Lightspeed Offers POS Companies A Lesson In Building Tomorrow’s Products

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Lightspeed POS launched its Analytics tool on May 9th. I know it sounds boring – who isn’t doing “analytics”? Well, that’s only because marketing dollars have bastardized the word analytics in brick and mortar, where doing something as mundane as telling you what your sales were yesterday is considered “analytics”. Viewing things in that light would lead nearly every reader to glaze over Lightspeed’s announcement, but it’s worth examining for some very important reasons.

First a little history.

Started in 2005 by Dax Dasilva, Lightspeed was a local-server POS system that uniquely operated on Apple’s operating system. In 2013 Lightspeed acquired MerchantOS, a cloud POS developed by Justin Laing. (Justin left Lightspeed in 2015, and that will be important to the story shortly.) Lightspeed turned MerchantOS into their cloud product offering and now operates two different merchant groups: those on their legacy platform, and those on their cloud platform.

Lightspeed has a history of buying solutions it doesn’t have. It bought an eCommerce engine, a cloud retail POS, and a cloud restaurant POS. Lightspeed has realized where its core values lie, and when it’s easier to augment best-of-breeds… something POS companies who haven’t raised $126MM still struggle to understand.

Which is how Lightspeed settled upon Justin Laing to build their Analytics offering.

Justin built CrankLogic, a prescriptive analytics tool for retailers, on the back of Looker. Justin’s tool focused on three main areas:

  • Inventory: helping merchants determine what items to get rid of and what prices to offer them for
  • Employees: what employees are doing well and how to coach up the under-performers to drive move value
  • Customers: recommending marketing campaigns to customer groups to increase revenue

This is the first time we’ve ever encountered prescriptive solutions in the wild, and we’re psyched it was recognized by a player as large as Lightspeed. Lightspeed acknowledged that applying rigor to their data could deliver actionable solutions, not a false sense of security (and enough rope to hang yourself) under the guise of “analytics”.

You see, outside of brick and mortar, nobody cares if sales were up year over year if you can’t figure out WHY or HOW make it happen faster. But this is sadly what brick and mortar has been brainwashed into believing is the definition of “analytics”. Lightspeed wanted to change that for its customers.

Dax tells us,

In continuing to build the best point of sale company for independent businesses, we recognize the importance in providing a suite of comprehensive tools to seamlessly run a business. We launched Lightspeed Analytics because we noticed that independent retailers needed not just access to their data but also wanted actionable insights from a next-generation analytics tool.

How Lightspeed determined to partner and white label the solution is even more impressive.

Given the realities that our customers face, we are a constantly adding to our offering, whether it’s through strategic partnerships or acquisitions.

Remember the legacy POS companies who built every solution under the sun inside their walled gardens? Lightspeed realized that this approach wasn’t going to work if they wanted to offer a best-of-breed solution, so they started white labeling CrankLogic for their Analytics offering. Through this arrangement Lightspeed would actually increase merchant success and adoption of now-Lightspeed’s prescriptive analytics tool.

This is how.

CrankLogic would automatically have access to all merchant data through Lightspeed’s API and would be able to recommend corrective actions with top – and bottom – line impacts. If the merchant wanted to learn more they would have to sign up, but that wouldn’t prevent Lightspeed from identifying opportunities for customers and giving them a soft nudge. Normally these merchants would be losing these revenues or profits, so it’s not as if Lightspeed was doing something egregious: they’re making their customers more successful!

There are two major takeaways from Lightspeed’s seemingly banal Analytics announcement.

One is that finding best-of-breed solutions for customers involves a walk outside your walled garden. It’s hard enough to build a good POS solution, and trying to build everything on top of that is a fool’s errand… though until lately this learning has come the customer’s expense. As POS moves to cloud and connectivity gets easier, customers will discover better solutions. Which brings us to the next point.

Prescriptive analytics are the way of the future. Once merchants discover what their data can and should do for them, they’re not going to revert back to the old days of “analytics” where a lengthy report was a promised panacea. Instead they are going to demand better and better solutions, as they should. Absent fat margins (which will happen when POS companies start pooling data), POS companies will need to find better and better partners that deliver specific solutions incredibly well.

Now what’s the over-under on legacy POS providers doing any of this? If past evidence is any indicator, that line starts at a negative number.

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