Measuring Return on Investment

The more generalized financial analysis of investment return involves analysis of investments whose return is measured over a period of years, not months. Financial analysis of investment return is part of corporate investment proposals, particularly capital investments that involve the purchase of buildings, machinery, and equipment, as well as businesses. This chapter presents that an investment in marketing automation capability involves a similar initial investment followed by an expected return, and will likely require a similar proposal and analysis of investment return. The measurement of financial investment return is an analytical exercise based on the value of the investment—the cost to purchase the building, relative to the expected profit that the investment (the building) will generate. The investment purpose is typically captured in a proposal, and the proposal includes one or more financial schedules demonstrating the expense and profit of the investment over time.