What is ROI? Learn how to calculate Return on Investment

Based on the ROI, it is possible to plan goals based on tangible results and understand whether or not it is worth investing in certain channelsROI is short for “Return on Investment.” It is a metric used to know how much the company earned through its investments. To calculate the ROI it is necessary to raise the total income, subtract the costs from these and, finally, divide that result by the total costs. Don’t have time to read the content? Do not worry. Here we leave you a video on the subject, you just have to press play!We always talk here on the RD Station blog that, for a long time, the results of advertising campaigns were analyzed based on guesswork.The Mexico Phone Number List Digital , however, brought a series of metrics to know precisely the efficiency of your investments.One of the best known indicators is the Return on Investment (or ROI, short for the English term Return on Investment).As the name itself suggests, ROI allows you to know how much money the company loses or gains with the applications made in different channels.In this post you will learn what ROI is, why this metric is important for your business and how to calculate it.Do you need a tool to help you easily calculate your Return on Investment? Download our ROI Worksheet for free .What is ROIROI is an indicator that allows you to know how much money the company lost or gained with the investments made (in paid advertisements, new tools, training, etc.).

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In this way, you can know which investments are worthwhile and how to optimize those that are already Mexico Phone Number List so that they have an even better return.The metric is important because it allows you to evaluate how certain initiatives contribute to the results of the company.In the same way, based on ROI, it is possible to plan goals based on tangible results and understand whether or not it is worth investing in certain channels.How to calculate ROIThere is a simple formula to calculate ROI, which consists of:ROI formulaImagine that the profit of your company was $ 100,000 and the initial investment was $ 10,000. Using the formula above, we have:ROI = (100,000 – 10,000) / 10,000ROI = 9In this illustrative example, the Return on Investment was 9 times the initial investment. You can also multiply the result by 100 to get it as a percentage (in this case, 900% return).Why is ROI important?ROI is an effective indicator when it comes to calculating the return on an action and can be applied to all investments, from those made in marketing campaigns and events, to improvements in the company’s infrastructure, to name a few examples.When evaluating your company, investors will also see the ROI, since it is essential to know how much you will earn to know if the investment is worth it.Being attentive to this indicator also allows the company to plan its goals based on possible results to be achieved, observing previous performances.You can also identify the time that investments take to bring a return.Also keep in mind that your company must understand what ROI means to itself and how the metric influences its objectives. Plot realistic metrics and monitor them constantly.Read more about ROI in the post:

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Impact your customers with results reports and test the ROI of your actionsA tip to multiply your ROI: Conversion OptimizationHow are your website conversion rates? Whether you have answered that they are satisfactory or that they are wrong, you should know that there is always room for improvement.And to improve them based on solid information, you must follow some CRO (Conversion Rate Optimization) precepts .The most immediate benefit of the CRO is, as the name already says, the optimization of the conversion rate , that is, the improvement of a page -or even an entire website- so that it generates more conversions from the same volume of traffic.But what is the relationship between CRO and ROI? Where do the two pieces fit?Every day that a bad page, ad or landing page is in the air, money is lost. Ask yourself the following question: “how much would you earn in a year if you increased your conversion rate by 25%, 50% or 100%?”Optimizing the conversion of your pages, ads, email campaigns , blog posts, social media posts and other Digital Marketing actions means generating more results, which directly impacts ROI.Some benefits of CRO and how it can improve the Return on Investment in Digital Marketing of your business are:

1. Higher profit:Not only does the turnover increase, but also the return on investment is greater, since it uses the same structure to bring more results.

2. More budget for traffic:Combining traffic growth with CRO is very powerful for businesses. By generating more money to invest in traffic, you also get more conversions, you generate more money, you can invest more in traffic and so on.

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3. Greater maneuver for CPCs (Cost per Click):By generating more conversions and sales, you have more money to pay for visitors with paid ads. Thus, you have greater bargaining power in Google auctions, for example.And that can make life difficult for your competition, raising the value of the auctions and making them pay more for the CPC , which only increases your distance in relation to the competition.How to assemble a report to test ROIImagine that you are an employee of a company or an agency and you need to assemble a report to present the results of the Digital Marketing actions and strategies for the Board of Directors of your company or for a client.You can spend hours and hours making a huge report of many pages, removing practically all the data that you can get from Google Analytics .Even so, it is likely that, when presenting your report, it does not make much sense, and the Board of Directors or clients will hardly understand the meaning of all the data displayed.Therefore, we can extract 4 lessons about mounting reports:Data and information are different: it is not worth using all the data that you have available if it does not make sense for your company or client.More concise reports can also help deliver more relevant information, but they certainly do not guarantee the presentation of performance metrics. Mainly if, at the end of the presentation, the following questions were not answered: “What do I do with this? What are the next steps?”Reports do not exist only to test results, but to direct the next steps : the size of the report and the time it takes to be done are not decisive for its relevance, and a one-page report that took an hour to be ready can deliver much more information than a 50 that took 8 hours.What really matters is that the report delivers value and importance, meeting the demand of the company or the client.The report should be focused on your audience and the goals that matter to them: it is useless to ask about accesses if you do not know how much you sell, or what you need to sell more or generate a higher average income. Likes, pageviews, and impressions are important, but they are not business metrics.Vanity metrics do not keep a business running: only branding does not serve to keep an open company. If you have excellent branding but don’t turn it into money, that can be dangerous for your business.With those four points we already know much more about reports. But we still need to know how to do them. So we separated six steps to build reports that prove ROI.

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