ROI (Return on Investment)
ROI is the net return — gain minus cost — divided by cost, expressed as a percentage. It's the broadest measure of whether an investment pays off.
What it is
Return on Investment is a universal financial efficiency metric. It can apply to a marketing campaign, a software purchase, a hire, or an entire business. ROI subtracts the cost from the gain before computing the ratio, unlike ROAS which is purely top-line.
How to calculate
ROI = (Net Profit / Cost of Investment) × 100%.
Example: $60,000 net profit from a campaign that cost $20,000 = 300% ROI.
For marketing specifically: Marketing ROI = ((Revenue − COGS − Marketing Spend) / Marketing Spend) × 100%.
Why it matters
ROI is the universal language between marketing and finance. CFOs care about ROI more than they care about CTR or CPL. Building marketing reports around ROI (or contribution-margin ROI) keeps the C-suite engaged and unlocks bigger budgets.
Frequently asked questions
Why does marketing-reported ROI differ from finance-reported ROI?
Different inclusions. Marketing often uses gross revenue; finance includes operational costs, refunds, COGS. Align definitions early.
What time horizon should I use?
Match it to the customer lifecycle. For impulse-buy ecom, 30 days. For behavioral health with multi-year customer relationships, 12–24 months.
How does ROI relate to payback period?
ROI tells you total return; payback period tells you when you break even. Both matter — high ROI with a 24-month payback can starve cash flow.
