A company should not only focus on developing action plans, but also on measuring the results of these plans in order to be able to correct mistakes and create more refined plans in the future. ROI is an indispensable measurement practice for communication strategies that focuses on investment results.
ROI stands for “Return on Investment”. It is used to measure the return we have obtained on an investment, meaning how much a company earns on its investments. Measuring these results allows us to visualise the performance of our work and to detect failures or improvements to amortise the investment made. Using ROI in marketing will allow us to have return on investment ratios in each of the campaigns we carry out. So, we will always be able to see if those actions are profitable or not.
Advantages of measuring ROI
Measuring ROI has become a must for companies due to its numerous advantages such as:
- It helps to refine different strategies that can be reused in future strategies, saving you time, and ensuring their success
- Helps to optimise costs
- Allows managers to make decisions more quickly, as it often accompanies the state of the company and its investments
How is ROI calculated?
To calculate it, we must use the following formula:
ROI = (benefit obtained – investment / investment)
You subtract the cost of the investment from the benefit obtained or that you plan to obtain from an investment and then divide that result by the cost of the investment. The result obtained from this operation is multiplied by 100, since ROI is measured as a percentage. If you have a negative ROI it means that you are losing money; if it is very close to zero it may mean that the investment is not very attractive.
At AREA10 Marketing we have experience in implementing effective strategies adapted to each project, always keeping in mind to maximise results and ROI. Your objectives are ours!
If you need advice on developing communication strategies for your company and measuring their performance, click here. We will be happy to help you!