Easy ROI for PIM

The Easiest ROI for Product MDM, by Tom Marine

Some insights on achieving return on investment from Product MDM by a new contributor, Tom Marine.

With an abundance of ROI and customer implementation experience, most Product MDM providers can direct you to several key areas on which to focus, on your journey to obtaining capital expenditures.

Providers deal with these situations in every engagement, so they know where the money can be “had” – it’s probably wise to listen to them.

While developing proof of ROI, keep track of both soft dollar and hard dollar benefits. Soft dollars usually fit in the “what if” category: “We’ll be able to add ‘x’ more products, which will produce ‘$y’ more sales.” I was once asked pointedly by an executive – “I’ll accept those soft dollar projections, but I’ll be paying you in soft dollars if that’s OK with you?” In reality, soft dollars can become hard dollars once they are proven and get into a budget.

Where to Show ROI

Increase Product Sales

If you’re like most great multichannel marketers, then you know that the formula for a product lifecycle yields a calculated growth, sales and profit. So identifying more of the right products is critical to your success. Product MDM systems can help by providing quality analytics and the ability to get more products to market – faster.

Increase Product Productivity

With rich data that’s easily accessible, your merchandisers/product managers/marketers will be able to make faster, better and more integrated decisions on how your products go to market. With Product Information Management (PIM), product set-up, which used to take hours or days, can be reduced to minutes.

Reduce Overtime

We’ve seen overtime, in particular for advertising and merchandising groups, go to “nothing” from some very high numbers. We often see at least a 50 percent reduction in the page production group. But, at the same time, you’ll have to balance that with increased need for your teams to handle more products and increased capacity demands for any group associated with either catalog or web production.

Reduce Errors

Errors cost money. Here’s where to reduce those errors: cost to make it good with the customer, cost to make it good with the vendor, cost to allocate resources to make changes in systems, catalogs, web, etc. An Activity Based Costing (ABC) system can lend insight into where the problems are.

Reduce the “Time To Market”

Getting your new products – you know, the innovative ones – out there for your customers, can be a major competitive advantage, especially if your brand is noted for innovation. First, you’ll have it before anyone else; and second, there will be more time to sell it. A PIM system can optimize the way to immediate distribution of products in multichannel environments.

Increase Page Sales

If you have a page profitability system to show the valuations of pages, then you can make the case for additional pages that can provide additional income. We have seen page production increase as much as 650 percent without adding any FTEs. Adding content in other languages for international sales opportunities becomes a cinch.

Increase Page Productivity

As noted above, the approach to productivity can be looked at in several ways. For instance, although not everyone has an ABC system, if you want to increase pages in the catalog, which many companies do each cycle, then you usually have to increase staff to do this. With a PIM, you probably wouldn’t have to incur additional staff expenses to increase catalog pages.

Summary

It’s been my experience that either the reduction of overtime or the reduction of head-count is the most compelling ROI. But those will get met head-on with fierce defensiveness. Managers will fight tooth and nail not to reduce staff, even if there are obvious inefficiencies.

So it’s easier to preach the advantages of being able to produce more with the same people – while preventing staff increases in the future. As for “selling” the product sales increase or the “endless aisle” to management – it usually takes a visionary marketing person to see how to do this and evangelize the necessary changes via PIM to the rest of the company.

About the Author

Tom Marine has been in the multichannel database publishing space since 1995 as a user, provider and consultant. Tom’s accomplishments include optimizing Product MDM implementations at large cataloguers and global instances using the Agility Multichannel product. B2X Partners is a venture Tom shares with Bob Lewis, the former Founder and CEO of Enterworks, another Product MDM provider. Together, they consult, design and implement best-in-class information architect solutions.

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One Comment on “The Easiest ROI for Product MDM, by Tom Marine”

  1. FX Nicolas 01/16/2014 at 4:38 am #

    IMHO, the most difficult part of ROI calculation is to get THE formula that converts “technical measures” into “$”. It is not easy to have it for technical reasons (too many variables) and human reasons (managers work with experience, not with mathematical formulas).

    It have talked about this in one of my blog posts:
    http://www.semarchy.com/semarchy-blog/the-roi-challenge-driving-mdm-by-value/

    Excellent post Tom!

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