How Some Cloud POS Companies Exploit The System to Win Enterprise Accounts

Legacy POS incumbents never thought cloud POS would penetrate enterprise merchants. And if it did happen, it would be with one of their logos.

But larger merchants are moving to cloud. When you don’t offer a POS that can even accept EMV transactions nearly 4 years after the liability shift is it even a wonder? If your API has material fees and is highly unstable, is this a legitimate question anyone with three brain cells is asking? Please.

There’s more than one way to skin a cat, however. Some cloud POS companies – like Brink and Qu – sell directly to larger enterprise accounts and spend 47 years in the sales cycle building custom features (the pejorative is only partially a joke). Others – like Toast and Revel – take a different tach and onboard franchisees who can, in some instances, put pressure on corporate to adopt a POS company-wide.

While there really is no “right” way to go about enterprise sales, one of these methods is predispositioned to exposing brands and their franchisees to a world of pain.

The prevailing theory is that merchants get smarter as they get larger. Abstracting from brick and mortar industries the theory holds water: as companies grow there’s more money to manage and smarter people are better allocators of capital, thus they’re actively recruited.

However, brick and mortar is very illogical. It shouldn’t surprise you to learn that larger merchants (i.e like 98% of them) are often run just as poorly as the smaller merchants they thumb their noses at. We can say this because we have full transaction data from over 50,000 merchants and we audit the hell out of it, so you can shut up with your knee jerk conjectures already.

Still, that 2% is a real edge when we’re talking about industries that are losing market share to Amazon on the daily. So larger merchants are somewhat smarter than smaller merchants, even if by a hair. Franchisees are often smaller than corporate operations. Obviously there are exceptions to this rule, but think of this more as a guideline. Therefore, according to this theory, franchisees are less sophisticated than their corporate counterparts.

So it’s now understandable why franchisees are more easily bamboozled into the idea of “free” POS. In some cases you can’t fault them: you’ve got a turd of a POS that can’t even get EMV to work and you think it’s going to cost you $30K to replace the POS ( because that’s what the current system cost when you bought it, and that’s what it still costs if you were to buy a new one today). Then, all of a sudden, a new POS company shows up with a system that will fix many of your problems and it’s “free”. Score. Right?

Wrong.

We’re going to say this again, and we’re going to type really slowly.

THERE IS NO SUCH THING AS FREE POS.

You are paying for it one way or another. If you think POS is free here’s what you need to do.

Book a trip to San Francisco.

When you’re there, have some rope and cinder blocks delivered to your place of stay.

Take an Uber to the Golden Gate Bridge and bring your new toys with you. Walk to the highest point on the bridge.

Proceed to tightly tie one end of the rope to the cinder blocks, and the other end to your ankles. No cheating now, make sure you use this knot for extra security.

Now jump off the bridge. There will be authority figures yelling at you as you do this but don’t worry: they’re just jealous you got that awesome “free” POS. Haters gonna hater, amiright?

Franchisors needs to think about this more intelligently and can’t simply give in to demands made by dumb shit franchisees. As we’ve said before, franchisors need to be collecting unified data from all of their franchisees. Many have some backwards way of doing this if for nothing else then to collect franchise fees. But how do you know if new menu items are succeeding? How do you know what marketing is adding sales? How do you know if pricing should vary by geography?

The simple answer is unified transaction data. Having a consistent POS system across franchise stores is the easiest way to do this. If that can’t happen you can install agents or gather data from API endpoints, but leaving the list of acceptable POS systems wide open – especially to the “free” POS variety – is a huge mistake. Yes, the free POS providers might be able to unify necessary data, but what good does that do if you and your franchisees are paying hand over fist on some usurious loan scheme?

Obviously not all cloud pos companies win enterprise accounts this way. Sometimes they get in early and grow with the brand, and other times they’re swapped out by corporate when the existing POS system doesn’t scale (think classic SMB POS systems like Square or Clover).

But without a doubt, there are cloud POS companies winning enterprise customers by exploiting franchisee retardation and lax POS standards set by the nearly equally incompetent franchisor. They know that once a corporate entity has spent about half of the franchise IT budget in committing to new POS system you cannot unring that bell – the POS will roll out to the remaining locations; whether it’s been discovered that the new POS is as bad as the old POS becomes irrelevant.

This whole experience will end poorly for both franchisees and their corporate brands if they don’t change their practices soon. Even if it is their own, collective fault.