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Retail Software
DotActiv TeamOct 17, 2016 9:01:53 AM3 min read

Evaluating Retail Software? Here Are Practical Tips To Focus On:

Retail Software

Improving the mix of retail software or even the implementation of software which your team has already purchased are some of the first things retailers and suppliers explore when wanting to improve their overall business performance. The right mix of retail software will improve the efficiency, profitability and overall performance of your stores.  So when you are looking to add a particular program to your mix, make sure you centre your evaluation around how much money your business will earn and save in return for every dollar you spend on the solution. In this blog, we are going to share some practical tips on how you can get to grips with ROI and justify your decision.

When choosing retail software for your business, the first question you should ask yourself is: “What will the return on investment be?”.

Why is ROI Important?

Before you buy retail software, it’s important that you understand and realise the value of the software. Return on investment defines how many gross dollars you’ll receive in exchange for every dollar spent purchasing the software. Here are three reasons why this is so important:

1) If you are unable to provide comprehensive information regarding the ROI, then you are going to battle to get the decision makers at your organisation to allocate the budget and resources required for your initiative.

2) When you understand the ROI which should be derived from an initiative, then you are in a better position to achieve that ROI because you have a benchmark from which to evaluate your efforts.

3) Assuming that you and your team are consistently delivering a healthy ROI from the implementation of a solution, then the powers that be are likely to buy into your future initiatives and will continue to support your existing efforts.  

How to Calculate ROI Before You Purchase Software

The most basic formula for calculating ROI uses only two variables: gross profit for units sold as a result of the software (Return) and the cost of purchasing the software (Cost of Investment): ROI % = (Return – Cost of Investment) divided by Cost of Investment X 100

This basic ROI calculation is not the most accurate measure of software value. Instead, we recommend using a combination of the above formula and the tips below to determine the practical and financial value you can expect the software to generate in the future:

  1. Determine the total cost of the software - first things first, you need to understand the full cost of your initiative. Remember to include license fees, training costs, hours required for implementing the software and costs for additional hardware. Make sure you have taken all direct and indirect costs into account. Once you have this value, you will need to compare it to the practical and financial benefits.
  2. Identify the cost saving benefits of the software - when evaluating your software, be sure to look out for any of the following time and cost-saving benefits: data processing, process management, accuracy improvements and any other operational efficiency gains.
  3. Decision support benefits - your software should support decision-making which results in a competitive advantage. Evaluate this by asking: what decisions will the software help you and your team make? Consider this support being absent: what cost can be associated with untimely or wrong decision-making because decision support information is untimely or unreliable? On the other side of the coin, what opportunity for improved decision-making is being missed out on?
  4. Money making benefits - last but not least, you need to consider how your investment is going to help your organisation make money. When preparing your case, you should focus on these three areas: 1) How will the software add to my customer's experience and therefore result in customer loyalty? 2) How will the software encourage customers to increase their purchase frequency and size per transaction? 3) How will it help my organisation win new customers?


The right mix of integrated retail software will give your business a competitive advantage. If you are currently evaluating ways to increase the financial performance of your stores, don't go in alone, book a free exploratory consultation with one of our account advisors to learn how DotActiv's software and support services can help you achieve your goals.

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DotActiv Team

The DotActiv team comprises category management experts lending their retail experience and knowledge to create well-researched and in-depth articles.