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Return On Investment (ROI)

Return On Investment (ROI)

Noun

ROI, or return on investment, in the context of B2B SaaS is a key metric that measures the effectiveness and profitability of an investment. This could be a marketing campaign, sales initiative or partnership. By measuring ROI, businesses can understand which strategies are generating the most revenue, helping to make data-driven decisions to optimize their spending and maximize overall impact.

The formula for calculating ROI is: (Revenue - Investment) / Investment * 100.

For example, consider a company that invested in a new affiliate marketing campaign that involves training materials, email templates and marketing. The investment of the campaign was $5,000. After three months, the affiliate partnerships saw an increase in revenue by 33 per cent, resulting in $25,000 more in revenue for the company. The ROI for the campaign was 500 per cent, making it a smashing success.

Measuring partnership ROI allows you to identify your most valuable partners, uncover areas for improvement, and make informed decisions about future collaborations. By quantifying the impact of your partnerships, you can also effectively communicate their value to stakeholders, securing buy-in and fostering further opportunities.

Example:

By diligently tracking the ROI of their partnership, Steve was able to validate the investment to the companies stakeholders at the end of the quarter.

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