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Why Measuring ROI Matters More Than You Might Think

Do you know how much return you’re getting on what you invest in your business? It’s critical to know because if you’re spending time and money on things that don’t work, you’ll be able to cut them loose and put more money into things that support your business. Every dollar counts, but not every return is measured in dollars. For example, if you’re running a fleet management company and you’re using software that tracks warranty reimbursements, it’s easy to see your ROI because you’ll be generating money from every warranty claim you submit and win. Not all of your efforts will be easy to measure in dollars like this. Some returns come in the form of ensuring your business runs smoothly, but everything can be measured, at least to some degree.

So, how do you measure ROI, especially the components that don’t produce results in dollars?

First, identify all of your investments

roi, small business coach

Keep in mind that investments that provide a return are more than just dollars spent. You probably have all or some of the following investments in your business:

  • Marketing campaigns
  • Task management software
  • Email marketing software
  • Mobile devices for staff
  • Physical desktop computers
  • Networking equipment
  • Payroll software
  • Cybersecurity automation
  • Software subscriptions
  • Ergonomic office furniture

These are just a handful of examples of the investments you might have made in your business. Once you have a list of your current business investments, you can start to assess them individually to make sure you’re getting a return. That return could be anything, including:

  • Revenue
  • Customer satisfaction
  • Employee satisfaction
  • Team productivity
  • More time saved
  • A superior product or service
  • More positive online reviews
  • Brand ambassadors
  • And more

As you can see, not every return is directly measurable in profits and dollar amounts. For example, your task management software application won’t directly increase your profits, but it will keep your team organized and on track, which has a positive impact on your bottom line. However, if you use the wrong application, your team’s productivity will suffer. So, to know if your task management solution is generating a positive ROI, you have to talk to your team to make sure they’re actually using it and that it supports their workflows.

You can connect your email marketing software to ROI, but not directly. This is where things get a little more complicated. Email marketing is a proven marketing method for generating leads and sales, so as long as you’re using software that has the necessary components, you have a chance at generating ROI. However, the ROI will come from your specific marketing strategies. If you’re assessing your marketing strategies and think email marketing doesn’t work, instead of moving away from email, work on improving your email marketing strategy.

Why ROI matters

return on investment

The most obvious reason to measure ROI is to know that you’re investing in the right things to grow and run your business. You don’t want to waste money. Another reason is to use it to justify new projects or additional expenses. When a project produces positive ROI, it’s a good sign that you’re onto something that can support your business. The project may be a small test run for a larger launch, or it could be an entirely new segment of your business.

Measuring ROI is the only way to know if your business activities are making a positive difference for your organization. It’s also a good way to prove to investors that your business is profitable.

ROI projections are also useful for your business. Say you want to purchase a large piece of equipment, like a copy machine or conveyor belt. You should be able to project how much money your investment will save in the long run. If the cost of the machine will decrease your time, effort, and money spent overall, and you can recover the cost of the machine in a decent amount of time, you’ll know the ROI should be positive.

Start measuring ROI today

If you have yet to start measuring ROI across your business, it’s time to start. The more you measure, the more you can stay in control of your expenses by cutting things that aren’t contributing to your success. When your investments are profitable, your business is profitable.

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