What is ROI and how to calculate it in RetailCRM
Posted: Thu Dec 26, 2024 4:15 am
How can ROI calculation help a marketer evaluate the effectiveness of an advertising campaign? How can it be used in RetailCRM to manage the advertising budget more wisely? When is ROI calculation useless? We answer in the article.
What is ROI and why should you calculate it?
When is it useful to calculate ROI and in what cases it won’t help?
How to view ROI in RetailCRM
How to enter marketing expenses in RetailCRM to see ROI
What to do after calculating ROI
What is ROI and why should you calculate it?
ROI in simple terms is an indicator of business success, jamaica phone numbers the profitability of your investments. It stands for Return On Investment.
The indicator helps to measure the return on investment from each specific investment separately. For example, an email newsletter or a contextual campaign. It helps to understand what works effectively and where to continue investing money to make a profit.
How else does ROI help:
you see what profit advertising activities bring - campaigns, promotions, events - and which ones do not pay off;
understand your customers' preferences: what CTAs and offers they respond to best;
you can adjust your development and promotion strategy: abandon ineffective channels and strengthen profitable ones;
You can make forecasts, plan future expenses and identify trends in a specific business.
The simplest formula for calculating ROI looks like this:
7 Ways to Build a Database for Email Newsletters
ROI = (income - expenses) / expenses * 100%
The higher the ROI, the more you usually earn. It is expressed as a percentage. A good ROI is one that is greater than 100%. If the ROI is 200%, then each ruble brought you 2 rubles.
For advertising campaigns, ROMI, Return On Marketing Investment, is calculated. This is a special case of ROI, when only marketing costs are taken into account.
Automate your mailingsLaunch welcome chains, remind about abandoned carts, inform about accrual and burning of bonuses in the loyalty program
Try it for free14 days ★test period
When is it useful to calculate ROI, and in what cases it won’t help?
Here are a few instances when an online store marketer should calculate ROI:
do email newsletters;
launch contextual or targeted advertising;
Run competitions on social networks.
This is not the entire list, but the main one. The result allows you to evaluate the return on investment and directly affects the advertising and development strategy.
Example : you launched advertising in Yandex. Direct and VKontakte. At first glance, the conversion and number of orders are higher from Direct. It seems that you need to invest money there. But we looked at the ROI and saw that VKontakte has much more, that is, this channel brought in more money.
Sometimes calculating ROI is useless, as it leads to incorrect conclusions. Here are these cases:
The product or service purchase period is greatly extended in time . If customers take a long time to make a decision, it is difficult to assess the return on investment. As a rule, this is a very expensive purchase or a complex product. ROI can be negative for a long time and only in the end will it turn out to be positive. Or the customer can change his mind about buying product A and buy a more expensive option A+. As a result, the ROI for each period will be different and not indicative.
Large range of product prices . If your products vary greatly in price, the more expensive ones will distort the picture. ROI will not show how many expensive and how many cheap products were sold, and conclusions about the effectiveness of investments will be incorrect.
No income data . If the marketer does not collect complete statistics and does not know how much money he made for the business, it will not be possible to calculate ROI.
The company is a startup . At the start, the company can invest a lot in promotion and not recoup these investments. The ROI will not be indicative, but this does not mean that the business is ineffective.
How to Reduce Abandoned Cart Rates on Your Website and Increase Conversion to Orders
Read more articles on the RetailCRM blog
How to understand that the mailing worked? Metrics in RetailCRM will help
LTV: what is this metric, how to calculate it and can it be managed
Appointment booking, upselling and more: how to work with services in RetailCRM
How to view ROI in RetailCRM
In RetailCRM, you can record advertising expenses and compare them with income from advertising sources of orders. To view ROI in the system, go to the section "Analytics" → "Finance" → "Marketing report".
How Analytics in RetailCRM Can Help You
Where to look at ROI in RetailCRM
In the marketing report, you can immediately see how many orders and how much each channel brought in. Advertising costs and ROI are also indicated here
ROI in the system is calculated using the formula:
Gross profit on orders from the channel /
Costs of attracting these orders * 100%
To see more information, namely the campaign and its content, keyword, CPO and average check, you need to click on the gear and activate the items. Then the table will expand and you can see everything in more detail.
Custom fields in the report
You can customize which fields to display in the report.
But before you can look at ROI, you need to enter your marketing expenses into your CRM.
How to Enter Marketing Expenses into RetailCRM to See ROI
There are four ways to do this:
Manual.
Automatic with trigger.
Automatic using a ready-made module.
Automatically via API.
Manual method . First, you need to create an expense item. By default, CRM has a list of expenses that occur most often. But if this list is not enough, you can add a new item in the section "Settings" → "Reference books" → "Expenses".
How to add an expense item
Click the button to add a new expense item
The expense itself must be added in the section “Sales” → “Finance” → “New expense”.
How to add an expense
Expenses for already prepared items are added in the “Finance” section
The new expense card will open. After selecting the article, the "Source" block will be displayed. All data in this block must match the settings in the advertising systems.
Expense card
For a new expense, you need to specify the item, period, and store to which this expense is linked.
Automatic method using a trigger . You can add expenses to the system using a trigger. To do this, create a new trigger, select the event "Order change" and the action "Add expense" for it. In the condition, specify what the trigger will be triggered by.
What is ROI and why should you calculate it?
When is it useful to calculate ROI and in what cases it won’t help?
How to view ROI in RetailCRM
How to enter marketing expenses in RetailCRM to see ROI
What to do after calculating ROI
What is ROI and why should you calculate it?
ROI in simple terms is an indicator of business success, jamaica phone numbers the profitability of your investments. It stands for Return On Investment.
The indicator helps to measure the return on investment from each specific investment separately. For example, an email newsletter or a contextual campaign. It helps to understand what works effectively and where to continue investing money to make a profit.
How else does ROI help:
you see what profit advertising activities bring - campaigns, promotions, events - and which ones do not pay off;
understand your customers' preferences: what CTAs and offers they respond to best;
you can adjust your development and promotion strategy: abandon ineffective channels and strengthen profitable ones;
You can make forecasts, plan future expenses and identify trends in a specific business.
The simplest formula for calculating ROI looks like this:
7 Ways to Build a Database for Email Newsletters
ROI = (income - expenses) / expenses * 100%
The higher the ROI, the more you usually earn. It is expressed as a percentage. A good ROI is one that is greater than 100%. If the ROI is 200%, then each ruble brought you 2 rubles.
For advertising campaigns, ROMI, Return On Marketing Investment, is calculated. This is a special case of ROI, when only marketing costs are taken into account.
Automate your mailingsLaunch welcome chains, remind about abandoned carts, inform about accrual and burning of bonuses in the loyalty program
Try it for free14 days ★test period
When is it useful to calculate ROI, and in what cases it won’t help?
Here are a few instances when an online store marketer should calculate ROI:
do email newsletters;
launch contextual or targeted advertising;
Run competitions on social networks.
This is not the entire list, but the main one. The result allows you to evaluate the return on investment and directly affects the advertising and development strategy.
Example : you launched advertising in Yandex. Direct and VKontakte. At first glance, the conversion and number of orders are higher from Direct. It seems that you need to invest money there. But we looked at the ROI and saw that VKontakte has much more, that is, this channel brought in more money.
Sometimes calculating ROI is useless, as it leads to incorrect conclusions. Here are these cases:
The product or service purchase period is greatly extended in time . If customers take a long time to make a decision, it is difficult to assess the return on investment. As a rule, this is a very expensive purchase or a complex product. ROI can be negative for a long time and only in the end will it turn out to be positive. Or the customer can change his mind about buying product A and buy a more expensive option A+. As a result, the ROI for each period will be different and not indicative.
Large range of product prices . If your products vary greatly in price, the more expensive ones will distort the picture. ROI will not show how many expensive and how many cheap products were sold, and conclusions about the effectiveness of investments will be incorrect.
No income data . If the marketer does not collect complete statistics and does not know how much money he made for the business, it will not be possible to calculate ROI.
The company is a startup . At the start, the company can invest a lot in promotion and not recoup these investments. The ROI will not be indicative, but this does not mean that the business is ineffective.
How to Reduce Abandoned Cart Rates on Your Website and Increase Conversion to Orders
Read more articles on the RetailCRM blog
How to understand that the mailing worked? Metrics in RetailCRM will help LTV: what is this metric, how to calculate it and can it be managed Appointment booking, upselling and more: how to work with services in RetailCRMHow to view ROI in RetailCRM
In RetailCRM, you can record advertising expenses and compare them with income from advertising sources of orders. To view ROI in the system, go to the section "Analytics" → "Finance" → "Marketing report".
How Analytics in RetailCRM Can Help You
Where to look at ROI in RetailCRM
In the marketing report, you can immediately see how many orders and how much each channel brought in. Advertising costs and ROI are also indicated here
ROI in the system is calculated using the formula:
Gross profit on orders from the channel /
Costs of attracting these orders * 100%
To see more information, namely the campaign and its content, keyword, CPO and average check, you need to click on the gear and activate the items. Then the table will expand and you can see everything in more detail.
Custom fields in the report
You can customize which fields to display in the report.
But before you can look at ROI, you need to enter your marketing expenses into your CRM.
How to Enter Marketing Expenses into RetailCRM to See ROI
There are four ways to do this:
Manual.
Automatic with trigger.
Automatic using a ready-made module.
Automatically via API.
Manual method . First, you need to create an expense item. By default, CRM has a list of expenses that occur most often. But if this list is not enough, you can add a new item in the section "Settings" → "Reference books" → "Expenses".
How to add an expense item
Click the button to add a new expense item
The expense itself must be added in the section “Sales” → “Finance” → “New expense”.
How to add an expense
Expenses for already prepared items are added in the “Finance” section
The new expense card will open. After selecting the article, the "Source" block will be displayed. All data in this block must match the settings in the advertising systems.
Expense card
For a new expense, you need to specify the item, period, and store to which this expense is linked.
Automatic method using a trigger . You can add expenses to the system using a trigger. To do this, create a new trigger, select the event "Order change" and the action "Add expense" for it. In the condition, specify what the trigger will be triggered by.