The return on investment (ROI) calculation is one of the most widely used metrics for decision-making businesses use. In the most basic sense, the calculation is:
With its simple but versatile use, ROI will show you the profitability of your investment through a percentage amount. For example, if you purchased a product for your business for $1,000 and believed the product would earn your business $1,500, your ROI would be 50%. If your ROI is a negative number, that means the investment will cause you to lose money. Now that you have a solid grasp of ROI, let’s go through three reasons why it should be the biggest consideration when purchasing a field service management solution for your business.
ROI is Used by Top Earning Businesses
The ROI calculation is a widely relied-on tool for many top-earning businesses in the S&P 500 Index from various industries. On average, ROI for S&P 500 Index companies has been 10% per year. Many of these companies track and report their ROI to investors for stakeholders to feel confident in their decision-making abilities. As of September 30th, 2022, Apple reports an ROI of 73.31%. Tesla also has reported a 19.84% ROI for 2022. If you are a small or medium-sized business, chances are that the top companies in your industry are measuring their ROI for all their decision-making.
ROI is Easily Comparable
The most beneficial aspect of ROI is that it is easy to compare and contrast different options based on the ROI calculations done for each decision. Once the numbers are laid out in front of you, the decision-making process becomes much easier as the choice with the highest ROI will most likely be the best option. To do this optimally, ROI should be calculated the same way for each choice and will require research and understanding of how each choice will be profitable and to which degree. For example, if you are deciding on a field service management solution, your choices could be Competitor 1, Competitor 2, and ServiceEcho. After knowing the price of each option, you will then weigh the profitability of each decision based on the product features. After doing a simple ROI calculation, you may see that the ROI of Competitor 1 is 15%, the ROI for Competitor 2 is 20%, and the ROI for ServiceEcho is 30%. With this information on hand, it will now be easy to make our decision.
ROI is Industry Specific
A benefit of ROI is that the calculation can be very industry specific. So depending on your industry, the ROI number you get may vary in size. A good example of this provided by Fortune, was that in 2020, many technology companies generated annual ROIs above 10%, while companies in other industries, such as energy and utilities, generated much lower ROIs and in some cases experienced losses. This means that ROI takes into account industry differences and should only be compared with ROI calculations done in the same industry. Over time, ROI averages for an industry may change due to factors such as increased competition, technological changes, and consumer preferences. This means that ROI can be viewed to understand how your business’s decisions compare to the industry standards and its changing variables.
If you are looking for a field service management solution and are unsure where to start, try doing an ROI analysis of the available options and go from there. For this purpose, ServiceEcho now has a built-in ROI calculator on our website here. Just input your information, and let us do the calculations for you. You will see that ServiceEcho will be a great return on your investment. Book a demo below to learn more.