Uncovering Opportunities to Expand Square Features for Small-Medium Sized Businesses
Exploratory research to understand the needs of existing Square Sellers who are approaching one million dollars in annual revenue.
Role
UX Researcher working with 3 other researchers, reporting to the lead UXR on the Commerce Platform team.
Project Timeline
2 months on a part-time basis, April-May 2022
Total Involvement
March - May 2022
Methods
- semi-structured interviews
- competitive analysis
- card-sort
Context
Square is a market leader for merchant services, which includes payment processing, point-of-sale (POS) systems, and online store functionalities. The commerce platform is the foundation for all of Square’s software products. All industry specific features or apps are built on top of the platform, and universally needed features such as inventory, catalog, shipping, checkout, and subscriptions are embedded within the platform.
Square’s primary market is small businesses such as “mom-and-pop” shops, including restaurants and retail. Currently, Square is looking to expand upmarket and attract customers–Square Sellers–with more complex businesses that have multiple sales channels. They want to attract higher revenue businesses, but their current offerings are not robust enough for growing businesses.
Based on prior work conducted by the UX Research lead, customers with more complex businesses often have multiple sales channels and more diverse income streams, meaning that the business will be more likely to have higher and more stable revenue.
Research Goals
To address the Commerce Platform team’s goals, we framed the study around the following questions:
What functionalities do Square Sellers need in their software that are currently missing?
This allows us to understand how the current Square POS products and ecosystems are being used and learn seller’s workflow in relation to the POS system.
Where do Square Sellers encounter friction in their business workflow when working with the POS systems?
This helps us understand current seller pain points when usings Square or competitor products and uncover opportunities that arise as a result of these studies.
Target Users
We narrowed our focus to Quick Service Restaurants that are active Square POS users. Our original goal was to reach users who had over 600K in yearly revenue and over 20 transactions a day, but learned that this specific user segment had already been fatigued from prior research study recruitment, and had to revise it to the following criteria:
- Current Square POS users that are Quick Service Restaurants
- Omni-channel: have multiple locations, or have a physical and online presence
- Upmarket or towards upmarket
- Revenue is greater than $350k per year
- at least 5 transactions per day
Approach
Given that we had a team of four researchers working on this project, we leveraged multiple research methods (interviews, card sort, competitive analysis) to triangulate findings and contextualize insights. Additionally, given difficulties in recruiting research participants for interviews, we explored additional sources for contextualizing information, such as internal data sources on engagement with specific features. We further triangulated insights by reading customer blogs, Reddit, and other small business knowledge sharing channels to have more confidence on how our research could inform Square’s Q3 product roadmap.
We conducted a competitive analysis in parallel with interviews to understand Square’s competitive advantage and limitations in relation to its two major competitors, Clover and Shopify. Both competitors were identified by Square Sellers as alternative POS systems that they were considering.
Summary of competitive analysis
We found that Square provides cheaper hardware and transparent pricing compared to other companies. However, Square provides limited integrations with eCommerce, only allows sellers to use Square’s payment processors. Square also does not have 24/7 customer support, which emerged in interviews as a major pain point for sellers having frequent hardware issues.
Based on our work from the competitive analysis, we determined that a card sort was needed to understand what POS features were most valuable to their experience using Square.
Participant view of sorting 
Cards and likert scale
From the card sort activity, we learned that the following features were the most helpful to Square Sellers:
- integration with e-commerce features
- the ability to review and add inventory with POS
- fast check out process
For our semi-structured interviews, we spoke to four medium sized business owners of restaurants, juice bars, and bar/cafe/ecommerce concepts. This allowed us to reference findings that emerged through the competitive analysis and card sort. Additionally, interviews uncovered core issues with the product offerings that were not previously known to the product and research team. To analyze the data, we cleaned the interview transcript, pulled out major themes mentioned in each interview, and conducted thematic analysis through affinity mapping.
Key Findings
Lack of integration with e-Commerce features
Square seeks to attract businesses with multiple sales channels, which often means selling through an e-commerce retail storefront in addition to a physical storefront. However, as colorfully put by interview participant 3, it is currently difficult to maintain product tracking in both the online store and physical store simultaneously:
“The website integration is absolutely atrocious. There are continuous lags. Things we entered in Square do not get updated to things in the website. The two don’t communicate anymore. Whenever there is an update, the system breaks down. I have to call customer service…If there is a lag between website and in person integration, our biggest thing is to replace a new item rather than create a new item. There are products that could sell out of the door within minutes. So we need to keep track if the items can still be sold online.”
This is a case of a Square Seller only selling through an online store and physical store, which means there would likely be further challenges for a Seller also selling through social media platforms.
No payment processors allowed other than Square
Square’s competitors have subscription fees, but the cost of these fees is offset by lower per payment processing fees. For higher sales businesses, competitor merchant services are often more economical for them because the payment processing fees continue to decrease as their sales increase. This point is repeatedly noted as Square’s weakness in reviews of merchant services, and this finding converges with our interview findings. Interview Participant 1 specifically mentioned that they tried Clover, one of Square’s main competitors, for a period at one of their stores because of the lower processing fees. However, they ultimately returned to Square because their employees preferred it and found the Square user interface easier to use. While this case highlights the strengths in Square’s interface design, that might not convince other businesses to stick with Square when they can save money with lower processing fees elsewhere.
Unsatisfactory inventory management system
Interviewes who managed high volumes of products found the process of updating and removing items from the Square interface to be a tedious but necessary process. They mentioned benefitting from a synced digital and physical inventory management system that would alert them to low stock so that they would be able to place in orders for more, or even understand what products are underperforming and can be removed from their offerings.
“Our business is unique in that we have 600-800 SKUs in store at any given moment. Every week, lots of the SKUs rotate so 100 new items come into the store and 100 items might leave. The 100 items that are leaving have to be removed from our website and store.” (Participant 2)
Hardware and Software issues
Most of Seller’s issues with the POS system involve two parts: hardware and software. When they talk about hardware problems, they are mostly describing the actual physical aspects of the POS system. This includes issues with the Square stand disconnecting, the iPad freezing or slowing down, wire connectivity and cash register issues. Examples of software issues include the Square app freezing and dealing with general wifi issues that affect the hardware. These issues can cause huge headaches for small business owners who don’t have time to take out of their busy schedule to address all these concerns with equipment that is intended to make their lives easier, not harder.
Little customization for marketing and website design
P3 and P4 both mentioned that they needed more flexible marketing campaigns and tools for their business as they grow. P3 specifically mentioned using alternatives like Mailchimp due to greater flexibility with their desired email layouts, and noted that Square’s template options were too limited for their needs. The interviews show evidence that Square sellers would like to use Square’s website building features, but note that the limited flexibility and difficulties with syncing their in-store inventory with their online store makes it challenging for them to communicate with customers accurately what the stock is. To support growing businesses needs, Square should do more usability testing and semi-structured interviews into understanding what they can do to keep their customers on their platform, and can even create a competitive pricing model to encourage users to stick with square for their marketing and online store needs.
Recommendations
- Improve customer service for sellers to reduce time spent trouble shooting hardware/software breakdowns.
- Incorporate QA testing protocol before pushing updates and launches to limit breaking.
- Make Square processing payments more malleable to grow with sellers businesses – offer flexibility with payment processing and determining new revenue generation opportunities
- Increase customization opportunities for sellers that help diversify their revenue streams, increase marketing channels and better integrate the physical and software side of inventory.
Future Work
Additional interviews can be held with specific verticals and revenue brackets to see if service reliability are consistent across Square sellers. The lack of dependable customer support has huge monetary costs for Square sellers and pushes them away from the platform.
Impact
Our research work spurred new experiment processes, which minimized the experiment operationalization timeline by 2-3 weeks per experiment, leading to a projected increase in team project capacity by 20%. This is crucial given that there is limited qualitative UXR bandwidth. Additionally, we uncovered key limitations to Square’s marketing content and design messaging paradigms through user interviews and card sorts. This pain point was relatively lower lift for the product team to address, which increased the click-through-rate of email marketing campaigns by 3%.
Reflections
dependencies, dependencies, dependencies!
- For short term projects, don’t make methods dependent on each other – you will get blocked. Our initial protocol would base each method off of the prior method’s findings, but that ultimately did not work out due to recruitment issues. There were delays in sending out the recruitment survey because of limits to how often we could contact sellers. Although we sent the survey to 3000 people, not a single person responded, even after we widened our selection criteria to include folks that were slightly above and below selection criteria. We had to work quickly to determine what methods and selection criteria would be good proxies, and worked with the UX lead to hand-pick interviewees that matched our target audience criteria.
- Business owners are time constrained, so we needed to be creative about how to learn more about them without taking up too much time – 30 mins is a lot of time to learn in depth about issues!
- We might also focus on local businesses and work with data science to offer incentives to overcome challenges with limitations in sampling just via merchant tokens.
- While it could have been tempting to ask Square’s data science team to pull data on specific merchants instead of conducting interviews, interviews provided depth of context and richness that data alone often miss. However, the most ideal scenario would have definitely been triangulating Seller usage data with interviews, but due to data science resourcing constraints, we were unable to do so.