Return on Investment (ROI) measures how much profit is made from an investment relative to its cost, expressed as a percentage.
For example, a business spends $40,000 on a new CRM system and, within one year, attributes $110,000 in additional closed deals to improved follow-up processes. The ROI is ($110,000 - $40,000) ÷ $40,000 = 175%, confirming the investment generated strong returns.
Why it matters: It is the ultimate scorecard; every dollar spent must be justified by an ROI that exceeds the company's cost of capital.
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