ROI: Learn how to do the calculation!

ROI, or return on investment, is a mathematical calculation that marketers can use to evaluate investments and their performance compared to others. Sometimes, this account can be used to facilitate business decision-making and to optimize Trade Marketing campaigns.

At the organizational level, understanding the ROI generated by a Trade Marketing campaign reveals how this sector is being managed, helps justify marketing expenses, consider the budget, and the allocation of resources for top priority actions. The accuracy of this calculation reveals the importance of the investments made in the area and shows whether the advertisements generate conversions.

Would you like to understand the importance of Trade Marketing, how to calculate and what formulas to use at that time? Follow the reading!

Learn what ROI is and what is it for#

ROI is a practice used by professionals in this sector to attribute the increase in revenue and profit according to the impacts of Trade Marketing campaigns. By calculating the return on investment, managers are able to discover how the team’s efforts are contributing to business growth.

The calculation of marketing ROI assists in defining new expenses and allocating budget for future or ongoing initiatives and campaigns. Thus, it is an indicator that indicates monetary amounts resulting from investments made in relation to their cost to the business to know if the company is on the right track.

Understand why it’s important to calculate ROI in Trade Marketing#

Calculating ROI is very important to understand how each investment contributes directly or indirectly to your business. This tool is very useful for evaluating your previous choices and directing the future choices that need to be made. Employees can also use this data to make comparisons and identify new opportunities.

For example, if the professional discovers that a certain investment generates more profits, it is easier to decide to dedicate more energy and time to similar actions. [On the other hand, investments that do not bring sufficient financial return to pay their own expenses must be eliminated and replaced by new strategies capable of generating results.](/en/tipos-de-promocoes/)

Discover how to calculate the ROI of a Trade Marketing campaign#

It’s not hard to calculate the ROI of your Trade Marketing campaigns. The calculation involves few numbers, which are available on balance sheets or financial statements. By obtaining your result, you will have greater comparative capacity and will be able to measure the profitability or net profit of investments. See below for more details!

Variables considered#

The total revenue of a specific campaign is one of the variables that can be observed to have a clear and objective overview of your investments. Count it when measuring marketing ROI if you want to do good strategic media planning. Also evaluate the gross profit and the cost of production, as well as the net profit.

Formula used#

There are several ways to calculate Trade Marketing ROI, but the main formula for understanding the impacts of campaigns is as follows: “Trade Marketing ROI = (Sales Growth - Trade Marketing Cost)/Trade Marketing Cost”. However, those who want to get a more real view of the impacts need to include organic sales.

To account for organic sales, the formula is used: “Trade Marketing ROI = Sales Growth - Organic Sales Growth - Trade Marketing Cost)/Trade Marketing Cost”. The ROI can be calculated as net profit, divided by the investment cost and multiplied by 100 to express a percentage: percentage. “ROI = (net income/investment) x 100”.

Practical example#

The first step is to obtain the sales growth number for a product, subtract campaign expenses, and divide by the cost of marketing. If sales have increased R$ 1,000.00 from your budget and the Trade Marketing campaign costs R$ 100.00, the ROI will be 900%, note: (R$ 1,000-R$ 100)/R$ 100) = 900%.

Did you learn how to calculate ROI in Trade Marketing? You can use a specific technological solution to generate your Trade Marketing ROI reports, regardless of your area of expertise, and put our tips into practice. Consequently, it will be easier for you to find the best ways to increase this indicator.

Do you want more information on the subject? Talk to one of our customer service professionals!