Return on Investment (ROI) is a key figure that measures the profitability of an investment. It is critical to companies because it allows decision-makers to evaluate and compare the profitability of projects. ROI relates the profit or loss of an investment to the capital invested.

Calculating ROI before implementing a new system is essential for companies to evaluate the investment. However, calculating ROI is a complex task because the technology’s benefits are mainly visible in the medium to long term. In the case of PIM systems, the ROI provides information on how effectively the invested capital contributes to improving the company’s product information management.

Costs versus benefits

To calculate the ROI, the costs of a PIM system must be defined as clearly as possible. The following must be taken into account:

• Software licenses: The acquisition cost of the PIM system itself and the cost of user licenses.
• Implementation: The costs associated with integrating the PIM system into the existing IT infrastructure and adapting it to the company’s specific needs.
• Training: Spend time training users to use the system effectively.

These investments are necessary to provide the technology foundation for improved data management processes and to support the organization’s long-term digital transformation strategy.

Benefits must be considered first and foremost to measure the ROI of PIM systems fully. The benefits of a PIM solution are multifaceted and more challenging to measure and can include the following:

• Efficiency gains: By automating processes, companies can save time and resources. This results in reduced cycle times and error rates.
• Ensuring data is current and consistent: A PIM system centralizes and standardizes product information across channels and platforms. This ensures that all customers and prospects have access to current and consistent information. This is especially important in dynamic markets where rapid responses to market changes or consumer needs are required.
• Quality of Product Information: High-quality data is a key sales driver. A PIM system ensures accurate product information is delivered across all sales channels so customers can access reliable data at every point in their purchase decision.
• Customer Satisfaction: By providing up-to-date and comprehensive product information, brands, manufacturers, and retailers can build customer trust and ease the ordering process, ultimately improving customer satisfaction.
• Easy catalog expansion: A PIM solution can help expand the product catalog easily through “endless product shelves” to increase sales.
• Faster product launches & channel expansion: A PIM system can significantly reduce the time to market for new products. PIM systems facilitate the rapid customization and distribution of product information across multiple channels, resulting in a faster return on investment for new product lines.
• Customer acquisition: PIM systems also ensure that new customers are reached by distributing products to new sales channels and optimizing offerings for search engines.
• Increased sales: Improved product data with more information and meaningful references to the entire poroduct range increases visibility across multiple channels and potentially higher sales.
• Cost savings: A 2022 e-commerce study by inriver shows that poor product descriptions accounted for over a third (34%) of all returns. This illustrates that inadequate product information often leads to increased returns. A higher quality of product data can, therefore, reduce the number of costly returns. In addition, the integration of a PIM system into existing company systems enables the efficient processing of any returns to save time and money.

Evaluating the success of PIM systems

To measure the success of your PIM system, you should consider the following KPIs and aspects:

• Lead times and error rates: Compare process speeds and error rates before and after implementing the PIM system to measure efficiency gains.
• Process costs: How much are inefficient processes costing your company, and how much can be saved?
• Productivity: Measure the average hours spent on data management tasks before and after implementing the PIM solution.
• Data consistency: Close Monitoring of product information and error control across multiple channels can provide insight into improved consistency.
• Time to market: Comparing the time from product conception to market availability before and after PIM implementation provides insight into the effectiveness of accelerating product releases.
• Customer acquisition: On average, how many new customers per month have you added since implementing the PIM solution, and how many were there before?
• Order fulfillment time and volume: How long did it take to process an order on average before and after implementing the PIM solution, and how many orders have been placed in a month since?
• Sales growth: How much can sales be increased by improving product visibility?

The key figures listed here are a selection of critical KPIs for PIM solutions and can be expanded individually. They can help you determine the value of your PIM system and make strategic decisions about future investments and improvements.

Impact of a PIM system on the customer experience – the ROX

• Functionality of the online shop: The usability and design, navigation, and overall experience on the website or in the app (enabled, among other things, by an underlying smart product data model).
• Delivery reliability: The reliability of the delivery process, including on-time delivery and order accuracy (e.g., by providing accurate logistics data).
• Call Center Service Quality: The efficiency and effectiveness of customer support, including response time and satisfaction with problem resolution (using comprehensive product data).
• Number of returns: Customer satisfaction with the product and quality of product information (based on accurate information and detailed content).

The ROX helps companies understand how improvements in the customer experience can directly lead to increased customer loyalty, lower churn rates, and, ultimately, increased revenue. Investments that improve the customer experience help establish a positive brand and build customer loyalty. This also plays a role in measuring the ROI of PIM systems.

Extended ROI of PIM systems: Risk Mitigation and Future Orientation

A PIM system can also significantly improve a company’s public image. It demonstrates the company’s ability to provide consistent and reliable information and enables agile response to market changes. This flexibility and responsiveness are important not only for the company’s current image but also for its long-term future.

Methods for calculating the ROI of PIM systems

Correctly determining the ROI of PIM systems is not just a mathematical exercise but requires a balanced consideration of both quantitative and qualitative factors. Here we offer a step-by-step guide on evaluating your PIM system’s economic benefits.

1. Calculate the costs: Start by listing all the costs associated with implementing the PIM system. This includes software acquisition costs, software licenses, implementation costs, customization costs, training investments, and ongoing maintenance and support costs.

2. Evaluate the benefits: Evaluating the benefits requires an accurate analysis and quantification of the direct and indirect benefits that the PIM system will bring. Consider what efficiencies will be achieved, how data quality will improve, and how this will increase customer satisfaction and sales. For example, use the metrics mentioned above.

3. Calculate the ROI of the PIM solution: First, calculate the difference between the return on investment (from step 2) and the investment cost (from step 1). Then, divide this difference by the investment cost. A positive ROI indicates that the investment is generating profits that contribute to the company’s financial health and growth.

4. Set Time Frame: Define the period over which ROI will be evaluated. Depending on the business objective and the type of PIM system, this may be short-term (one to two years) or long-term (three to five years) after going live.

5. Evaluate risks and opportunity costs: Consider the potential dangers and lost benefits of not selecting or implementing a PIM solution.

6. Conduct monitoring: Effective ROI monitoring goes beyond a one-time calculation. Continually monitor the PIM system’s real costs and benefits and make adjustments as needed.

Given the complexity of calculating the ROI of PIM solutions, management consultancies can provide valuable assistance. With in-depth experience and specific industry knowledge, they are ideally positioned to help companies identify and quantify the relevant KPIs.

Our consulting offering is designed to guide you through this complex process to ensure you get the maximum benefit from your PIM investment.

Including both financial and qualitative aspects, such as improved customer satisfaction and market positioning, ensures that the ROI assessment fully reflects the PIM system’s true benefits.

Calculating the ROI of PIM systems gives you a comprehensive view of your investment’s potential benefits and challenges. It is essential to understand that determining ROI is not a one-time activity but requires ongoing review and adjustment to optimize the PIM system’s performance and derive maximum benefit from it.