ROI (Return on Investment)
Quick answer
The metric measuring the net gain of an investment relative to its cost: (benefit - cost) / cost.
Key takeaways
- Benefits: hours saved, chargebacks avoided, capital freed, sales recovered
- Costs: implementation + operation over the analysed period
- ROI = (benefits - costs) / costs
What ROI is
Return on Investment (ROI) expresses the return of an investment: ROI = (net benefit - investment cost) / investment cost. A 3x ROI means the investment generated three times its value.
Why it matters to the board
ROI is the common language of investment decisions. For operational software, the benefit comes from reducing manual work, errors, dead stock and retail penalties.
How it is calculated for an operational project
- Benefits: hours saved, chargebacks avoided, capital freed, sales recovered
- Costs: implementation + operation over the analysed period
- ROI = (benefits - costs) / costs
How CRMconnect helps
CRMconnect measures real benefits (automated orders, chargebacks avoided, dead stock reduced) and offers dedicated ROI calculators, so the decision is made on concrete figures, not promises.
Real-world example
A distributor saved €14,200/month (manual work + chargebacks avoided) at a cost of €216/month + setup, reaching an ROI above 7x in the first year.
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Frequently asked
Difference between ROI and payback?+
Payback tells how long until you recover your investment; ROI tells how much you gain beyond what you invested, over a given period.
How do I estimate ROI before implementing?+
Starting from measurable current costs (manual hours, chargebacks, dead stock) and the realistic benefit of automation. CRMconnect calculators help with this.
Where CRMconnect fits
Related terms
Total Cost of Ownership (TCO)
The sum of all costs of a solution over its full life: acquisition, implementation, operation, maintenance and replacement.
FinanceDepreciation
Systematic allocation of a fixed asset's cost over its useful life, recognised as a periodic expense.
FinanceOpportunity cost
The value of the best alternative you give up when choosing a particular use of resources - a key concept in strategic capital-allocation decisions.
FinanceWorking capital
The difference between current assets and current liabilities - the cash a company has to fund daily operations. A key financial-health indicator.