Two Meanings of ROI (Often Confused)

Understanding the crucial difference between Return on Investment and Result of Investment for better business decision-making.

Marketing ROI explained

Two Meanings of ROI (Often Confused)

What most people think…

Return on Investment

(Financial Ratio)

Definition

A backward-looking efficiency metric that answers:

“How much money did we make relative to what we spent?”

Formula

ROI = (Return − Investment) / Investment

Characteristics

  • Financial

  • Lagging

  • Aggregated

  • Useful for budgeting and reporting

  • Weak for decision-making in dynamic systems

What you should NEVER FORGET

Result of Investment

(What happened = Outcome)

Definition

A forward-looking measurement of what changed because you invested.

“What did this investment cause to happen that would not have happened otherwise?”

Characteristics

  • Behavioral and operational

  • Leading or mid-funnel

  • Incremental

  • Actionable

  • Necessary for optimization

ROI tells you if something paid off — not why, how, or whether scaling will work.

Why Financial ROI Alone Is Insufficient

Financial ROI collapses complex systems into a single number.

400% ROI

Campaign A [cite: 31]

250% ROI

Campaign B [cite: 32]

Without result tracking, you cannot know: [cite: 33]

  • Which built future demand [cite: 34]

  • Which is scalable [cite: 36]

  • Which cannibalized existing demand [cite: 35]

  • Which created durable advantage [cite: 37]

What “Result of Investment” Actually Means

A result is a measurable change in buyer behavior, capability, or system performance directly attributable to spend.

Increase in qualified demand

Reduction in sales cycle length

Increase in conversion rate

Increase in price tolerance

Improvement in brand recall or trust

Expansion of addressable market

ROI of Results: A Layered Measurement Model

Investment Input

Spend Time Attention Opportunity cost

Immediate Outputs

Impressions Clicks Leads Engagement

Behavioral Results (Critical Layer)

Revenue Margin Lifetime value Cash flow

How to Track ROI of Results (Not Just Spend)

Measure Incrementality, Not Attribution

  • Holdout tests

  • Geo splits

  • Budget on/off tests

  • Pre/post comparisons with controls

Track System-Level Leverage Points

Instead of tracking campaigns, track:

  • Conversion rates

  • Velocity

  • Retention

  • Price realization

  • CAC/LTV ratio

These metrics persist beyond any single campaign.

Tie Results to Financial Levers

Examples with predictable financial impact:

  • A 3% close-rate increase at constant lead volume

  • A 10% reduction in churn

  • A 15% increase in average deal size

These have predictable financial impact, even if not immediately realized.

Same Financial ROI, Different Result ROI

CampaignFinancial ROIResult of Investment
Retargeting500%Captured existing demand
Brand Education200%Increased close rate + shortened cycle
Product Content180%Reduced sales objections