This is what a PIM system delivers in concrete figures

However, the decision-makers who typically approve investment in PIM projects always ask the payback question: what is the ROI of this project? The good news is that there are many qualitative measurements.

1. Better conversion rates - 10% increase

PIM systems aim, among other things, to improve conversion rates through better quality and more complete product information. With better product information, PIM improves search functionality and Google indexing, which helps increase both conversion rates and average order value. Here is an example of how PIM can help increase online revenue.

Example:
Let's look at an online shop that receives 10,000,000 sessions a year with a fairly typical conversion rate of 2% and generates 200,000 orders annually. By implementing PIM, they get a relative increase in conversion rate of 10%, representing a new conversion rate of 2.2%. Now, those same 10,000,000 sessions will generate 220,000 orders. Multiply the difference, 20,000, by your average order value (AOV) and you get the revenue increase you can conservatively expect from your new PIM. In this scenario, with an AOV of €40, this shop would get an extra €800,000 in revenue per year from its PIM.

2. Fewer returns - 10% reduction

Of course, it's not just about convincing customers to buy your products, but also about making sure they are satisfied with their purchase and don't return the product. Product returns are an ongoing concern for - estimates show that up to 40% of online orders are returned by customers - and with an average cost of €25 per return, it's easy to see how much this can cost an organisation.

Reducing the return rate has a huge impact on the bottom line. High return rates are caused by the product the customer buys not meeting expectations. In other words, low-quality product information and poor product experiences cause higher return rates. The capabilities offered by a PIM guarantee that businesses will provide customers with better product experiences. This is why most of our corporate clients factor in a 10% reduction in returns in their ROI model.

Example:
If you stay with the webshop from the previous example, you will recall that they perform 200,000 transactions a year. If 30% of those transactions are returned by customers, that's 60,000 returns a year. At €25 per return, this webshop needs to put a negative €1.5 million on its books. Reducing the return rate by a conservative 10% will reduce the number of returns by 6,000. The new lower return rate of 27% means that the company faces only 54,000 returns, saving the company around €150,000.

3. Efficient enrichment

Everyone knows the expression 'time is money'. But for companies, especially in the modern omnichannel world, it is not just an old saying - it is a fact. Fortunately, a PIM system is the solution to working more efficiently, for instance in enriching product information.

Organisations report that a PIM significantly reduces the workload. To determine productivity costs, our clients first look at how many full-time employees are engaged in product enrichment. Then they calculate how many hours those employees spend on average on product data. Many organisations expect to achieve 5x higher returns in productivity with a PIM system. This gives us all the data needed to calculate productivity costs.

Example:
Let's revisit our webshop example. Today, they have 10 employees who cost an average of €100,000 a year, each spending 25% of their time on product enrichment, costing the company around €250,000. However, a PIM can reduce enrichment time by at least 50%, saving €125,000 in raw costs.

4. Accelerated time-to-market - up to 70%

Higher enrichment speed can help your business not only save money, but also generate more revenue. A recognisable pain point is the (long) time it takes to make a new SKU sales-ready. It is common to hear that it takes 6 weeks or more to collect all the right data, populate all the attributes, make sure they are correct and then distribute them across sales channels.

These organisations are losing money because they have to wait for the full product enrichment to be completed. When all that downtime is multiplied by all the new SKUs produced each year, the losses add up. It has been proven that a PIM system makes it possible to get new products live up to 70% faster.

What does this mean in the real world? The easiest way to estimate the value of improving time-to-market is to start by estimating the number of new products you release each year. Then apply the average selling price to each SKU. Using this data, estimate the value these SKUs add to your business per day. Finally, if you multiply this daily value by the number of days a PIM shortens your time market, you get the ROI.

Example:
The easiest way to calculate this is with a series of ratios. The first says that if I currently generate €20,000,000 a year with my 50,000 SKUs, I should generate €22,000,000 with 10% more or 5,000 extra SKUs. The following ratio equation says that if I generate €2,000,000 in additional revenue in 365 days, I should generate €5,479.45 per additional sales day. Now that I know the revenue per day I can expect from my new SKUs, I can calculate how much incremental revenue I can earn by halving time-to-market. In this case, our example earns €115,068 by reducing Time To Market by 50% or 6 to 3 weeks.

5. Easy catalogue expansion

A PIM is also used to expand product lines. In fact, many customers tell us that they have been able to expand their catalogue by exploring the endless possibilities. Some start working with dropshipping suppliers, some create their own marketplaces and others become empowered to stock bigger and better product lines. However they approach it, more products means more sales and that is all possible thanks to a PIM system.

Example:
The webshop in our example recently decided to expand its catalogue by about 10,000 SKUs, 2,500 in each of the next 4 quarters. Using the same ratio we used in the time-to-market section, we can begin to estimate what these new SKUs mean for the business. If our webshop earns €20 million with 50,000 SKUs, how much does it earn with 60,000 SKUs? With PIM's help, they could generate up to €125,000 in new revenue, depending on when the products are released and whether they are considered core products or accessories.

6. Easy expansion of sales channels

A PIM system can help you expand not only the number of products, but also the number of channels on which you sell. Many of our customers use PIM to easily distribute product data to all sales channels.

Increasing the number of sales channels on which your products are available makes it easier for potential customers to find your products. That means they are more likely to make a purchase. How much extra value can new sales channels bring to your business?

Example:
First take the number of desired new channels and multiply that by the number of products you want to sell there. For example, our retailer wants to open 3 new channels selling an average of 2,500 of their products in each of them. As it will take some time for the new channel to take off, we estimate that a new channel will initially add 5% of the value of their existing business, or in the case of our example retailer about €150,000 in revenue.