Can you tell the difference between these two indicators? Despite some similarities, they take different factors into consideration and both are highly relevant to strategies, increasing the assertiveness of decisions.
In this article I will present the RoDI concept, its france companies email list and how to calculate and use it on a daily basis.
What is Return on Data Investment?
RoDI, short for Return on Data Investment, is a performance indicator that relates the amounts invested by companies in obtaining strategic data and the return generated by this.
Most companies currently use ROI, which is Return On Investment, but this indicator relates general investments, such as Google Adwords campaigns , social media ads , software acquisition, corporate and physical structure, among others.
However, with the increasing use of data to guide professionals, it became necessary to create an indicator that related the effort and structure needed to have this data, comparing this with the gain generated, hence the RoDI emerged.
The difference between ROI and RoDI lies precisely in what is taken into account when calculating. The first relates all the costs and all the gains generated by the strategy, while the second indicator only examines what is obtained from the data and what is spent because of it.
Your company must monitor these two indicators if it wants to have its actions truly monitored and based on results .
How important is RoDI?
Imagine that an organization has just started investing in Google Adwords . Initially, it invested R$2,000. It replicates this investment every month. So, how do you know if this amount is relevant to sales? The answer lies in the well-known ROI. With it, the professional will compare the amount invested in the ads with the profit and prove the efficiency or not of that action.
Thinking about this example, what if the campaign was targeted at a specific audience? Before launching the ads, the marketing department invested resources to gather data on potential customers and target those who live in a more strategic region, with greater potential. So, how do you consider the cost of obtaining this data? By applying RoDI.
A new calculation must be made considering what was spent to obtain this information and what profit was generated from this decision. The importance of Return on Data Investment lies in the growing need for companies to base their actions and decisions on Big Data and, for this, a cost is generated for acquiring and accessing the information.
How to calculate Return on Data Investment?
The calculation of RoDI is very similar to that of ROI, the difference lies in the values taken into consideration. In RoDI, the cost of generating the data is subtracted from the gain obtained from the analysis, dividing this result by the same cost.
RoDI = (Data Gain – Data Cost) / Data Cost
To make things clearer, let's create an example. Imagine that a company is starting to base its strategies on Big Data now. The costs to access this data were R$50,000, while the net profit from the strategies created with this information was R$60,000. So, applying these values to the aforementioned formula, we have:
RoDI = (60,000 – 50,000) / 50,000 = 0.2
Transforming this result into a percentage, we have 20%. Although it is an example, this value found is considered the market standard and represents a good investment.
What to take into account when calculating RoDI?
You already know how to calculate RoDI, but you may be unsure about what to consider in the calculation, both in terms of the investment made and the return generated. So, now we will show you what should be taken into consideration to make this calculation.