How to increase ROI: Best practices in 2026
How can you increase ROI for your business?
Learning how to increase ROI comes down to four moves: grow revenue, use your data well, invest in analytics, and cut overhead costs.
A rising ROI signals a healthy business. So it is a goal worth chasing. Here is what drives it:
- More revenue, without a matching jump in costs.
- Smart use of data and analytics tools.
- Lower overhead, often through outsourcing.
For success-driven owners, a higher return on investment (ROI) is a top priority. There are also programs that help owners and investors spot new opportunities, such as The Ferris Report. As a result, you can make better financial calls.
A higher ROI means more profit for the company. So learning how to increase ROI matters for any team. This guide explains ROI and the steps to lift it.
Defining ROI
Return on investment measures the profit or loss you make on an investment. In short, it is the ratio of net returns to costs, shown as a percentage.
A simple way to think about ROI is a trade-off. You compare what you pay against what you get back.
For example, if you buy a widget for $10 and sell it for $50, your ROI is 500%. So the more you earn on an investment, the better your ROI.
In accounting terms, ROI is a percentage set against the total amount invested. For example, if you invest $1,000 and make $200 in profit, your ROI is 200/1000, or 20%.
Because profit is tied to ROI, knowing how to increase ROI is key to running a strong company.
How to measure ROI
There are two ways to work out ROI. Below are the formulas for each.
First method:
ROI = (Cost of Investment / Net Return on Investment) x 100%
For example, say a business invested USD 40,000 and had a net ROI of USD 60,000. Using the formula, the ROI works out as:
= (40,000 / 60,000) x 100%
= 0.6667 x 100%
ROI = 66.67%
Second method:
ROI = (FVI – IVI / Cost of Investment) x 100%
Where:
FVI = Final Value of Investments
IVI = Initial Value of Investments
For example, take a company that invested USD 10,000 for its startup[1] and saw a final value of USD 25,000. In this case, the ROI works out as:
= [(25,000 – 10,000) / 10,000] x 100%
= (15,000 / 10,000) x 100%
ROI = 150%
Knowing the formula helps you spot the factors that shape ROI. In turn, that helps you plan how to increase ROI for your company.
How to know if you have a good ROI
Whether an ROI is good depends on your company size and industry. So there is no single right number.
Kabbage Inc., a fintech firm acquired by American Express, says larger companies can treat annual ROIs of 10% or even less as good.
There is also return on digital investment (RODI) to weigh. In fact, an EY survey found that a large share of firms, around 41%, now measure RODI.
Digital ROI tracks the returns from digital investments[2], such as online marketing campaigns. A strong digital ROI sits near 5:1, or USD 5 back for every USD 1 spent.
How to increase ROI
If you want to learn how to increase ROI, several factors need your attention. These are:
- Revenue
- Data
- Analytics
- Overhead costs
Each of these plays a big role in your ROI. So they should top your list when you plan. Below are the steps you can take.
Increase your business’s revenue
More revenue naturally lifts your net returns. So the goal is to earn more without a matching rise in costs.
One way is to improve your marketing and grow your sales pipeline at every stage. In addition, steady revenue generation keeps returns climbing over time.
You can also raise prices. Still, keep the rise small, so it does not hurt your sales.
Leverage available data
Using your marketing data can lift both ROI and the wider business. For example, data shows you what customers need and want.
A clearer view of your market leads to better campaigns. As a result, sales rise, which brings us back to revenue.
There are many ways to gather customer data. These include:
- Social listening
- Surveys
- Creating customer profiles
- Touchpoint maps
- Customer journey maps
- Predictive analysis
- Customer segmentation
Invest in analytics
As noted above, data can help you raise ROI. So investing in analytics tools is a must.
Tools like Splunk, Talend, QlikView, and Apache Spark help you skip vanity metrics. For example, they steer you past follower counts and blog views toward metrics you can act on.
Actionable sales metrics include:
- User conversion rate
- Email opt-in conversion rate
- Social media referrals
- Lifetime value
- Acquisition cost
By focusing on metrics that drive revenue, you make better calls. As a result, your ROI improves.
Reduce overhead and operational costs
Overhead and operating costs eat into your revenue. So they drag down your ROI.
Cutting overhead is a good alternative to raising prices. For example, these cost saving strategies help you trim expenses without losing quality.
Farming out some processes to offshore firms can cut costs by a lot. In addition, quality stays intact.
Re-evaluate your expectations
Your ROI does not always show up as instant cash. Still, the gains should be easy to spot.
For example, investing in employee engagement builds a positive culture. As a result, you keep and attract more staff.
This can mean lower turnover and higher output. Because of this, revenue and ROI both rise. So shifting your view helps you see gains that plain ROI metrics miss.
How to increase ROI through outsourcing
As noted above, outsourcing can cut your operating and overhead costs by a lot. So it hands back revenue you would have spent on those resources. In fact, the benefits of outsourcing reach well beyond simple savings.
But how exactly does outsourcing raise your ROI? Here is a closer look.
Outsourcing offers cost-reduction opportunities
Cost reduction is a top benefit of outsourcing any function. Data from Zippia, a firm that gathers corporate data worldwide, shows businesses save as much as 70% to 90% on labor costs.
You also save on overhead when you outsource. For example, facilities, equipment, and training costs shift to the provider. To weigh the trade-offs, review these outsourcing costs and value before you sign.
Outsourcing gives you access to better tech
Investing in analytics is one step toward higher ROI. As service providers, outsourcing firms already own these tools.
So you hit two targets at once. You gain leading data tools and skip the cost of buying them. In addition, these firms often run better marketing software that can boost your campaigns.
Outsourcing improves marketing campaigns
Offshoring your marketing taps into the provider’s tech. For example, you get modern CRM software that sharpens your efforts.
You can also hire seasoned marketers. As a result, you draw on deep experience from many industries.
Outsourcing improves your customers’ experience
As your processes get more efficient, your customers benefit too. For example, offshore teams can cover support 24/7.
This builds loyalty and can lift your conversion rate, mainly for ecommerce. In addition, strong customer retention adds long-term value. So while it may not show up as instant revenue, it still helps your ROI.
Frequently asked questions about how to increase ROI
What is a good ROI for a small business?
It varies by industry, yet many small firms aim for 15% or more. Meanwhile, larger companies may treat 10% or less as solid.
How does outsourcing help increase ROI?
Outsourcing cuts labor and overhead costs, often by 70% to 90% on labor. As a result, you free up revenue and gain access to better tools and talent.
What is the fastest way to increase ROI?
The quickest wins usually come from cutting overhead and using data you already own. So you lift returns without a big new spend.
Should ROI only be measured in money?
No. Some gains, like lower staff turnover and happier customers, are hard to price. Still, they clearly add to your long-term ROI.
Key takeaways
- ROI compares what you spend against what you earn back.
- To increase ROI, grow revenue and cut overhead at the same time.
- Use your data and analytics tools to guide smarter decisions.
- Outsourcing lowers costs and hands you better tech and talent.
- Some ROI gains, like loyalty and retention, are real but hard to price.
References:
[2] digital investments. König, M. et al. “Different patterns in the evolution of digital and non-digital ventures’ business models.” Technological Forecasting and Social Change, 146, 844-852. https://doi.org/10.1016/j.techfore.2018.05.006
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