I had the honor of being invited to an interview by Gabriela Escamilla, host of the Máquina de Crecimiento Podcast by RD Station, to tell you about how to find ROI in Marketing and a little about the company in general.
What Is ROI?
ROI, short for Return on Investment, refers to the return on what you invest, and it is a metric used to determine what a company is earning through the investments it makes.
How Is ROI Calculated?
There is a very simple formula for this calculation; keep the following in mind:
Take the Revenue generated by the campaign, subtract the campaign expenses, and now divide it by the campaign cost; then multiply that result by 100 and that is your return on investment.
Formula:
Example:
Imagine that your company's profit was $100,000 and the initial investment was $10,000. Using the formula above, we have:
- ROI = (100,000 – 10,000) / 10,000
- ROI = 9
In this purely illustrative example, the Return on Investment was 9 times the initial investment. You can also multiply the result by 100 to express it as a percentage (in this case, a 900% return).
Why Is It Important to Calculate ROI?
ROI is an effective indicator when it comes to calculating the return on an action, and it can be applied to all investments, from those made in marketing campaigns and events to improvements in the company's infrastructure, for example.
When evaluating your company, investors will also look at ROI, since it is essential to know how much you will earn in order to know whether the investment is worth it.
Knowing this indicator also allows the company to plan its goals based on achievable results by looking at past returns.
It also helps identify how long investments take to generate a return.
Keep in mind that your company must understand what ROI means for it and how the metric influences its objectives. Set realistic metrics and objectives and monitor them constantly.
And now, after this brief introduction, here is the interview for you to listen to. 🎧
Enjoy it!
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