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How to Calculate Promotion ROI

In Consumer Goods, a lot of money is spent on promotions. To actively manage margin when trade spending increases you need to: 1) know what promotions work (and don’t work), and 2) take action.

Promotion Return on Investment (ROI) is a financial metric that enables you to compare promotions across customers and products so you can understand what spending is working the hardest for you. You’ll find many ways to calculate ROI. We think the one shown below fits best for quick, actionable insights.

Use the formula described below to calculate ROI for your promotions. Compare ROIs across customers and products to understand what works and what doesn’t.

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