What is ROI: Definition, formula, examples, and how to improve it

Growing up in the '90s, the internet was a burgeoning phenomenon, characterized by dial-up connections and a proliferation of internet companies, many of which were overvalued and led to the infamous "dot-com bubble." This era underscored the importance of return on investment (ROI), a metric that measures the profitability of investments, expressed as a percentage. ROI is essential for various stakeholders, including investors, company owners, financial managers, and product managers, who utilize it to evaluate the efficiency and profitability of business operations, product features, marketing campaigns, and more. Understanding and calculating ROI involves subtracting the cost of investment from the gain from investment, dividing by the cost of investment, and multiplying by 100. A "good" ROI varies by context and should be assessed through outcome-driven metrics and regular evaluations. Strategies to improve ROI include reducing costs, increasing revenue, investing in marketing, enhancing efficiency, and focusing on customer retention. For product managers, ROI aids in making informed decisions about product development, pricing, resource allocation, promotion, and lifecycle management, ultimately supporting flexible and data-driven decision-making.

No tracked trend matches for this post yet.

Use this post, company, and trend context to find content marketing opportunities, perform competitive analysis, or address product feature gaps via the Plushcap MCP server or the Plushcap API.