What does ROI mean?

Definition and explanation

ROI stands for Return on Investment, which is a financial metric used to measure the profitability of an investment. It is commonly used in business to evaluate the performance of investments made in marketing campaigns, capital projects, and other areas. ROI is calculated by dividing the net profit gained (or loss avoided) from an investment by the total cost of the investment. A positive ROI indicates that the investment is profitable, whereas a negative ROI indicates that the investment is not profitable.

Why it matters in sales

In the sales world, nothing speaks louder than numbers. That's why Return on Investment (ROI) is the kingpin of metrics used to determine the impact of a sales organization. It's the ultimate measure of success that tracks the cash flow and profitability of an investment. The ability to earn more than one has invested is a key strategy for any business, and a positive ROI is the ultimate pat on the back in this regard. But, as Seth Godin once said, "marketing is no longer about the stuff that you make, but about the stories you tell." ROI is the story that tells us whether we are winning or losing, and in a sales organization, there is no space for losers.

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