Why ROI matters for your business

Return on investment (or ROI), is a metric that businesses use to calculate the effectiveness of their spending. It’s particularly important for measuring the success of marketing efforts and helps to take the uncertainty out of crunching the important numbers. Regardless of how big your operation is or what industry you find yourself in, having the ability to calculate return on investment is crucial to getting things right. 

How can we calculate ROI? 

Determining ROI is simple in nature. All you have to do is divide the gains from your investment by the cost and you’ll be left with an answer in the form of a ratio or percentage. Basically, if you’re looking at a positive number, then you’ve made a good investment and the business has benefited from the expense. If the number is negative, on the other hand, then the investment has cost you more money than it has generated. 

Granted, the above represents a relatively easy equation that can be used for most businesses. However, it’s also important to take into account other factors that may be a little less obvious from the outset. For example, considerations that you may overlook include time, unexpected costs, fees and even stress and anxiety in relation to yourself and your team. The above can all affect your ROI greatly. 

So, going back to our formula, don’t forget to include everything from how much time you spend on research to whether you need to allocate time for training employees, and so on. By being aware of any hidden factors that can influence ROI calculation, you can more accurately measure how worthwhile something has been. 

Putting ROI into action 

Now that we understand what ROI is and how to calculate it, how can we actually use it? Let’s look at a few examples:

• Investing in a new software tool: Let’s say you want to invest in a new software tool for your marketing campaigns. By calculating the ROI, you can accurately gauge how valuable it will be and what other options may be a good idea in the future.
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• Bringing on a new employee: Sometimes hiring additional staff members can be risky. Monitoring the return on investment of your employees will ensure that you can better understand which types of people bring on and which to let go.  
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• Adding a new department: Just like the above, the addition of a new department is a costly move, but it can bring a lot of profit. To safeguard your business, determine the return on investment to figure out if it will be a good move. This can also help to identify other opportunities for success. 

Using ROI to your advantage

Understanding how ROI works and how it can be used to your advantage is key to getting the best results, especially when it comes to things like marketing. At WildJar, we help businesses to improve their campaign results with advanced call tracking software. And, not only do we have some awesome tools to improve your efforts, but we guarantee a fantastic return on investment. 

Want to find out more? Contact our friendly team and book a demo today.