Return on Investment….Is your Marketing Plan Paying off?

What is Return on Investment (ROI) anyway?

Usually expressed as a percentage Return on Investment is a measure that indicates whather or not a company is using its resources in an effective manner.  Sometimes we hear this called the rate of return.

Below is the formula put together by the corporatefinancialinstitution.com on how you should calculate your ROI percentage.

ROI = ((Gain from Investment – Cost of Investment) / (Cost of Investment)) x 100

Why is ROI important you ask?

Well that is easy – tracking your return on investment is the best way to see how efficiently your business investment is turning into profit.  It exceptionally useful in managing the future of your business, through trial and error (hopefully not too much error) and making smart decisions on which business ventures are working best for you and your business.

What is a good return on investment percentage?  According to entrepreneur.com any business is considered a relatively risky investment, so you should be able to earn a very good return on your invested capital,  in the neighborhood of 15%.

 

There are several newer types of ROI that have been designed as modern day technologies have unfolded such as Social Media Statistics ROI and Marketing Statistic ROI.  As the world and economy change the way we receive information also changes and develops.  What works for your business now may not be what worked for you business 5 years ago.  When was the last time you reviewed your investment strategies?

 

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