toast’s success story in the US
Toast has established itself as a leader in the POS industry by offering a wide range of restaurant management features and emphasizing customer retention. With its robust feature set, Toast has become a trusted partner for tens of thousands of restaurants throughout the United States.
However, Toast's success is not solely due to its comprehensive platform, but also to its ability to integrate with other systems. In striving to be an "end-to-end platform," Toast has created integrations with various accounting software and third-party applications, which allows businesses to streamline their financial management and reduce the likelihood of errors. By focusing on both functionality and integration, Toast has distinguished itself in the highly competitive POS industry, delivering a platform that addresses the unique needs of the hospitality and retail sectors while fostering long-term customer loyalty.
What about Europe ?
Europe has a very segmented POS market. However, we can highlight a booming POS that has a strong but selective integration strategy : Lightspeed.
Similar to Toast, Lightspeed has emerged as a leader in the POS industry by providing a comprehensive solution. Its success also comes from its integration capabilities and partnership program. An interesting integration to highlight is the POS - Accounting integration with Pennylane, enabling restaurants to automatically synchronize sales data and simplify their accounting processes.
You got it, integrations are key. But how to quickly build them ? Use unified API’s.
In an ideal world, you would find a perfectly documented API for each tool that you want to integrate. However, the truth is not that easy. A lot of API's are not (well) documented, some tools do not have an API at all, some API are changing all the time…. Integrations can quickly become a nightmare and very costly to maintain.
A shortcut and an easy way to have several integrations at once is to use a unified API vendor that will perform all the hard work and ease the integration project. By connecting to Chift API, a software is connected to all the connectors behind the API.
A typical use case for POS systems is to connect to Chift Accounting API. In one single integration, the POS is integrated with all major European Accounting tools such as Pennylane, Sage, Cegid, MyUnisoft, Exact Online and many others.
Chift is active in 6 verticals : Accounting API, POS API, Ecommerce API, Invoicing API, Payment API and PMS API.