Mining Your Transaction Data for Smart Business Growth

Insights gleaned from your transaction data can provide real opportunities for new growth. Discover key metrics and reporting features that you can leverage today to set your business up for success.

Understandably, digging into transaction data beyond daily sales figures and cash flow is often overlooked by time-strapped small business owners. However, transaction data found within your merchant services platform or accounting software can reveal key insights to address small business challenges, minimize inefficiencies, and drive future growth.

Read on to learn how choosing the right financial resources and taking a strategic view of transaction data can support your business today.

Four Ways That Transaction Data Can Support Your Business Today

By analyzing your transaction data, you can reveal hidden insights about your business performance from customer behavior, employee time allocation, inventory needs, cash flow, and even your marketing efforts.

These data points can be calculated manually or automated by merchant service providers like Clover, Square, or accounting software systems like QuickBooks and FreshBooks. Let’s take a look at four key ways your transaction data can contribute to better-informed business decision-making.

1. Analyze Customer Behavior

Understanding customer behavior is crucial for improving sales and scaling your business over time. Analyzing transaction data can inform your sales and marketing efforts and can help you better allocate resources.

Key Metric: Average Ticket Size

The average ticket size refers to the typical dollar amount spent by your customers per transaction. This data is calculated by dividing the total dollar amount of receipts during a given time period by the total number of receipts during the same period.

For example, if you have 100 transactions on Monday and a total sales volume of $5,000, the average ticket size for that day is $50.

You can use average ticket size to provide measurable marketing goals to hit particular sales figures.

Some merchant services providers like Clover offer competitor analysis to understand how your average ticket size compares to similar businesses in your area. This can highlight whether you should focus on acquiring new customers (if your average ticket size is similar to competitors) or upselling your existing ones (if your tickets are significantly lower than your competitors).

Other bits of transaction data can help you determine not just the amount your customers are spending, but also their shopping behavior at your store.

Key Metric: Source of Order

Source of order breaks down the channels that your customers use to make purchases. This typically refers to in-store purchases, online delivery orders, and online pick-up orders. This data can be used to highlight inefficiencies or improve user experience in any areas that are lagging behind expectations.

For example, if in-store purchases are significantly outperforming online orders, this may signal a need to improve the online ordering experience. Solutions could include simplifying the checkout process, making your website mobile-friendly, or optimizing page speed—or perhaps increasing your site visibility through online advertising and search engine optimization (SEO).

2. Address Staffing Needs

Nearly every business and organization is experiencing staffing challenges as a result of the pandemic. However, analyzing relevant key performance indicators (KPIs) within your merchant data can help your business better allocate employees when and where they are needed most.

Key Metric: Average Transactions

Average transactions can be calculated by dividing the total number of transactions by a given period of time. This metric provides insight into what days of the week, time of day, or months of the year are the busiest for your company.

This data can be used to properly allocate staff during peak business hours to reduce payroll waste and maximize customer satisfaction.

Average transaction data can often be located within the “Sales Summary” reporting feature of your merchant services provider or accounting software.

You can also dig deeper into this data to reveal how your customers are purchasing at particular times. For instance, if more customers are ordering pick-up breakfast orders during the morning hours, this could impact your staffing schedule, as you may need fewer customer facing staff but more cooks at your business to meet demand.

3. Handle Inventory Management

Business owners across the country continue to feel the effects of supply chain disruption. From backorders, to stockouts, and delays for critical manufacturing components, today’s owners can’t afford to neglect inventory management.

Fortunately, analyzing merchant data can illuminate insights that enable your business to optimize inventory forecasting and stay ahead of supply chain disruptions.

Key Metric: Items Report

An items report (sometimes called a “sales report”) details sales figures for particular SKUs in a specified period of time. This allows business owners to keep track of the sale of popular items to ensure stock availability. This can be especially useful for seasonal businesses with significant changes in sales during certain periods of the year.

Another beneficial way to utilize items report data is to discover which items have the highest profit margin so that you can focus marketing efforts on those products.

Your merchant services or accounting system can likely run detailed items reports. For example, the Clover Shopventory tool offers comprehensive and integrated point-of-sale (POS) and e-commerce sales data all in one central location.

4. Minimize Fraud Risk

Credit card payments fraud remains a serious concern for small business owners, especially as online sales continue to rise in popularity. In fact, fraud has increased 51% since the start of the pandemic—highlighting the need for proper risk mitigation strategies.¹

Once again, analyzing transaction data may be able to help. This data can be used to identify patterns within fraudulent transactions. These trends may include:

• Transaction location: Where are fraudulent transactions originating from?
• Transaction amount: Do fraudsters typically spend a certain dollar amount?
• Transaction frequency: How often (and when) do these transactions typically occur?

Once you have identified patterns of fraudulent behavior, you can leverage fraud prevention tools offered by most of the top merchant services providers.

If fraud is originating from a particular location, consider IP address or card-issuing country filters. If fraudulent transactions are isolated to a particular dollar amount, consider sales quotas or thresholds for transaction size. Finally, if transaction frequency is a key indicator of fraud, consider velocity quotas.

While no business can completely eliminate fraud risk, these mitigation strategies can go a long way towards minimizing your exposure to fraudulent transactions.

The Bottom Line

Business owners of all sizes can utilize transaction data to inform smart decision-making and propel growth. By leveraging the optimal merchant services system for your specific business, you can make the most out of this data and maintain a strong growth trajectory by staying ahead of trends, optimizing customers’ shopping behavior, and avoiding otherwise hidden pitfalls.

For assistance finding the best merchant services provider to help support your unique business needs, contact your Senior Relationship Banker or get in touch with us today.

1. “Merchant fraud predictions for 2022: a pandemic-driven increase.” Brighterion. January 4, 2022.

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