How to easily calculate ROI (return on investment)

Video: How To Calculate The Return on Investment (ROI) of Real Estate & Stocks 2024, July

As you know, 80% of the advertising budget of any advertising campaign is wasted. The question of the profitability of one way or another way of promoting your business is the most painful for the investor and business owner.

You will need

Access to site statistics on the Yandex.Metrica service.
Access to a similar counter in Google.Analytics.
Reports on orders or replenishment of the customer base for a certain period.
Data on the cost of goods and profits.

Instruction manual

Selection of key indicators: check the available data on the advertising campaign. What are the same indicators for all advertising sources you can calculate? It can be calls to specific numbers for each segment, applications from different pages of the site, or registered clicks from affiliate programs. The key indicator should ultimately be the same for the convenience of calculating the ROI. Consider the fact that you can calculate the return on investment for a particular employee. In this case, it is convenient to include in the column "cost" a monthly salary with all tax deductions.

Statistics collection: at this stage, the interaction of all departments is important, download the monthly report from the Yandex.Metrica service, Google.Analytics, collect data on calls, on requests in the admin panel of the site.

We believe that it turned out. For each advertising source you should get 4 indicators, namely: "Expense", "Number of orders", "Cost of one order", "Revenue". If you are selling a complex service, then it’s wise to count customers, not individual orders. In this case, the cost of attracting a new buyer can be high, however, in the income line you do not write down the transaction amount for orders for the month, but the estimated lifetime value (LTV) coefficient.

The magic formula. We have all the data on hand, now we calculate the percentage of ROI using the following formula: ROI = (income - cost) / investment in advertising * 100%.

Analysis of the effectiveness of the advertising source. By itself, the ROI indicator is useful only for a binary assessment of whether a business pays for investments for a certain period. Accordingly, with an indicator exceeding 100%, the business is profitable. But this indicator alone does not give much to the business owner, who can get such reports from accounting. The whole point of calculating the return on investment in marketing is to allocate the most effective advertising channel and redistribute human and financial resources to it.

note

Keep all processed data in a separate place. You will not be able to collect reports from all managers in a single format in the future. Make this report yourself and apply it to your monthly financial statement.

Recheck the data, compare the records in your "native" PBX with the list of calls in the Yandex service "Target Call". Upload order data from mail, the internal administrative panel of the site, or the 1C proprietary system. One such check is a chance to find bottlenecks in your sales funnel (the step at which potential customers are lost) and, therefore, increase the effectiveness of the selected source by several times.

Useful advice

In a crisis, the question of investment efficiency is particularly acute. Avoid the temptation to make a management report in the style of “We have a high ROI!” The task is to find out the weaknesses of the business and distribute resources between the most reliable and profitable sources of new customers.